New Obligations for Federally Regulated Employers: Canada Labour Code

Recent amendments to the Canada Labour Code (CLC) introduced changes that directly affect the employment of federally regulated employees. The new mandates require employers to provide certain notice, statement, reimbursement, and entitlements to their staff when it comes to employment and termination.

Currently, several changes are already in effect since July 9, 2023. These involve federally regulated employers’ obligation to provide employees a written statement of employment, reimbursement for reasonable work-related expenses, and information regarding employers’ and employees’ rights.

Other significant changes involving termination rules will come into effect on February 1, 2024. Employers in federally regulated industries must be aware of these amendments and ensure their workplace policies are aligned with the latest updates.

What are federally regulated employees?

Federally regulated employees in Canada are those who work in industries that fall under federal jurisdiction, rather than provincial or territorial laws. These industries are governed by federal laws, including the CLC. 

Employees in federally regulated industries include:

• Interprovincial or international transportation: Employees working in air transportation, railways, and shipping between provinces or internationally.
• Telecommunications: Employees in the telecommunications sector.
• Broadcasting: Those working in radio and television broadcasting. 
• Banks and certain financial institutions: Employees working in banks, including authorized foreign banks.
• Federal crown corporations: Employees working in corporations owned by the federal government.
• Federal government employees: Those working for federal government departments and agencies.

Changes effective on July 9, 2023

Written employment statement

Starting July 9, 2023, federally regulated employers are required to give employees a written employment statement. For existing employees, this must be done within 90 days of the effective date, while new hires must receive their statement in the initial 30 days of employment. If there are changes to the employment relationship, an updated statement must be provided within 30 days.

The new written employment statements must include:

• Names of the parties to the employment relationship.
• Job title of the employee and brief description of duties and responsibilities.
• Address of the ordinary place of work.
• The date on which employment commences.
• Term of employment.
• Duration of probation period (if applicable).
• Description of necessary qualifications for the position.
• Description of necessary training for the position.
• Hours of work (including overtime hour calculation).
• Wage rate or salary, and overtime pay rate.
• Frequency of paydays and frequency of payment of any other remuneration.
• Any mandatory deduction from wages.
• Information about how the employee can claim reimbursement of reasonable work-related expenses.

Penalties for non-compliance

Employers must retain copies of any employment statement for 36 months after an employee’s employment ends. Employers that fail to comply with the written statement requirements may face penalties ranging from $200 to $2,000.00.

Reimbursement of reasonable work-related expenses

Federally regulated employees now have the right to claim reimbursement for "reasonable work-related expenses." Employers are obligated to reimburse these expenses within 30 days of the employee submitting the claim.

To ensure fair reimbursement practices, employers should consider the following factors to determine if the submitted claim is a work-related or reasonable expense:

Work-related expense criteria:

• The expense is linked to the employee’s work performance.
• It enables the employee to perform their work.
• It’s required by the employer as a condition of employment.
• It’s required by the employee’s work in compliance with occupational health and safety standards.
• The expense pursues a legitimate business purpose without personal benefit.

Reasonable expense criteria:

• The expense is connected to the employee’s work responsibilities.
• It’s Incurred to enable an employee to perform work.
• The expense was requested by the employer.
• The expense is above the necessary amount to perform work.
• It’s usually reimbursed by employers within the industry.
• It’s authorized by the employer in advance.
• It’s Incurred by the employee in good faith.
• The claim is supported by documentation like receipts or invoices.

Penalties for non-compliance

Depending on business size, employers failing to meet the reimbursement obligation may face penalties ranging from $500 to $6,000. 

Understanding employee and employer rights under the CLC

Federally regulated employers now carry the responsibility of ensuring their employees are informed about their rights and obligations under the CLC. Here’s a breakdown of what employers need to know:

Information respecting rights of employers and employees

Employers must provide employees with copies of materials published by Canada's Minister of Labour about their rights and obligations under the CLC. These materials must be given within 90 days starting on July 9, 2023, or upon the initial publication by the Minister of Labour. 

New employees must receive these materials within 30 days of starting their employment. For outgoing employees, employers must provide current materials from the Minister of Labour that relate to termination rights.

Penalties for non-compliance

Failure to comply may result in penalties ranging from $200 to $2,000. The penalty amount is determined based on the size of the business.

Changes effective on February 1, 2024

Employee entitlements for without cause termination

Under the current amendments, termination notice periods for termination without cause or pay in lieu will change to: 

• 2 weeks after 3 consecutive months of continuous employment.
• 3 weeks after 3 consecutive years of continuous employment.
• 1 additional week per consecutive year of continuous employment.

Notice period based on length of employment

Here is a breakdown of when you should provide notice based on the employee’s length of employment: 

• Less than three months – no notice.
• Three months or more – 2 weeks.
• 3 years – 3 weeks.
• 4 years – 4 weeks.
• 5 years – 5 weeks.
• 6 years – 6 weeks.
• 7 years – 7 weeks.
• 8 years or more – 8 weeks.

Employee’s additional entitlements to severance pay remain unchanged. If an employee has completed 12 consecutive months of continuous employment, they are entitled to severance pay, along with termination notice or pay in lieu. Severance pay is in the amount of:

• 2 days’ wages for each completed year of employment, and 
• 5 days’ wages.

Mandatory written statement

Starting February 1, 2024, federally regulated employers must provide a written statement to terminated employees, detailing their vacation benefits, wages, severance pay, and any other employment-related benefits or pay as of the statement date. Employers must give the statement to:

• Employees receiving notice: Not later than 2 weeks before the date of termination. 
• Employees receiving wages in lieu of notice: Not later than the date of termination. 
• Employees receiving a combination of notice and wages in lieu of notice: as soon as possible, but no later than the date of termination. If the notice period is 2 weeks, then no later than 2 weeks.

Things to consider for federally regulated employers

Review and update employment contracts

Review and update your offer of employment and employment contract templates. Employers must keep these documents in line with the amendments and stay compliant with the changes.

Enforceable termination clauses

Existing employment contracts must have an enforceable termination clause. Specifically, a termination clause that states that the employee is entitled to two weeks of notice upon termination will no longer be enforceable. This means employees are entitled to a reasonable notice of termination based on the current guidelines of the CLC.

Entitlements for employees with less than 12 months of service

Employees with less than 12 months of service (but more than three months) won’t receive greater entitlements under the amended section 230 of the CLC. The entitlement remains at 2 weeks of notice or pay in lieu.

Group terminations unchanged

Group terminations remain unchanged for employers managing 50 or more employees. In such cases, employees are still entitled to 16 weeks of notice, surpassing the new statutory minimums.

Priority of managerial employee agreements

For managerial employees who have contractually agreed to greater termination benefits, these agreements take precedence over the new notice entitlements. 

Do you need help ensuring your business is compliant with the latest CLC amendments?

Our HR experts can help ensure your employment policies, documentation, and contracts are aligned with the latest regulatory changes. Whether it’s employment termination, calculating severance pay and entitlements, or 24/7 HR advice, we got you covered. Call today at 1 (833) 247-3652 to find out more.