In Re Lynx Air Holdings Corporation and 1263343 Alberta Inc Dba Lynx Air, 2025 ABKB 182 (Re Lynx Air) the Alberta Court of King's Bench confirmed that employees who are terminated as part of a group termination under the Canada Labour Code (the CLC) are not entitled to group termination notice, or pay in lieu thereof. The decision subsequently concluded that pay in lieu of a group termination notice under the CLC therefore does not form part of a Wage Earner Protection Program Act (WEPPA) claim. Thisis the first case to rule on the interpretation of section 212 of the CLC as it relates to termination pay in over two decades, since the Nova Scotia Court of Appeal addressed the issue in Conrad v. Imperial Oil, 1999 NSCA 29.
Background
Lynx Air Holdings Corporation and 1263343 Alberta Inc. (together, Lynx Air) obtained an initial order for creditor protection under the Companies' Creditors Arrangement Act (the CCAA) on February 22, 2024. Among other things, this order confirmed that former Lynx Air employees would be entitled to eligible "wages" as defined in section 2(1) of the WEPPA.
The WEPPA provides for the payment of outstanding eligible wages to individuals whose employer is bankrupt, subject to receivership, or other WEPPA qualifying insolvency proceedings. Under the WEPPA, eligible wages include termination pay and severance pay. The Canadian Union of Public Employees (the Union), which represented Lynx Air cabin crew employees (the employees), claimed that the employees were entitled to 16 weeks of wages in lieu of group termination notice based on section 212 of the CLC, and that this payment should form part of their eligible wages.
Are employees terminated in a group termination entitled to 16 weeks' notice?
Under section 212, Division IX of the CLC, any federally regulated employer who terminates 50 or more employees within a four-week period must give at least 16 weeks' advance notice of the termination to the Head of Compliance and Enforcement, the Minister of Employment and Social Development, the Canada Employment Insurance Commission, any trade union representing the impacted employees and, if there is no trade union, they must give the notice to the impacted employees or post the notice in a conspicuous place in the workplace.
After giving this notice, section 214 of CLC requires the employer to establish a joint planning committee. The goal of the joint planning committee is to discuss how to eliminate the necessity of the group termination, or, if the termination is deemed to be necessary, how to minimize the impact of the termination and assist impacted employees in obtaining new employment.
As Lynx Air entered CCAA proceedings, 16 weeks of advance notice pursuant to section 212 of the CLC was not provided to the Union or the Employees. The Union argued that the Employees should have received 16 weeks pay in lieu of notice under section 212 of the CLC and that this ought to have formed part of the eligible wages referred to in the WEPPA.
Justice Armstrong found that section 212 of the CLC does not entitle employees to 16 weeks' notice or pay in lieu of for four reasons:
- 16 weeks' notice of group termination is not owed directly to the employees, rather, it is owed to the Head of Compliance and Enforcement.
- The objectives of Division IX of the CLC are functional rather than financial. While Divisions X and XI of the CLC are concerned with relieving the immediate financial effects of a termination on an impacted employee, Division IX is concerned with attempting to eliminate the group termination, and if that's not possible, to help affected employees find employment. If an employer could just pay money instead of engaging in this process this undermines the functional purpose of Division IX.
- The Minister of Employment and Social Development may waive the
16-week notice requirement if they determine that the application
of Division IX would be
- unduly prejudicial to the employees or the employer
- seriously detrimental to the operation of the industrial establishment; or
- unnecessary because of pre-existing measures that have the same or a similar effect
- An employer's obligations to pay wages in lieu of notice under Division X and to pay severance under Division XI are explicit. Had Parliament intended to create an obligation on an employer to pay 16 weeks' wages in lieu of notice in Division IX, it would have done so, as was done in provincial employment standards legislation in British Columbia, Manitoba, Ontario, Québec, New Brunswick and Nova Scotia.
What are employees terminated in a group termination entitled to?
As a result, federally governed employees terminated as part of a group termination stand in the same position when it comes to their CLC minimum entitlements as any other terminated employee. Employees are entitled to both the minimum notice (or pay in lieu of) per Division X, and minimum severance pay per Division XI. Section 230 of the CLC, outlines the minimum notice requirements.
| Notice or pay in lieu of | Duration of consecutive employment |
| 2 weeks | More than 3 months but less than 3 years |
| 3 weeks | 3 years |
| 4 weeks | 4 years |
| 5 weeks | 5 years |
| 6 weeks | 6 years |
| 7 weeks | 7 years |
| 8 weeks | 8 years or more |
Section 235, Division XI governs minimum severance entitlements. If an employee has been employed continuously for over a year, the employer must pay them either two days' wages per year of continuous service, or five days' wages, whichever is greater.
The CLC of course only sets the statutory minimum amounts to which federally governed employees are entitled on termination of employment. Subject to a written employment agreement to the contrary, employees may remain eligible to receive common law pay in lieu of notice of termination.
Conclusion
Federally governed employees who are terminated as part of a group termination are not entitled to 16 weeks of advance notice of termination or pay in lieu of such notice under the CLC. The purpose of Division IX, including section 212, of the CLC is to address the larger functional issues raised by a group termination, not to provide financial compensation for impacted employees. On termination of employment, employees remain eligible to receive the statutory minimum amounts and other entitlements of Division X and Division XI of the CLC, which entitles all employees who are terminated to a certain minimum notice based on length of service and severance.
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