What are the Termination Rules in Canada

What are the Termination Rules in Canada?

How Does Terminating an Employee Work in Canada 

US companies looking to hire remote workers in Canada often struggle to understand local employment rules and regulations. That’s because unlike cut and dry American rules, Canadian employment law has both a federal component, covering government employees and those in federally regulated industries and a provincial one, covering all other employees. For US HR pros and hiring managers, terminating employees and notice of termination are some of the trickiest aspects of Canadian employment law. That’s why so many US companies work with an Employer of Record provider, to keep their Canadian hiring and firing compliant with local law! 

In this blog we will go over termination rules in Canada, how they vary by province and length of service, what “with cause” means, and what the consequences are for getting it wrong.  

What Is Cause for Termination?  

In Canada, notice of termination and cause for termination is required when firing an employee; there is no employment at will. However, what cause and notice look like, and what companies need to pay out if they fail to give notice, varies from province to province.  

Canadian employers are required to have “just cause” for terminating employees, save for those still under the probationary period stipulated in their employment contract. Cause for termination includes severe misconduct such as theft and sexual harassment, repeated misconduct, including insubordination, failure to follow directions of managers, incompetence, absenteeism, and more. Canadian employers can be challenged on just cause terminations, so it is important that they fully and thoroughly document discipline and be able to prove the misconduct was both severe and willful.  

While Canadian employers can fire an employee for poor performance, this is the trickiest kind of just cause to prove. A history of clearly poor performance combined with efforts to correct it, including performance improvement plans and progressive discipline, can bolster an employer’s case.  

Download the checklist on Terminating a Canadian Worker

What is Notice of Termination?  

The Canadian Labour Code requires employers to provide two weeks’ notice, in writing, when terminating an employee. (In turn, employees are encouraged but not required to provide two weeks’ notice when quitting.) In addition, to pay in lieu, some employees are entitled to severance pay. For federally regulated employees, this amounts to two days of pay for each full year of work, with a minimum of five days of pay.  

Employers who fail to provide two weeks’ notice and who do not have just cause must provide pay in lieu of notice: i.e., two full weeks of pay. Two weeks’ notice of termination is not required for severe misconduct, temporary layoffs, employees who are still within their three months probationary period, and for contracts that have a set end date.  

Employment contracts often set out longer notice periods or promise additional severance pay and can require that employees provide notice to their employers.  

However, there are also provincial termination rules to consider.  

What are the Provincial Termination Rules in Canada?  

Employment law and payroll rules have a federal and a provincial component. Where federal law applies to government employees and federally regulated industries, provincial law applies to most other employees in the country.  

Termination Notice in British Columbia 

Tenure Termination Notice Pay in Lieu
3 months 1 week 1 week
1 year 2 week 2 week
3 years 3 weeks, plus 1 week for each additional year of employment to a maximum of 8 years 3 week
4 years 4 week 4 week
5 years 5 week 5 week
6 years 6 week 6 week
7 years 7 week 7 week
8 years 8 week 8 week

Termination Notice in Alberta 

Tenure Termination Notice Pay in Lieu
90 Days 1 week 1 week
2 year 2 week 2 week
4 years 4 week 4 week
6 years 5 week 5 week
8 years 6 week 6 week
10 years or more 8 week 8 week

Termination Notice in Saskatchewan 

Tenure Termination Notice Pay in Lieu
13 weeks 1 week 1 week
1 year 2 week 2 week
3 years 4 week 4 week
5 years 6 week 6 week
10 years or more 8 week 8 week

Termination Notice in Manitoba 

Tenure Termination Notice Pay in Lieu
30 days 1 week 1 week
1 year 2 week 2 week
3 years 4 week 4 week
5 years 6 week 6 week
10 years or more 8 week 8 week

Termination Notice in Ontario 

Tenure Termination Notice Pay in Lieu
3 months 1 week 1 week
1 year 2 week 2 week
3 years 3 week 3 week
4 years 4 week 4 week
5 years 5 week 5 week
6 years 6 week 6 week
7 years 7 week 7 week
8 years or more 8 week 8 week

In Ontario, some employees are also eligible for severance pay. If they have worked for an employer for five or more years (including all the time spent by the employee in employment, whether continuous or not and whether active or not) and the employer has a global payroll of at least $2.5 million, or severed the employment of 50 or more employees in a six-month period because all or part of the business permanently closed.  

