The Year Ahead for Canadian Employees
According to a recent front-page article in the Wall Street Journal, 2024 promises to be a year of significant change for middle management roles. The article highlighted the massive downsizing of middle management positions in the United States, and it’s only a matter of time before Canada follows suit.
The Impact of Artificial Intelligence on Middle Management
The drive for greater efficiency, higher profits, increased international competition, and the impact of artificial intelligence have all combined to eliminate many employees occupying positions between front-line workers and executive teams. In the US, managers now oversee three times the number of employees they did in 2017, according to research firm Gartner.
LinkedIn’s Workforce Confidence Survey
LinkedIn’s Workforce Confidence survey found that close to one-third of employees claim to have bosses who are too stressed to support them. This is a clear indication that the pressure on middle management is mounting.
Declining Productivity in Canada
It’s worse here. Declining productivity under the Liberal government, combined with higher taxes, reduced foreign investment, and the Trump government’s emphasis on reshoring has made the plight of Canadian employers worse than their US counterparts.
The Middle Management Cull Is Coming to Canada
The Wall Street Journal points out that many US employers are demoting their middle managers. However, in Canada, such demotions would be considered constructive dismissal, which would permit the employee to resign and sue as if they had been fired. This makes demotions unworkable for most companies.
Advance Written Working Notice of Downsizing
One alternative seldom used is advance written working notice of downsizing. This makes a lot of sense in the context of demotions where the employer wishes to retain the employee and provides them with advance notice of their demotion. The length of notice for a demotion is identical to that of a dismissal.
Retention through Advance Notice
The purpose of advance notice is to provide an employee, if they don’t wish to accept the change, a reasonable opportunity to find another job elsewhere. If they do find such other employment, it reduces the employer’s liability and eliminates the incentive for employees to stay unemployed longer if they are going to be working anyway in a job that is undesirable because it is coming to an end.
Downsizings Are Coming to Canada’s Middle Management Ranks
Despite the cost of severance, employers will ultimately have no economic choice. An abundance of management layoffs will mean far fewer comparable positions for laid-off employees to secure. This will result in greater severance pay, further worsening the plight of Canadian employers and setting up an unanticipated corporate crisis for the next government to contend with.
Authoritative Insights
Howard Levitt is senior partner of Levitt LLP, employment and labor lawyers with offices in Ontario, Alberta, and British Columbia. He practices employment law in eight provinces and is the author of six books, including "The Law of Dismissal in Canada." His insights offer a unique perspective on the challenges facing Canadian employers.
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