Employment standards rules – Termination and termination pay

Basic rules

Employees and employers must give each other notice of their intention to end the employment.

An employer may end the employment of an employee by giving them:

• termination notice
• termination pay or
• a combination of termination notice and termination pay
• if the period of employment is 90 days or less, no notice is required from either party

Termination notice is not required for seasonal or task specific employment.

Notice period length is based on how long the employee has been working for the employer.

The employer must pay the employee's earnings with 10 days after the end of the pay period in which termination occurred, or 31 consecutive days after the last day of employment.

Neither earnings nor other terms or conditions of employment may be reduced during the notice period.

Employers are prohibited from requiring employees to use entitlements such as vacation or overtime during the termination notice period, unless agreed to by both parties.

Deadline of payments for amounts owed

When employment is terminated, employers must pay the employees as follows:

• within 10 consecutive days after the end of the pay period in which termination occurred, or
• 31 consecutive days after the last day of employment.

The employer may choose whichever option best suits their needs.

Termination by employee: quits

Termination notice

Employees who wish to end their employment must give written notice to the employer. The length of notice period is based on how long they have worked for the employer:

Table 1. Employee notice period needed for length of employment

When notice is not required

Employees are not required to give termination notice if:

• they have been employed for 90 days or less
• there is a different established custom or practice in an industry respecting terms of employment
• continuing to be employed by the employer would endanger the employee’s personal health or safety
• the employment contract is impossible to perform due to unforeseeable or unpreventable causes beyond the employee’s control
• they are temporarily laid off, or laid off after having refused reasonable alternate work
• they are not provided with work as the result of a strike or lockout at the employee’s place of employment
• they are casual employees employed under an arrangement where they may choose to work or not when asked to do so
• they quit because of a reduction in wage rate, overtime rate, vacation pay, general holiday pay or termination pay

Contents of the termination notice

To be valid, the employee’s termination notice must be:

• in writing and addressed to the employer,
• given or otherwise provided to the employer, and
• for the correct notice period or longer

When notice is no longer valid

A termination notice is null and void if the employee continues to be employed by the same employer after the date specified for termination of employment.

Expediting termination

When an employee gives termination notice that is less than what the employer is required to give, and employer wants to expedite the termination:

• the employer must pay the wages that the employee would have earned if they had worked regular hours for the remainder of the notice period the employee provided.

When an employee gives termination notice that is more than what the employer is required to give, and employer wants to expedite the termination:

• the employer must pay the wages that the employee would have earned if they had worked regular hours for the remainder of the notice period that is required to be given by the employer.

Use of entitlements during the notice period

An employer cannot require an employee to use the following during termination notice period:

• banked overtime, unless otherwise agreed in writing
• vacation unless the employer already informed the employee in writing to take their annual vacation prior to that employee giving notice
• general holidays when an employee has not taken the day off as a holiday

Construction workers

Construction employees are not entitled to termination notice or termination pay from their employer. Likewise, construction employees are not required to give their employer termination notice.

Termination by employer

When an employer terminates the employment of an employee

Employers may give termination notice, termination pay or a combination of termination notice and termination pay.

Termination notice

Employers who end their employee’s employment must give the employee, and ensure they receive, written termination notice.

An employer must give written notice to their employee of at least:

Table 2. Employer notice period needed for length of employment

When notice is no longer valid

A termination notice is null and void if the employee continues to be employed by the same employer after the date specified for termination of employment.

Determining length of service

The employee’s length of service is the time that they have worked for the employer, which can include more than one period of employment if the breaks between periods are not longer than 90 days.

If the employee took a job protected leave during the time they have worked for the employer, that time counts as being continuously employed for the purposes of calculating years of service.

Change of ownership

When a business changes ownership and the employee continues to work for the business, the employee retains all previous length of service. In this case, they would be entitled to a notice of termination based on their full length of service.

The original hire date with the initial business would be used for determining termination pay.

When termination notice is not required from employer

Employers are not required to give termination notice (or pay in lieu) to employees who are:

• dismissed for just cause
• employed on a seasonal basis and their employment ends on completion of the season
• employed for 90 days or less
• employed for a definite term or task for a period of 12 months or less
• not provided with work as the result of a strike or lockout at their place of employment
• casual employees who may elect to work or not for a temporary period when requested to by the employer
• refuse reasonable alternate work when temporarily laid off
• fail to return to work within 7 consecutive days of a recall (unless provided otherwise in a collective agreement) when temporarily laid off
• subject to a contract of employment that is or has become impossible to perform because of unforeseeable or unpreventable causes beyond the control of their employer
• employed on-site in the construction industry
• employed in the cutting, removal, burning or other disposal of trees and brush or either of them for the primary purpose of clearing land

Although the Code outlines minimum termination notice requirements, some employees may be entitled to greater notice under common law.

