Terminations in Newfoundland and Labrador: A Guide for Employers

Running a small business in Newfoundland and Labrador means wearing many hats, and handling terminations can be one of the toughest. A single mistake could lead to costly legal disputes or unexpected payouts, pulling your focus from growth. This blog answers key questions about terminations in the province to help you navigate terminations confidently, stay compliant, and protect your business. 

What are the different ways in which an employment relationship can end in the province?  

In Newfoundland and Labrador, employment relationships can end in several ways. Understanding the differences is crucial for managing your risk. 

• Termination Without Cause: This is when you end an employee's job for reasons unrelated to their performance or behaviour, such as restructuring, downsizing, or a role elimination. You don't need to provide a reason, but you must provide termination notice or pay instead of termination notice, as outlined in the Labour Standards Act, RSNL 1990, c L-2. 
• Termination With Cause: This is a dismissal for very serious reasons. The Labour Standards Act is extremely specific about what qualifies, and you don't have to provide termination notice or pay in these limited cases. The bar for proving a "with cause" termination is very high. 
• Constructive Dismissal: This happens when an employer makes a significant, one-sided change to a core term of the employment agreement, like a major cut in pay or a demotion. The employee can treat this change as a termination and may be entitled to notice or pay.  
• Temporary Layoff: This is a temporary interruption of work, not a final termination. However, if a layoff lasts longer than a "temporary" period—generally 13 consecutive weeks—it is legally considered a termination, triggering termination notice requirements (Labour Standards Regulations, CNLR 1163/96, s 36). 
• Employee Resignation: This is when an employee voluntarily chooses to end their employment. 
• Group Termination: Special, longer notice periods apply if you terminate 10 or more employees at a single establishment within a four-week period (Labour Standards Act, s 63) 

What is termination without cause? 

Termination without cause occurs when an employer ends employment for any reason. No specific justification is needed, but employers must ensure their decision is not grounded in discriminatory or retaliatory reasons. Furthermore, employers are not required to give termination notice or pay in lieu to employees with less than 3 months of service. Common law may entitle employees to additional notice, increasing potential costs if not managed properly. 

What is termination with just cause? 

Many employers use the term "just cause," but in Newfoundland and Labrador, the Labour Standards Act provides specific grounds that exempt an employer from having to provide notice. You can only terminate an employee without notice or pay if you can prove they engaged in "wilful misconduct or disobedience or wilful neglect of duty that has not been condoned by the employer" (Labour Standards Act, s 58(1)(a)). 

This standard is much higher than simply poor performance. It requires deliberate and serious actions. Think of things like theft, fraud, or a direct, intentional refusal to perform a core job duty. Poor performance or minor mistakes almost never meet this threshold and should be managed through performance improvement plans and progressive discipline. If you cannot definitively prove wilful misconduct, a court will likely deem the termination to be "without cause," making you liable for notice pay 

When is an employee considered laid off? 

An employee is considered laid off when work is temporarily suspended due to lack of work or other reasons, with an expectation of recall. It becomes a termination if the layoff exceeds reasonable recall periods. The layoff period may count toward calculating service length for notice or pay if it results in termination. 

How much termination notice or pay is required? 

For a "without cause" termination, you must provide written notice or pay in lieu of notice. The amount is set by law and depends on the employee's length of continuous service. 

• 30 days to less than 2 years: 1 week of notice or pay 
• 2 years to less than 5 years: 2 weeks of notice or pay 
• 5 years to less than 10 years: 3 weeks of notice or pay 
• 10 years to less than 15 years: 4 weeks of notice or pay 
• 15 years or more: 6 weeks of notice or pay 

This is mandated by section 56 of the Labour Standards Act. Important note: Notice is only required for employees who have been employed for 30 continuous days or more (Labour Standards Act, s 55). 

Termination pay must be a lump sum equal to the regular wages and benefits the employee would have earned during the notice period, including vacation pay that would have accrued (Labour Standards Act, s 57). 

Beyond the minimums: Be aware that these are just the statutory minimums. An employee may also be entitled to "common law reasonable notice," which is often much longer (sometimes calculated as weeks or months per year of service), unless they have signed a legally sound employment contract with a termination clause that clearly limits them to the statutory minimums 

Do I always have to provide termination notice or pay when terminating an employee? 

No, notice or pay is not required for:  

• Employees with less than 3 months of service (probationary period)  
• Just cause dismissals (with sufficient evidence)  
• Employee resignations  
• Fixed-term contracts ending as agreed (unless extended significantly)  
• Employees on protected leaves (e.g., parental, sick), unless termination is unrelated to the leave.

Common law notice may still apply unless limited by a contract. 

When do I have to pay final wages? 

All final earnings must be paid out promptly. This includes regular wages, overtime, accrued vacation pay, and any termination pay owed. The payment must be made within one week of the termination date or on the next regular payday, whichever is earlier (Labour Standards Act, s 47). 

You cannot make deductions from a final paycheque for things like damaged equipment or training costs unless the employee has provided clear, written authorization for that specific deduction (Labour Standards Act, s 48). 

When an employee quits, do they have to give termination notice? 

While it's customary for employees to provide two weeks' notice, they are not legally required to do so under the Labour Standards Act. If an employee does provide notice, you have two options: 

1. Allow them to work out their notice period. 
2. End their employment immediately, but you must pay them what they would have earned during their notice period, or the statutory termination pay they would be owed, whichever is less (Labour Standards Act, s 61). 

Regardless, you must pay all their final wages by the deadline mentioned above. You must also issue a Record of Employment (ROE) as soon as possible, with Service Canada requiring it to be issued within five calendar days of the end of the pay period in which the employee's interruption of earnings occurs. 

How to calculate termination notice and pay? 

Calculating termination pay in lieu of termination notice is a precise, multi-step process. Getting it wrong can lead to complaints and legal action, so it’s vital to be exact. When calculating the minimum amount owed to an employee whose termination entitlements are limited to the Labour Standards Act standards, such calculation must cover not just the employee’s base pay, but also the accrued vacation pay, and benefits they would have earned if they had worked through their termination notice period.  

Do you need help calculating termination pay correctly?  

Peninsula can help. Our certified experts can help you avoid mistakes when conducting terminations and reduce legal risks for your business. We can also assist with termination documentation and processes, including termination letters, calculating final pay, and guiding you on carrying out the termination meeting confidently. To learn more about how our HR services can benefit your business, call us today at (1) 833 247-3652.