Graduated Termination Notice for Federal Workers

Summary#

This is an order that sets February 1, 2024 as the date when certain parts of the Budget Implementation Act, 2018, No. 2 take effect to change the Canada Labour Code. The changes introduce a graduated minimum notice (or pay in lieu) for individual terminations and require employers to give a written statement of benefits when someone is let go.

What it does#

• Fixes February 1, 2024 as the coming-into-force date for sections 483, 485, and 522 of the Budget Implementation Act, 2018, No. 2, which amend Part III of the Canada Labour Code.
• Creates a graduated minimum notice (or pay in lieu) for individual terminations based on length of continuous service:
  • Employees with at least 3 months but less than 3 years of service keep two weeks notice (no change).
  • At 3 years of service the minimum becomes three weeks, and then increases by one week for each additional completed year, up to a maximum of eight weeks.
• Allows employers to give pay in lieu of notice, or a mix of notice and pay in lieu, equal to the wages the employee would have earned during the notice period.
• Requires employers to provide a written statement of benefits on termination that lists vacation pay, wages, severance and other employment-related pay and benefits.
• Does not change the separate rules for group terminations (for example, where 50 or more employees are terminated together); those are not part of this order.

Who's affected#

• Employees and employers covered by Part III of the Canada Labour Code, i.e. federally regulated workplaces such as:
  • banks and some financial institutions,
  • telecommunications and broadcasting companies,
  • airlines, airports, railways, shipping, trucking and interprovincial bus operations,
  • port operations and grain handling,
  • some federal Crown corporations (but not the public service),
  • First Nations band councils and other industries declared by Parliament to be for the general advantage of Canada or more than one province.
• Workers in provincially regulated workplaces (more than 90% of the Canadian workforce) are not affected by this federal order.
• It is clear who is affected for federally regulated employers and their staff.

Why it matters#

• Long-serving federally regulated workers will get more time or more pay when their job ends. Starting at 3 years of service, minimum notice increases and can reach up to eight weeks for very long service.
• More notice can give workers extra time to look for new jobs or to retrain, which may reduce time spent unemployed.
• Employers may face higher termination costs, but they can reduce cash outlays by giving working notice instead of paying in lieu.
• The order simply sets the start date for changes that were approved in 2018; it gives employers and employees time to prepare before the rules take effect on February 1, 2024.