CHAUDHRI: Will Trump's tariffs impact Canadian businesses?

Article content

With the weekly uncertainty around how U.S. President Donald trump’s trade war will play out, there are already reports that deal flow in Canada is slowing down and the tariff war is threatening Canadian economic recovery.

Over the last several weeks, I have received many questions about how employers can navigate these uncertain times. Here is a snapshot of some helpful dialogue on the topic:

Q. Our company did a lot of onboarding in the last two quarters of 2024. With the new tariffs we are considering letting some new employees go. Are these employees owed anything if they are terminated within their probationary periods?

A. Employees who have been employed for any period of time (even extremely short notice) may be entitled to some pay on termination. A properly drafted probationary period could limit entitlements to employees however employed must be mindful to pay employees at least their minimum entitlements under employment legislation, like the employment standards act in Ontario.

Q. The constant threat of tariffs has been like watching a tennis match. My small business deals with a lot of manufacturers and depending on how this all plays out my costs of doing business could sky rocket. To ease some of my risk, our company is discussing temporary layoffs of some employees. Is this legal?

A. While employment legislation in Canada typically allows employers to temporarily lay off employees, the best practice for employers to follow is to add a layoff provision to employment agreements. This allows employees some notice that a layoff is possible depending on the needs of the business. Without a layoff clause, some employees may assert a constructive dismissal claim in response to a layoff notice, even if temporary.

Q. We are budgeting the costs associated with downsizing at our company that exports products to countries including the U.S. Are we right to assume that if we pay statutory entitlements we are on side of employment laws? Are there other costs we need to consider?

A. You may not be on side. While employers must pay statutory entitlements on an employee termination, there could be other damages owing to an employee, including additional wages, bonus and benefit continuation, to name a few. The amount owing to a terminated employee will be contingent on whether or not an enforceable contract is in play and contemplates termination.

We apologize, but this video has failed to load.

Try refreshing your browser, or
tap here to see other videos from our team.

Play Video

Q. To cut costs at our company, we are considering changing some of our benefits, including changing our health and dental plan to a more economical model. Are there legal ramifications of doing this?

A. In limited circumstances, yes. Most employers can make changes to employee benefits without much legal consequence. Employers should consider the impact to employees that are on a medical leave, as any reduction in benefits could have a meaningful impact to those individuals. Be cognizant of benefits being removed as employees that rely on them may raise concerns.

Have a workplace question? Maybe I can help. Email me at sunira@worklylaw.com and your question may be featured in a future column.

The content of this article is general information only and is not legal advice.