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End of Employment

General Guidelines

Termination procedure

Canada doesn’t recognise at-will employment. Instead, in order to lawfully terminate an employment, companies must provide employees with a notice of termination. Specific termination laws vary by province/territory, but the guidelines are more or less the same, as follows:

  • Probationary period, which doesn’t require a valid reason for termination.
  • Gross misconduct (unlawful act, constant insubordination, and wilful misconduct). In this situation, employees are not entitled to any notice or payment in lieu of notice and severance pay.
  • Contractual time-bound end of a fixed-term contract.
  • Employee resignation.
  • Absence of cause (must provide pay in lieu of notice, or notice).

In Quebec, employees gain additional termination protection after a two-year tenure and can be terminated for serious infractions or layoffs only.

To avoid giving a notice, employers must prove that employees are dismissed with a just cause. This is difficult to prove unless there is strong evidence of serious misconduct such as fraud, significant breaches of employer policies, or insubordination.

Note: Non-unionised employees in every province/territory except Nova Scotia, Quebec, and the federal jurisdiction can be dismissed without cause but must be given the required notice. Nonetheless, even with a notice, civil claims being brought against employers are still likely. Collective agreements almost always provide protection against termination without cause.

Canadian laws encourage employers to work with underperforming employees rather than default to termination. If employers proceed with termination, they give their employees a written notice of dismissal, which can be delivered in person or by email/mail. Then employers must respect the notice period, which varies not only by province/territory but also by employee’s tenure and age. Employers can choose to pay in lieu of notice.

Upon termination, employers must process the final payment and pay it by the next pay date, issue the Record of Employment (ROE) to the employee, and report the termination to the authorities. If there’re any outstanding payments from unpaid time off or bonuses, they too must be paid by the next pay date. Failure to follow the requirements listed above may result in a fine of up to CAD$2,000 and imprisonment for up to six months.

Failure to follow employment standards can lead to fines or orders to compensate employees for losses incurred as a result of the contravention. There are no predefined minimums or maximums of the fine, and the exact sum depends on the violation and facts of each case. Employees can also commence a civil action for wrongful dismissal, and claim damages for losses suffered during the notice period. In these cases, remedies are compensatory, and reinstatement is not possible.

Disciplinary procedure

Before taking an employment termination route, companies in Canada should have a progressive discipline policy in place to assist employees who need to improve their performance or correct a misconduct. The goal of this policy is to help employees. While it has a degree of flexibility, the procedure involves certain steps that may or may not all be taken depending on the seriousness of the misconduct, past employee performance, and the employee’s response to prior disciplinary action:

  1. Verbal warning — given when minor corrective action is required or when no previous disciplinary action has been taken
  2. Written warning — given when a more serious disciplinary action is needed or because the previous disciplinary action had a poor response
  3. Suspension with or without pay and full and final warning — given when the offence is so serious that a lower level of action is not appropriate, there is repeated unacceptable conduct, or the previous disciplinary action had a poor response
  4. Termination with just cause — implemented when the misconduct fundamentally breaches the employment relationship, or the unacceptable behaviour has been repeated after a final warning or suspension

After each step before termination, the employee should be given an opportunity to correct the problem or their behaviour. If the employee doesn’t correct their behaviour, the type of discipline increases in severity, and, eventually, termination occurs.

Employers should document and date the meetings, training sessions, warnings, and performance reviews involved in the disciplinary process.

Resignation

Employees who want to resign from their jobs should follow a correct procedure to avoid breaching their employment contract. First, employees should submit a written resignation letter to their employers as proof of resignation to avoid being taken to court and failing to prove their giving the appropriate notice. Employees don’t need to provide details about their reason for leaving but should include a statement saying they are resigning and indicating their last day of work.

Second, employees must respect the notice period in their employment agreement, which is detailed in the Notice Period section. If there’s no stated period in the contract, the Canadian common law requires a “reasonable notice”, which is usually two weeks. The employer may negotiate a longer notice, depending on the employee’s position, length of service, pay, and time it would likely take to replace the employee.