Severance pay in Ontario amounts to 1 week’s wages x number of years of employment + months for an uncompleted year. 

Termination Notice in Quebec 

Tenure Termination Notice Pay in Lieu
3 months 1 week 1 week
1 years 2 week 2 week
5 years 4 week 4 week
10 years or more 8 week 8 week

Termination Notice in New Brunswick 

Tenure Termination Notice Pay in Lieu
6 months 2 week 2 week
5 years or more 4 week 4 week

Termination Notice in Nova Scotia 

Tenure Termination Notice Pay in Lieu
3 months 1 week 1 week
2 years 2 week 2 week
5 years 4 week 4 week
10 years or more 8 week 8 week

Termination Notice in Prince Edward Island 

Tenure Termination Notice Pay in Lieu
6 months 2 week 2 week
5 years 4 week 4 week
10 years 6 week 6 week
15 years or more 8 week 8 week

Termination Notice in Newfoundland & Labrador 

Tenure Termination Notice Pay in Lieu
3 months 1 week 1 week
2 years 2 week 2 week
5 years 3 week 3 week
10 years 4 week 4 week
15 years or more 6 week 6 week

Termination Notice in Yukon 

Tenure Termination Notice Pay in Lieu
6 months 1 week 1 week
1 year 2 week 2 week
3 years 3 week 3 week
4 years 4 week 4 week
5 years 5 week 5 week
6 years 6 week 6 week
7 years 7 week 7 week
8 years or more 8 week 8 week

 Termination Notice in Northwest Territories 

Tenure Termination Notice Pay in Lieu
90 days 2 week 2 week
3 years 3 week 3 week
4 years 4 week 4 week
5 years 5 week 5 week
6 years 6 week 6 week
7 years 7 week 7 week
8 years or more 8 week 8 week

Termination Notice in Nunavut 

Tenure Termination Notice Pay in Lieu
90 days 2 week 2 week
3 years 3 week 3 week
4 years 4 week 4 week
5 years 5 week 5 week
6 years 6 week 6 week
7 years 7 week 7 week
8 years or more 8 week 8 week

How Employer of Record Providers Can Help  

Employer of Record providers like Canadian Payroll Services hire your international remote workers and then lease them back to you to direct. They provide locally compliant employment agreements that ensure you stay compliant, even if your new hire doesn’t work out. When employees leave your organization, either by quitting or being fired, risks are heightened for employers. It’s crucial that employer-employee relationships end compliantly, with no dangling issues, and within the timelines set out by local employment law.  

Let Canadian Payroll Services Help You Employ Compliantly 

Canadian Payroll Services specializes in helping global employers hire quickly and compliantly in Canada. We provide locally compliant employee agreements that ensure you start off new relationships on the right foot, and coach you through the end of them. Terminating an employee is never fun, but we can ensure that you handle it appropriately and without any loose ends.

Want to learn more about how Canadian Payroll Services can help you grow your team? Contact us today!

Frequently Asked Questions

Does Canada have employment at will?

Employment at will is a term used to describe the employment relationship between an employer and an employee where either party can end the relationship at any time without notice, cause or justification. This type of relationship is not recognized in Canada because of the country’s legal protections for employees. In Canada, employers must have just cause for dismissal and must provide reasonable notice of dismissal prior to terminating an employee.

Do you have a letter of termination template?

Canadian Payroll Services does not provide free templates of any employee letters because compliance is about more than having the right documents. Instead, we provide our clients with advice and documents throughout the termination process and beyond.

What is termination with cause?

The principle of termination with cause is that employers can terminate employees when they have done something wrong. That is, your case must be based on the employee’s behavior or performance and must be reasonable in relation to the circumstances. It is sometimes referred to as “just cause” termination. Examples of the types of behavior that could lead to termination with cause include theft, fraud, insubordination, dishonesty, and other serious misconduct.

What is the termination notice period?

Employees in Canada are entitled to a period of notice before they are terminated. The length of this notice is set out in provincial employment law and determined by term of service. When employees are terminated without notice, they are entitled to receive pay in lieu.

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