Terminating without cause under the Canada Labour Code – is it legal?

On February 1, 2024, the minimum requirements for notice periods regarding the individual termination of employees changed, with notice amounts now tied to the individual’s length of employment. These amounts are outlined below and are in addition to any severance amounts that the employee may be entitled to under the Canada Labour Code.

As per the Federal Labour Program: “Notice of termination of employment or pay in lieu of notice is not required if the employee:

• has not completed 3 consecutive months of continuous employment;
• terminates their own employment;
• is dismissed for just cause;
• is on a temporary layoff that does not constitute a termination of employment; or
• has signed an employment contract that provides a specific end date and that the work ends on that specified date.”

While this all seems pretty straightforward, these changes may create confusion in the context of existing case law, specifically Wilson v. AECL 2016 SCC 29. In the outcome of this case, the Supreme Court of Canada indicated that non-unionized employees working for a federally regulated entity who can pursue an unjust dismissal claim under the Canada Labour Code can only be dismissed if the employer has “just cause.”

Federally regulated employees may initiate an unjust dismissal claim where they:

• Have completed at least 12 consecutive months of employment;
• Are not unionized; and
• Are not a manager.

Note: Certain criteria must be met to determine whether or not an employee is in a managerial position. In other words, if an employee’s job title contains the word “Manager,” this does not necessarily mean that they are a manager. Criteria used to make this determination are often related to the responsibilities of the role.

Considering these parameters under common law, federally regulated employers are advised to continue approaching individual terminations with caution. The changes to termination notice amounts that came into force in February 2024 might suggest that dismissing an employee without cause is permissible, even though this may not be the case. This could lead to costly and time-consuming consequences; therefore, employers will want to ensure that they keep these considerations in mind when faced with decisions regarding termination of employment.

For more information about this regulation, visit the link below. 

Individual Termination Requirements under Canada Labour Code