Federal support available to avoid tariff layoffs

The federal government is expanding the Employment Insurance Work-Sharing Program in response to ongoing tariff disputes with the United States. These Work-Sharing “special measures” will be in place from March 7, 2025, to March 6, 2026.

Work-sharing overview

The Work-Sharing Program assists employers in avoiding layoffs when they face a temporary decrease in business activity for reasons beyond their control. If program requirements are met, an employer, employees (or their union, if any) and Service Canada enter into a multi-party Work-Sharing agreement under which:

• Available work is shared equally among employees.
• Employment Insurance (EI) benefits are provided by the federal government as income support to employees who are working reduced hours, mitigating their income loss.

A key requirement of an application for a Work-Sharing agreement is that an employer must not only disclose evidence of decreased business activity, but also of a “recovery plan” outlining a path toward normalized working hours for affected employees.

Where requirements are met, the Work-Sharing Program is one option to address a shortfall of available work – an option that keeps staff in the building in anticipation of improved business demand in the future.

Work-Sharing Program amendments in response to tariffs

In response to the current trade dispute with the United States, the federal government has expanded access to the Work-Sharing Program from March 7, 2025, to March 6, 2026.

Under the revised eligibility criteria, employers experiencing a decline in business activity due to the threat or application of US tariffs may be eligible for Work-Sharing special measures if they:

• Have been operating in Canada for at least one year (as opposed to the normal two-year requirement);
• Operate either year-round or on a seasonal or cyclical basis (seasonal/cyclical businesses are typically excluded);
• Are a private or publicly held company, or a non-profit/charitable organization experiencing a reduction in revenue levels as a direct/indirect result of tariffs (non-profits are typically excluded except in narrow circumstances, and public sector employers are typically excluded);
• Experience a decrease in overall work activities over the past six months (normally the decrease must be at least 10%, but this minimum does not apply in response to tariffs);
• Have at least two eligible employees in a proposed Work-Sharing unit.

Employee eligibility has also been expanded. Normally, only “core” employees are eligible to participate, meaning permanent full-time or part-time employees. Under the tariff response rules, employees who are assisting in employer recovery efforts, or who are seasonal or cyclical employees, are also eligible. 

Additionally, the normal 60% cap on utilization (the percentage of lost hours that will be eligible for EI payments) has been removed, meaning EI benefits can make up for more lost hours.

Finally, the maximum duration of Work-Sharing agreements has been extended. Normally Work-Sharing agreements must run between 6 to 26 weeks with a possible extension up to 38 weeks. There is a mandatory “cooling-off period” between successive agreements equal to the length of the prior agreement. Under the new rules, agreements may be extended up to 76 weeks and the cooling-off period has been waived. 

Takeaway 

The Work-Sharing Program has proved useful in times of economic disruption. During the COVID-19 pandemic, there was a huge increase in program uptake under similar special rules developed in response to pandemic-related business pressures.  Similar usage may arise under the new tariff-related special rules.

Employers whose businesses have or may be impacted by US tariffs should consider whether the Work-Sharing Program and its new expanded eligibility may help avoid layoffs and retain staff until business conditions improve.