A Canadian Termination Letter is a formal written notice from an employer to an employee communicating the end of the employment relationship. The letter documents the effective date of termination, the reason for the termination, the notice period or pay in lieu of notice, and the employee's entitlements regarding final compensation, vacation pay, benefits, and the Record of Employment (ROE). A properly drafted termination letter protects the employer against wrongful dismissal claims and ensures compliance with provincial Employment Standards Acts.

Canadian employment termination operates under a dual framework combining statutory minimums set by provincial Employment Standards Acts and common-law reasonable notice. Ontario's Employment Standards Act, 2000 (S.O. 2000, c. 41, s. 57) requires employers to provide one week of notice per year of service, up to a maximum of eight weeks for employees with eight or more years of service. British Columbia's Employment Standards Act (R.S.B.C. 1996, c. 113, s. 63) similarly requires one to eight weeks of notice based on length of service. Alberta's Employment Standards Code (R.S.A. 2000, c. E-9, s. 56) requires one to eight weeks of notice. Quebec's Act respecting labour standards (R.S.Q., c. N-1.1, s. 82) requires one to eight weeks based on service length.

Common-law reasonable notice is determined by the Bardal factors established in Bardal v. Globe & Mail Ltd. (1960): the employee's age, length of service, character of employment, and the availability of similar employment. Common-law notice typically exceeds statutory minimums and can reach up to 24 months for long-service senior employees. The Supreme Court of Canada in McKinley v. BC Tel (2001 SCC 38) established the contextual approach for assessing just cause, requiring proportionality between misconduct and termination. The Ontario Court of Appeal's decision in Waksdale v. Swegon North America (2020 ONCA 391) confirmed that if any part of a termination clause violates the ESA minimum standards, the entire termination provision is void and common-law notice applies.

A Canadian Termination Letter is needed whenever an employer ends an employment relationship, whether the termination is without cause, for just cause, due to redundancy or layoff, at the end of a probationary period, or upon elimination of a position. The letter is the primary legal instrument for documenting the employer's decision and the employee's entitlements upon separation.

For termination without cause, the employer must provide the notice period or pay in lieu required by the applicable provincial Employment Standards Act and, unless limited by a valid termination clause in the employment contract, the common-law reasonable notice period. The termination letter must clearly specify the last day of employment, the amount of working notice provided, and any pay in lieu of notice. For termination for just cause, the letter must clearly articulate the grounds relied upon, including specific acts of misconduct and the dates on which they occurred. Just cause in Canada requires a high threshold as established by the Supreme Court of Canada in McKinley v. BC Tel (2001 SCC 38).

The termination letter is also required for mass terminations. Ontario's Employment Standards Act requires 8 to 16 weeks of additional notice when 50 or more employees at an establishment are terminated within a four-week period. The employer must also notify the Director of Employment Standards in writing before implementing a mass termination. After issuing the termination letter, the employer must issue a Record of Employment to Service Canada within five calendar days of the employee's last day of work, using the correct reason code. The ROE is required for the employee to apply for Employment Insurance benefits.

Employers should issue the termination letter in a manner that creates a clear record of delivery. Best practices include hand delivery with a signed acknowledgment, registered mail (Canada Post), or email delivery with a read receipt. The letter should be kept in the employee's personnel file and may be required in the event of a complaint to the Ministry of Labour or a wrongful dismissal claim before the courts.

A compliant Canadian Termination Letter must identify the employer and employee by full legal name and specify the employee's position, department, and date of hire. The letter must clearly classify the termination as without cause, for just cause, or due to redundancy, layoff, or position elimination. This classification determines the employee's entitlements to notice, severance, and EI eligibility.

The notice period must be explicitly stated and must meet or exceed the minimum statutory notice under the applicable provincial Employment Standards Act. The letter should acknowledge that common-law reasonable notice may exceed the statutory minimum and should not contain language that purports to limit the employee's common-law entitlements unless supported by a valid contractual termination clause. If the employer is providing pay in lieu of notice, the letter must specify the amount in Canadian dollars (CAD), including the continuation of benefits during the statutory notice period.

Final compensation must be detailed with precision. The employer must pay all outstanding wages, accrued vacation pay at the applicable percentage (minimum 4% of gross wages for two weeks of vacation under most provincial ESAs, increasing to 6% for three weeks after five years in Ontario), any earned but unpaid bonuses or commissions, and expense reimbursements. All amounts are subject to statutory deductions for Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and federal and provincial income tax. Provincial ESAs set strict deadlines for final pay: Ontario requires payment within seven days of termination or the next regular pay date, whichever is later; British Columbia requires payment within 48 hours; Alberta requires payment within three consecutive pay periods.

The letter must confirm that the employer will issue a Record of Employment to Service Canada within five calendar days. If offering severance beyond the statutory minimum, the letter should be accompanied by a Full and Final Release with an adequate consideration period. The letter must address return of company property, ongoing confidentiality and restrictive covenant obligations, and the status of group benefits. It should reference the governing province and recommend that the employee seek independent legal advice.