Changes to Part 3 of the Canada Labour Code will alter the termination rules that federally regulated trucking companies must follow effective Feb. 1, 2024.
The Code applies to all road transportation services, including trucks and buses, crossing provincial or international borders. In other words, if you operate or are employed by a trucking company that performs services interprovincially or to the U.S., that company is subject to the Code.
Previously, employees with three or more consecutive months of continuous employment were entitled to two weeks’ notice or pay in lieu of notice upon being terminated without cause. Once the new provisions come into effect on Feb. 1, the notice period increases to three weeks. The notice period continues to increase by one week for each additional year of service completed thereafter, up to a maximum of eight weeks.
Employers who provide notice before Feb. 1, 2024, will not be required to follow the new provisions.
The new provisions also require federally regulated trucking companies to provide a written statement of benefits to employees who are terminated. The statement must set out the employee’s vacation benefits, wages, severance pay, and any other benefits and pay arising from their employment.
When employees receive advance working notice, employers must provide this statement no later than two weeks before the termination date. Those paid in lieu of notice must receive the letter no later than the termination date.
Employees vs. owner-operators
But to be protected under Part 3 of the Code, workers must have status as an employee. So, federally regulated trucking companies that engage both employee drivers and owner-operators (ie independent contractors) should have well-drafted owner-operator and employment agreements.
In addition to written agreements, trucking companies must examine relationships with their owner-operators to determine if someone is truly an owner-operator or if they may inadvertently be classified as an employee.
Federally regulated trucking companies should consider auditing employment agreements to ensure they provide at least the minimum notice of termination provided under the Code. This is especially important given recent case law (Waksdale v. Swegon North America Inc., 2020 ONCA 391), which effectively heightens the risk that contracting out of the Code’s minimum standards may render termination clauses in an offending employment contract unenforceable.
If a termination clause in an employment agreement is rendered unenforceable, this could increase the amount of pay in lieu of notice upon termination without cause.
Federally regulated trucking companies that engage owner-operators should have a carefully drafted owner-operator agreement that clearly identifies the owner-operator as an independent contractor. Apart from a written contract, any interactions with an intended owner-operator can’t risk being characterized as an employer-employee relationship.
If an owner-operator is classified as an employee, that owner-operator would then be entitled to notice or pay in lieu of notice under the Code. It’s why trucking companies should ensure owner-operators own their own trucks, can control when they work, are responsible for their own fuel and insurance expenses, and pay for truck maintenance, among other things.
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