April 1st, 2024
Tough Decisions and Tariff Uncertainty
Posted on May 6th, 2025 in Human Resources Advisory
If you’re feeling the pressure from ongoing trade restrictions and tariffs, you’re not alone. Many Canadian employers especially those heavily reliant on U.S. trade are facing a lot of uncertainty right now. While the full impact of these tariffs might not be immediate, the unpredictability is already having an impact. You may find yourself considering your workforce needs and planning for potential challenges. A proactive approach is always best.
Employers should carefully consider their options:
- Layoffs: Employers with the right to lay off employees under their employment agreements can temporarily reduce staff. It will be important to be mindful around the timing of layoffs as these cannot go on indefinitely.
- Changes in Hours: Reducing employee hours can be an option, but this does require employee consent so you will want to document this in writing. You will also need to be mindful of the extent of this change in order to avoid any claims of constructive dismissal.
- Leave of Absence or Retirement: Offering employees voluntary leaves of absence or early retirement agreements can help to reduce your payroll obligations and alleviate some financial pressure for a time.
- Termination: In cases of permanent downsizing, you should ensure that you understand your obligations to employees under the Employment Standards Act, 2000 and the common law.
There are also government programs available that can assist you in your workforce management efforts:
- Work-Sharing Agreements: The federal government’s Work-Sharing Program allows businesses facing a decline in work due to external factors to reduce employee hours temporarily. Eligible employers may receive partial wage coverage for employees, up to 55% of their income.
There have been some temporary changes implemented to support businesses affected by tariffs and these include changes to eligibility and timing.
By assessing workforce needs and exploring cost-saving measures and government assistance programs, employers can better navigate the uncertainty caused by tariffs and trade restrictions.
Have questions or need more information? Our team is here to help. Don’t hesitate to reach out.
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