Termination of Employment: Understanding Compensation and Notices of Termination

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When it comes to ending an employment contract, not everything goes! The employer as well as the employee must follow certain rules. This article explains the rules that apply to compensation and notices of termination.

Important! Most of the rules explained below are from a law called the Act respecting labour standards. Most employees in Quebec are covered by this law, but there are certain exceptions.

 

Is a written notice necessary?

The Act respecting labour standards says that an employer who terminates your employment must give you written notice, so you have time to prepare for losing your job.  

However, there are some situations where your employer doesn’t have to give you advance notice:

  • You worked less than three months. For example, the employer realizes after a few weeks that you aren’t doing the job well.
  • Your employment contract ends on a specific date. (These employees are often called “contract workers” or “temporary employees.”)
  • You were guilty of misconduct. For example, you stole from your employer or committed fraud.
  • Your employment was terminated because of an event beyond anyone’s control. For example, a fire completely destroyed the factory you were working in.    

 

Advance notice periods

The notice of termination of employment must respect certain minimum periods set out in the Act respecting labour standards. The length of the period depends on how long you’ve been working for your employer:

  • less than 3 months: no minimum advance notice period
  • between 3 months and 1 year: 1 week
  • between 1 and 5 years: 2 weeks
  • between 5 and 10 years: 4 weeks
  • 10 years or more: 5 weeks

The Civil Code of Quebec adds that the notice period must be “reasonable.” In certain situations, the notice period of the Labour Standards Act will be too short to be considered reasonable under the Civil Code of Quebec.

Example: Elizabeth has held a strategic position in a company for many years with excellent working conditions. Another company wanted to hire her and offered her even better conditions. After much hesitation, Elizabeth left her job to join the new company. She was let go 11 months later because of company restructuring.

According to the Act respecting labour standards, Elizabeth is only entitled to one week’s notice because she has been working for the new company for only 11 months. However, according to the Civil Code of Quebec, this amount of time might not be considered “reasonable”. This is because the new company convinced Elizabeth to leave a very good job and ended up letting her go soon afterward. She might need more time to find a new job with similar conditions.

The following factors are taken into account when determining whether the notice period is reasonable under the Civil Code of Quebec:

  • type of job
  • specific circumstances
  • how long you were employed

 

Compensation instead of prior notice

Instead of letting you know in advance that you’ll be losing your job, your employer can pay you a “compensatory indemnity,” which is an amount of money. This compensation is equal to the salary you would have received during the period of the notice to which you were entitled.

Example: Luc has been working at the same job for two years. At the end of a workday, Luc’s employer tells him his employment has been terminated, effective immediately. Luc was entitled to a notice of two weeks before losing his job. Luc’s employer must therefore pay him compensation equal to two weeks of salary.

 

Be careful what you sign

Sometimes an employer offers an employee compensation along with certain conditions (a “package”). 

Before signing the document, make sure the amount offered respects the minimum provided by law. Read the entire document. Sometimes non-competition clauses prevent you from working in your own field. Also, if you receive a large indemnity, you might have to pay unexpected taxes.

Talk to a professional if you’re not sure whether accepting the package is a good idea in your situation.

 

Employee’s responsibilities

As an employee, you also have certain responsibilities. When you receive an advance notice of termination that respects the rules, you must continue to work until the last day indicated in the notice. If you don’t, your employer doesn’t have to pay you any compensation.

If you decide to leave your job, you must also give reasonable notice to your employer. Here as well, the length of the advance notice depends on the situation. For example, if you hold a strategic position in a company, you’ll probably have to give your employer more than just a few days’ notice, given your importance to the company.

Important !
This article explains in a general way the law that applies in Quebec. This article is not a legal opinion or legal advice. To find out the specific rules for your situation, consult a lawyer or notary.