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Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Canada

Notice period

In Canada, notice periods during employment termination are governed by the federal Canada Labour Code (CLC) and provincial or territorial employment standards legislation. The CLC provides a baseline notice period for employees in federally regulated industries. No minimum notice is required for less than three months of employment, one week's notice for three months to one year of employment, and for each additional year of employment, up to a maximum of eight weeks' notice is required.

Minimum Notice Periods under the Canada Labour Code (CLC)

For instance, an employee under the CLC who has worked for two years is entitled to two weeks' notice (one week for the first year + one week for the second year).

Minimum Notice Periods under Provincial/Territorial Legislation

Provinces and territories have their own employment standards legislation that may provide different minimum notice periods than the CLC. For example, Ontario's Employment Standards Act, 2000 (ESA) outlines a similar structure to the CLC, with a maximum of eight weeks' notice. Similarly, British Columbia's Employment Standards Act (ESA) follows a similar structure, but the maximum notice period is eight weeks.

Exceptions to Minimum Notice Periods

There can be exceptions to the minimum notice periods. These may include termination for cause, where if the employee is dismissed for serious misconduct, they may not be entitled to notice. Special rules may also apply to large-scale layoffs as defined by provincial/territorial legislation.

Employer Options

Employers can provide a longer notice period than the legal minimum. They can also choose to pay the employee their regular wages in lieu of working the notice period.

Important Considerations

The notice period starts on the day the employee receives written notice of termination. Employees should be aware of their rights and consult with a lawyer if they have any questions about their termination.

Severance pay

In Canada, the entitlements to severance pay are primarily determined by provincial or territorial employment standards legislation. However, for employees in federally regulated sectors such as banking, interprovincial transportation, and telecommunications, the Canada Labour Code (CLC) applies.

Severance Pay under the Canada Labour Code

Under the CLC, employees who have completed at least 12 consecutive months of continuous employment with the same employer are entitled to severance pay upon termination without cause. The calculation of severance pay is as follows: two days of regular wages for each full year of employment, or five days of regular wages if termination is due to mass layoff.

Severance Pay under Provincial/Territorial Legislation

Each province and territory has its own rules governing severance pay. Generally, eligibility typically requires a longer period of continuous employment (e.g., five years in some jurisdictions). In some provinces, severance pay might be required if a company's payroll exceeds a certain threshold. The calculation is usually based on a combination of the employee's length of service and their regular wages. Some provinces may set a maximum severance pay amount.


In Ontario, under the Employment Standards Act, 2000, severance pay is required for employees with at least five years of service whose company has a payroll of $2.5 million or more. In British Columbia, under the Employment Standards Act, severance pay is required for employees with at least three years of service who've been let go as part of a mass termination or when the company has a payroll of $2.5 million or more.

Important Considerations

Severance pay is due in addition to any pay in lieu of notice provided by the employer. Collective agreements or individual employment contracts may provide for more generous severance benefits. It's essential to check these agreements, as they will take precedence over the minimums set out in the legislation. Employees who feel they have not received their rightful severance pay can seek legal advice and potentially file a complaint with the relevant employment standards body.

Termination process

The termination process in Canada is governed by a combination of federal and provincial/territorial laws, ensuring fair treatment of employees. There are two types of termination: termination without cause and termination for cause.

Types of Termination

Termination without Cause: The employer can terminate the employment relationship for reasons unrelated to the employee's performance or conduct.

Termination for Cause: The employer can dismiss an employee immediately for serious misconduct such as gross insubordination, theft, etc. The employer bears the burden of proving that the "just cause" threshold is met.

Termination Process: Without Cause

  1. Providing Notice: The employer must provide a written notice of termination stating the effective termination date.

  2. Pay in Lieu of Notice: The employer can choose to pay the employee their regular wages for the notice period instead of having them work.

  3. Final Paycheck: The employer must issue the employee's final paycheck, including all outstanding wages, vacation pay, and any other earned entitlements.

  4. Record of Employment (ROE): The employer must issue a Record of Employment (ROE) outlining the employee's employment history, which is used to apply for Employment Insurance (EI) benefits.

Termination Process: For Cause

In termination for cause situations, employers may dismiss an employee immediately. However, it's important to note:

  • High Standard: The employer must have a demonstrably high standard of proof to justify termination for cause.
  • Documentation: Clear documentation of the employee's misconduct is crucial if dismissal is to be justified.
  • Progressive Discipline: Employers are often expected to have attempted progressive discipline measures to address performance or conduct issues, before resorting to termination for cause.

Important Considerations

  • Employers should always tread carefully and seek legal advice before terminating for cause, as the burden of proof is high and a wrongful dismissal claim could result if the termination cannot be justified.
  • Employees who believe they have been wrongfully dismissed have the right to challenge the termination through legal channels or by filing a complaint with the appropriate employment standards body.
  • Provincial and territorial employment standards legislation, as well as the Canada Labour Code, provide comprehensive details on specific requirements related to termination procedures.
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