Employees who resign are entitled to neither the unemployment funds benefit nor severance pay unless the employee can show they have been harassed, constructively dismissed, had their Human Rights violated, or that the workplace was toxic.

Redundancy

In Canada, the concept of redundancy doesn’t exist. Instead, layoffs are periods during which employers don’t provide work to employees, but where employees retain certain reinstatement rights should the company situation improve. During layoffs, employees may keep their entitlement to benefits. In Ontario, an employer can lay off an employee for 13 weeks (out of 20) without benefits, or 35 weeks (out of 52) if benefits are continued.

For a layoff to turn into a definite dismissal, a certain period must pass, which varies by jurisdiction as follows:

  • Alberta: a layoff for one or more periods exceeding 90 days within a 120-day period; COVID-19 allows for 180 consecutive days
  • British Columbia, Newfoundland and Labrador, and Yukon: 13 weeks of layoff in a 20-week period
  • Ontario: 13 weeks of layoff in a 20-week period if no benefits are provided; or 35 weeks of layoff in a 52-week period if benefits are continued
  • Quebec: six months of continuous layoff
  • Saskatchewan: six consecutive working days of layoff
  • Manitoba: eight weeks of layoff in a 16-week period
  • Prince Edward Island: no specified time limit prescribed in the legislation
  • New Brunswick and Nova Scotia: any layoff lasting 12 months or longer; a layoff subject to the same notice period as a discharge or suspension
  • Northwest Territories and Nunavut: 45 days of layoff in a period of 60 consecutive days

Non-unionised companies don’t need to consult employees when making decisions about layoffs. Employers simply provide employees with a notice of layoff in writing, which sets out the potential recall date, but with no other procedural requirement, which gives the employer the power to choose whom to recall once work becomes available. Layoff provisions should be included in employment agreements to allow them to be enforceable and to try to protect employees against constructive dismissal claims. This is true for, at least, Ontario wherein a layoff without a contracted right is likely to lead to a constructive dismissal.

On the other hand, unionised companies have collective agreements that set out the procedures to follow regarding layoffs and employee recall. Collective agreements typically dictate the order in which employees are to be recalled, which is normally on the basis of seniority. Collective agreements also usually include “bumping” provisions, which provide laid-off employees the right to displace an employee with less seniority. Any obligation to consult the union with regard to collective redundancies is also negotiated in the collective agreement.

In the event of a termination, employees have to be given the appropriate termination pay according to the relevant employment standards legislation in effect.

Notice period

In Canada, an employee’s statutory notice period varies by province/territory and is influenced by the employee’s tenure at the company, age, and job-specific factors such as availability of comparable work. There are two sources of notice: (1) statutory, which is remedial and (2) common law, which is more flexible and generous. Employers may choose to pay in lieu of notice, but, at a minimum, the notice period by province/territory is as follows:

Alberta

  • Less than three months of employment: none
  • Between three months and two years: one week
  • Two to four years: two weeks
  • Four to six years: four weeks
  • Six to eight years: five weeks
  • Eight to ten years: six weeks
  • Ten+ years: eight weeks

British Columbia

  • Less than three months: none
  • Three to twelve months: one week
  • One to three years: two weeks
  • Three years: three weeks
  • Three+ years: additional week of notice for each year after the third up to eight weeks in total

Manitoba

  • Less than 30 days: none
  • Between 30 days and a year: one week
  • One to three years: two weeks
  • Three to five years: four weeks
  • Five to ten years: six weeks
  • Ten+ years: eight weeks

New Brunswick

  • Under six months: none
  • Between six months and five years: two weeks
  • Five+ years: four weeks

Newfoundland and Labrador

  • Less than three months: none
  • Between three months and two years: one week
  • Two to five years: two weeks
  • Five to ten years: three weeks
  • Ten to fifteen years: four weeks
  • Fifteen+ years: six weeks