Contents of the termination notice

To be valid, the employer’s termination notice must:

• be in writing and addressed to the employee concerned
• include a termination date

Note: A termination notice is a legal document. You may need it if the employee sues for wrongful dismissal. Carefully consider the contents of your letter. See sample notice below.

Sample Termination Letter

(on company letterhead)

Date:

Employee address:

Dear employee:

Paragraph 1:

Advise the employee that their employment will be terminated, and the effective date.

Paragraph 2:

• if applicable, include a statement explaining that the reasons for termination were outlined in previous warning letters
• state that, because the employee hasn’t corrected these issues, their employment will be terminated

Paragraph 3:

• request the return of any company, property, etc.
• state when the employee will receive their final earnings (they must be paid within 10 consecutive days after the end of the pay period in which termination occurred or 31 consecutive days after the last day of employment, with the employer choosing whichever option best suits their needs)

Sincerely,

Supervisor/manager name

Title

Termination pay (pay in lieu)

The employer may not wish to have their employee work out a notice period. In this case they may give the employee pay in lieu in the amount the employee would have earned had the employee worked through the required notice period.

Combined notice and pay in lieu

An employer may combine notice (which the employee works out) and pay in lieu of notice to make up the required notice period.

An employer is prohibited from requiring the employee to use entitlements such as vacation or overtime during the termination notice period, unless both parties agree to it.

Calculating termination pay

Termination pay must equal at least the wages the employee would have earned if the employee had worked regular hours for the termination period.

When the employee’s wages vary from one pay period to another, the weekly average of the employee’s regular wages for the 13 weeks in which the employee worked preceding the date of termination, not simply the 13 calendar weeks immediately preceding the date of termination is used to determine the employee’s termination pay.

When an employer cannot terminate the employment of an employee

Generally, an employer has the right to end the employment of an employee at any time, as long as they provide the required length of notice or pay in lieu.

The exception is where the dismissal is in violation of human rights legislation. For more information, see the Alberta Human Rights Commission.

Employment situations that cannot be terminated

Employers cannot end the employment of or lay off an employee because that employee:

• has started any job-protected leave
• is entitled to or has started maternity or parental leave
• is facing or might face garnishment action (a legal procedure where the court can authorize a creditor to take money owing to them from sources such as an employee’s pay cheque, an account at a financial institution, or money owed by others)
• has given or might give evidence at any inquiry or in any proceeding or prosecution under the Code
• has requested or demanded anything to which the employee is entitled under the Code
• has made or is about to make any statement or disclosure that may be required of the employee under the Code

When a business is suspended or discontinued

An employee on any leave can be dismissed or laid off if the employer suspends or discontinues the business in which the employee was employed.

However, if the business’ operations are resumed within 52 weeks, the employer must reinstate the employee, or provide them with alternative work. In these cases, employees must be reinstated in accordance with an established seniority system or employer practice, and with no less than the same pay and benefits as before the leave started.

Discrimination against the employee

An employer may not end the employment of, lay off, or discriminate against an employee for exercising their rights–or complying with certain obligations–under the Code.

An employee cannot be discriminated against for:

• making a complaint
• giving or having the potential to give evidence at any inquiry or in any proceeding or prosecution
• requesting or demanding anything to which they are entitled
• making or being about to make any statement or disclosure that may be required

Just cause for terminating employment

An employer is not required to provide notice when just cause exists for dismissing an employee.

Termination for just cause typically involves conduct that is serious enough – either on its own account or in combination with other factors – to justify the employer ending the employment relationship.

Legal advice

If in doubt, call a lawyer. When dealing with termination for just cause, it is best to seek legal counsel prior to issuing a termination notice.

Employer’s responsibilities

1. The employer must prove that:
   • the dismissal is justified:
     • the employer must show more than just dissatisfaction with the employee’s performance
     • real misconduct or incompetence must be demonstrated
   • the employee was aware of the consequences of failure to perform certain duties or obey certain rules
2. The employer must keep accurate records:
   • it is a good practice to document the time, date and outcome of any conversations or encounters that they have with the employee about inappropriate behaviour or conduct
   • this information could be useful if they decide to end the employment relationship in the future
3. The employer must ensure employees know the consequences of breaking the rules. They may do this by:
   • developing an employee handbook and distributing it to all staff:
     • include information on vacation and general holidays, overtime and disciplinary measures for misconduct
     • post a copy of this handbook in a public place for all staff
   • issuing warning letters if the employee’s conduct becomes problematic

Employee’s rights

If you have questions about your rights regarding termination and would like legal advice, you can use the Law Society of Alberta Lawyer Directory to find a lawyer who specialized in labour legislation and layoffs.

An employee who feels they have been improperly terminated can file an employment standards complaint.

How the law applies

Part 2, Division 8 of the Employment Standards Code provides the process required to terminate employment relationships, entitlements to termination notice and pay, temporary layoff and recall rights.

Division 8 also outlines circumstances in which an employer or an employee may not be required to provide termination notice under the Code.

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