Tariff Pressures Could Change Severance Package Expectations in Canada
- Aug 12, 2025
- 2 min read
A Volatile Economic Forecast
The Financial Post warns that increasing U.S. tariffs on Canadian exports could ripple through our entire economy—from rising production costs to slowed growth and job losses, particularly in trade-intensive industries like automotive, manufacturing, and resources.
Bank of Canada projections now flag heightened risks: persistent unemployment, supply chain disruptions, inflation, and weakened business prospects add urgency to the situation.
Impact on Severance Packages
Canadian employment law doesn’t always extend notice periods simply because a downturn exists—what matters is how that downturn affects availability of similar employment, a core Bardal factor. In Zoldowski v. Strongco, the Court explicitly took judicial notice of the economic climate in the Greater Toronto Area and Southern Ontario and extended the notice period due to the difficulty of finding comparable work
We’re hearing from employers across Ontario who are struggling with high costs and softer demand. Many employers are terminating employees, due at least in part to the uncertainty in the market and the increased costs to operate.
Political Context: Trade Lagging Behind
While some nations diversify and secure new trade partnerships amid global volatility, or secure trade deals with the US, Canada under the Carney government appears unable to unwilling to do either one. With little sign of momentum in negotiation outcomes, some worry Canada may fall behind in a rapidly shifting global trade landscape.
From an employment standpoint, Canadians are bearing the consequences of weak governance and a Prime Minister who seems to prioritize international appearances and symbolic gestures over addressing real the needs of his constituents.
What This Means for Notice Periods & Severance Packages
If uncertainty stays elevated and job opportunities remain thin, future courts may once again refer to cases like Zoldowski to justify extending reasonable notice. That could mean greater severance liabilities for employers—and larger severance packages for workers in tough markets.
