How to prepare for possible job loss in Canada – MoneySense

Let’s back up a bit to explain how we got here. When the COVID-19 lockdowns ended in 2022, financial experts warned that the economy would be due for a contraction. That’s partly because of years of massive spending and borrowing by the federal government and historically low interest rates set by the Bank of Canada (BoC), as well as rapid hiring when the world opened up. And there is good reason to ask about Canada’s employment—persistent inflation means that the BoC has been aggressively hiking interest rates since March 2022, and is willing to risk a recession to do so. Plus, Canadian and international companies have started to shed the jobs they created during the pandemic. Headline-making mass layoffs from X, Meta (Facebook and Instagram) and Alphabet (which owns Google) have shaken up the tech industry, stoking fears that other companies would follow. And several have—so far in 2023, Canadian communications giant Bell has laid off 1,300 workers, Qualcomm will lay off 1,258, Canopy Growth has lost 35% of its staff and Shopify reduced its workforce by 20%.

There’s good news, though. So far, the Canadian job market has proved to be more robust than anyone expected. In July, job vacancies decreased by 28.1% year-over-year to 701,300 (the most recent data available). Employment has increased recently, rising by 0.3% in September, Statistics Canada said in its labour force survey. 

Here are some strategies to help you prepare your finances so that you can cope with a job loss—just in case. (Read more on how to prepare for a recession.)

Signs your company may have upcoming layoffs

Often there are warning signs when a company is considering shrinking its workforce. A major one is obviously the economy—in a recession, companies may look for ways to cut costs. What about your place of employment? Have you noticed signs of cost-cutting? Other signs: It keeps missing its earnings targets, its share price is falling, or other companies in the same industry are starting layoffs.

Know your rights when it comes to layoffs

You do have rights if you are laid off. Each province and territory in Canada has its own employment laws governing notice for termination, pay in lieu and other termination processes. Generally speaking, if you are laid off in Canada, your employer must provide you with two weeks’ notice, or two weeks’ severance pay if it fails to give you notice. Some employers provide laid-off employees with a combination of advance notice and severance pay. There are some exceptions to this requirement, when the mandatory notice and pay in lieu of notice do not apply—such as being dismissed for just cause (which is usually serious misconduct), when the layoff is temporary or if the laid-off employee has been working for their employer for less than three months. 

This severance pay should cover a couple of weeks or months of living expenses until you can find another job or switch over to employment insurance (EI).

Fiona Martyn, an employment lawyer at Samfiru Tumarkin LLP, an employment and labour law firm in Toronto, recommends taking your severance package to a lawyer for review before signing anything. Even though you signed an employment contract upon being hired, sometimes the termination clauses are unenforceable, as the law may have changed during your tenure. “What [an employment lawyer] can do is help you negotiate a better severance package which reflects factors like your age, length of service and position. Severance packages help to bridge the [financial] gap until you find a new job,” she says.

That’s exactly what Michael did (last name withheld for privacy reasons). Michael, who lives in Toronto, lost his job at a large tech company in 2019. “I saw the writing on the wall from a mile away,” he says. “I started getting my ducks in a row.” He was disappointed with his settlement offer—the company let him go only weeks before his stock options would have vested, so his total compensation package was much lower than he expected.