On June 1, 2023, the federal government announced that amendments to the Canada Labour Code (the “Code”) under the Budget Implementation Act, 2018, No.2 will be coming into effect on February 1, 2024. Notably, individual entitlements of notice or pay in lieu for termination without cause will be adopting graduated approach, increasing employee entitlements according to years of continuous employment.
Currently, federally regulated employees who have completed at least three months of continuous employment are entitled to two weeks’ notice or payment of two weeks' wages upon termination without cause. The changes will increase the entitlement period by one week for each additional year of employment, up to a maximum of eight weeks notice/pay:
Length of continuous employment | Entitlement period |
At least 3 months | 2 weeks |
At least 3 years | 3 weeks |
At least 4 years | 4 weeks |
... | ... |
At least 8 years | 8 weeks |
Note that this will apply only to ordinary termination without cause and not mass termination. With these changes, the Code will now be consistent with notice minimum standards for provincially regulated employees under the Ontario Employment Standards Act.
Despite the changes to the Code, common law reasonable notice standards may not substantially change for some employees. Where employment contracts are silent on termination or notice, the courts have recognized reasonable notice at common law for termination without cause, which is often well in excess of minimum standards in the Code. Factors that may affect common law reasonable notice include the Bardal factors: employee age, length of service, character of employment, and availability of similar employment.
Recent decisions in the Ontario Court of Appeal have held that all termination provisions should be considered jointly, suggesting that employment contracts containing unenforceable termination clauses may similarly be subject to common law reasonable notice requirements. Employers that fail to update employment agreements to comply with the federal amendment may consequently be liable for damages at common law when attempting to terminate without cause.
Although seemingly a minor update to evolving labour standards, the incoming amendment has potential ramifications for worker rights beyond increased minimum entitlements. Employers, employees, and employment lawyers all stand to benefit from keeping abreast of how these changes fit into the larger labour law framework.
- AC
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