Federally regulated employees who are terminated without cause have specific minimum entitlements under Part III of the Canada Labour Code (the “Code”). The Code applies to employees of banks, airlines, telecommunications and broadcasting companies, railways, interprovincial and international trucking and shipping companies, and federal Crown corporations.
Under the Code, a terminated employee is entitled upwards of 8 weeks’ notice or pay in lieu (depending on length of service) and to statutory severance pay, if they have completed at least 12 months of service. Benefits and all other terms and conditions of employment must also continue unchanged throughout the statutory notice period. This article summarizes those entitlements and how they work in practice. The notice schedule below has applied since February 1, 2024 and is current as of October 2026.
Key Takeaway: The Code sets a minimum floor only. Employment contracts must meet or exceed it, and non-union employees may be entitled to far more under common law reasonable notice.
How Much Notice Must a Federally Regulated Employer Give?
Under section 230 of the Code, an employer terminating an employee with at least three consecutive months of service without cause must give written notice, wages in lieu of notice, or a combination of both. Benefits and all other terms of employment must continue for the full notice period:
| Continuous Service | Minimum Notice | Benefits Continue |
|---|---|---|
| Under 3 years | 2 weeks | 2 weeks |
| 3 years | 3 weeks | 3 weeks |
| 4 years | 4 weeks | 4 weeks |
| 5 years | 5 weeks | 5 weeks |
| 6 years | 6 weeks | 6 weeks |
| 7 years | 7 weeks | 7 weeks |
| 8+ years | 8 weeks | 8 weeks |
Pay in lieu is calculated at the employee’s regular rate of wages for regular hours of work.
How Is Severance Pay Calculated Under the Canada Labour Code?
Under section 235, an employee with at least 12 consecutive months of continuous employment is entitled to severance pay, in addition to notice or pay in lieu, equal to the greater of:
- two days’ wages for each completed year of service; or
- five days’ wages.
Example: An employee with 10 years of service is entitled to a minimum of 8 weeks’ notice (or pay in lieu) plus 20 days’ wages as severance pay.
These are statutory minimums. Common law reasonable notice for non-union employees is frequently much higher. Recently, a terminated employee was awarded 33-months reasonable notice of dismissal, inclusive of their minimum statutory entitlements. See our complimentary severance calculator, for general overall assessment common law reasonable notice entitlements, including your minimum entitlements under the Code.
For an assessment of termination entitlements for provincially regulated employees in Ontario, see the following guide: Termination Pay, Severance Pay and Reasonable Notice in Ontario.
Do Benefits Continue During the Canada Labour Code Notice Period?
Yes. Benefits must continue, unchanged, for the entire Code notice period (2 to 8 weeks, depending on length of service, as shown in the table above).
Section 231(a) of the Code prohibits an employer that has given advanced notice of termination from reducing the rate of wages or altering any other term or condition of employment during the notice period, unless the employee consents in writing. During the notice period, the following should remain in place:
- salary and regular hours of work;
- group health, dental and life insurance coverage;
- disability coverage;
- pension or retirement savings contributions;
- bonus, incentive and commission entitlements; and
- allowances, such as a car allowance.
The Code does not set a separate benefits continuation period beyond the notice period itself. Benefits after that point depend on the employment contract and common law reasonable notice, which generally includes the value of lost benefits.
What Must a Statement of Benefits Include, and When Is It Due?
Section 230(2.2) of the Code requires employers to provide terminated employee a written statement setting out vacation benefits, wages, severance pay and any other benefits and pay arising from employment. The deadline to provide this written notice depends on how notice is given:
| Method of Termination | Statement of Benefits Due |
|---|---|
| Working notice | As soon as possible, and no later than 2 weeks before termination |
| Pay in lieu of notice | No later than the termination date |
| Combination of notice and pay in lieu | As soon as possible, and no later than 2 weeks before termination (or the day notice is given, if the notice period is shorter) |
When Do the Code Notice and Severance Rules Not Apply?
The individual notice requirements do not apply where the employee:
- is dismissed for just cause;
- has not completed three consecutive months of continuous employment (severance pay requires 12 months);
- resigns;
- is on a temporary lay-off that does not amount to a termination; or
- is employed under a fixed-term contract that ends on its specified end date.
Where 50 or more employees at a single industrial establishment are terminated within a four-week period, group termination rules also apply, including 16 weeks’ written notice to the Labour Program. Individual entitlements remain payable in addition. For a recent example, see Corus Media layoffs and Canada Labour Code severance rights.
Strategic Implications for Employers
1. Audit termination clauses against the Code. Provisions drafted around the former two-week minimum, or that limit payment to base salary, may fail sections 230 and 231 and may be unenforceable, exposing the employer to common law reasonable notice. Pelsmakher Law assists with terminations and severance for federally regulated employers.
2. Plan the mechanics of termination and monitor reform. The choice between working notice, pay in lieu or a combination affects both the benefits obligations during the notice period and the statement of benefits deadline. Federal labour law is also changing: see Bill C-39: Proposed Changes to Federal Labour Law.
Strategic Implications for Employees
1. Treat the Code as a minimum. Non-union employees are generally entitled to reasonable notice at common law, which for longer-service or senior employees is frequently well in excess of eight weeks, unless a valid and enforceable contract clause provides otherwise.
2. Confirm that benefits and compensation were maintained, and review the clause. A package that tracks the Code minimum, or omits benefits and bonus during the notice period, may leave entitlements unclaimed. An employment contract review can determine whether the termination clause is enforceable. Employees with at least 12 months of service who are not covered by a collective agreement may also have recourse to an unjust dismissal complaint under the Code, and a civil claim may be pursued at the same time. Strict deadlines apply.
Frequently Asked Questions
How much notice is a federally regulated employee entitled to under the Canada Labour Code? Two weeks after three months of service, increasing by one week per completed year from three years of service, to a maximum of eight weeks after eight years. The employer may instead pay wages in lieu of notice.
Do benefits continue during the Canada Labour Code notice period? Yes. Benefits and all other terms and conditions of employment must continue unchanged for the full notice period. Reducing them without the employee’s written consent breaches section 231(a) of the Code.
Is severance pay owed on top of notice? Yes. Statutory severance pay, available after 12 months of service, is separate from and in addition to notice or pay in lieu of notice.
Is the Code maximum of eight weeks’ notice the most an employee can receive? No. Eight weeks is the statutory minimum for employees with eight or more years of service. Common law reasonable notice and the employment contract may provide significantly more.
Can an employer change my pay or role after giving notice of termination? Not without written consent. During the notice period, the employer cannot reduce wages or alter other terms and conditions of employment.
Do the Employment Standards Act, 2000 minimums apply to federally regulated employees? No. Federally regulated employees are governed by Part III of the Canada Labour Code. Whether a workplace is federally regulated depends on the nature of the business.
Do the Code entitlements apply if an employee is dismissed for just cause? No. Notice and severance requirements do not apply where dismissal is for just cause, although the employer bears the onus of establishing it.
How Pelsmakher Law Can Help
Pelsmakher Law advises both employees and employers on terminations in federally regulated and provincially regulated workplaces, including wrongful dismissal, employment contract review and executive compensation. To discuss a termination or compliance concern, contact Pelsmakher Law or explore more articles on the blog.
This article is for general information only and is not legal advice. Entitlements depend on individual circumstances, and the law may change. Sources: Government of Canada, Termination, layoff or dismissal; Canada Labour Code, Division X.