Northwest Territories

  • Less than 90 days: none
  • Between 90 days and three years: two weeks
  • Three+ years: additional week of notice for each year after the third up to eight weeks in total

Nova Scotia

  • Less than three months: none
  • Between three months and two years: one week
  • Two to five years: two weeks
  • Five to ten years: four weeks
  • Ten+ years: eight weeks (terminating an employee with such tenure requires just cause or a good reason)

Nunavut

  • Less than 90 days: none
  • Between 90 days and three years: two weeks
  • Three+ years: additional week of notice for each year after the third up to eight weeks in total

Ontario

  • Less than three months: none
  • Between three months and a year: one week
  • One to three years: two weeks
  • Three+ years: additional week of notice for each year after the third up to eight weeks in total

Prince Edward Island

  • Less than six months: none
  • Between six months and five years: two weeks or two weeks’ pay in lieu of notice
  • Five to ten years: four weeks
  • Ten to fifteen years: six weeks
  • Fifteen+ years: eight weeks

Quebec

  • Less than three months: none
  • Three months to a year: one week
  • One to five years: two weeks
  • Five to ten years: four weeks
  • Ten+ years: eight weeks

Saskatchewan

  • Less than three months: none
  • Between thirteen weeks and a year: one week
  • One to three years: two weeks
  • Three to five years: four weeks
  • Five to ten years: six weeks
  • Ten+ years: eight weeks

Yukon

  • Less than six months: none
  • Six months to a year: one week
  • One to three years: two weeks
  • Three+ years: additional week of notice for each year after the third up to eight weeks in total

Federal jurisdiction

  • Two weeks after three months of employment

The Canadian courts have found that based on the combination of employee’s length of service, age, position, and other factors relevant to the employee’s ability to secure new employment, employees should be given anywhere between two and six weeks’ notice per year of service at common law. In some cases, long-service employees may be entitled to up to 24 months’ notice of termination, which may be exceeded in “exceptional circumstances”.

Severance

Employees who have been employed for a certain period are entitled to severance pay when dismissed by their employers. The pay and tenure vary by province/territory and aren’t applicable in every jurisdiction, as follows:

Federal jurisdiction

  • Severance pay entitlement after 12 months of continuous employment
  • Two days’ pay for each year of tenure after the first year, but with a minimum of five days
  • Eight days’ pay after four years of tenure
  • Forty days’ pay after 20 years of tenure

Ontario

  • After a five-year tenure, employees are entitled to one week’s salary for each year of employment, for a maximum of 26 weeks’ pay.
    • Applicable only if the employer’s payroll is more than CAD$2.5 million yearly, or if the employer dismisses 50 or more employees within a six-month period.
  • After 20 years of tenure, employees are entitled to 20 weeks’ pay.
 
Other jurisdictions don’t impose mandatory severance pay.

Employee termination protection

Employees in certain situations are protected from being dismissed. These situations include (but are not limited to) maternity, parental, domestic violence, compassionate, and critical illness leaves. In addition, the Human Rights Code provides protection from any dismissal motivated, in whole or in part, by a prohibited ground of discrimination, or in reprisal for the employee’s attempt to enforce their rights under human rights legislation.

Unemployment funds

Employees who have been dismissed through no fault of their own, and who have been without work or pay for at least seven consecutive days in the last 52 weeks, who are ready, willing, and actively looking for employment, and who have made Employment Insurance (Social Security) contributions for the last 52 weeks are entitled to unemployment funds.

The exact amount of the benefit varies on a case-by-case basis, but most people get 55% of their average insurable weekly earnings, capped at CAD$595 weekly (with the maximum of yearly insurable earnings being CAD$56,300). The benefit is provided for 14 to 45 weeks, depending on the region’s unemployment rate and the amount of EI contributions the person has accumulated in the last 52 weeks.

This page was last updated on 12th July, 2021. If you have questions about this page, send us an email.