Canada's Middle Management Jobs at Risk: A Warning from Expert Howard Levitt

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The Year Ahead for Canadian Employees

As we step into the new year, a pressing concern looms large on the horizon for Canadian employers. A recent article in the Wall Street Journal has foretold a massive downsizing of middle management positions, and it’s only a matter of time before this trend reaches our shores.

The Drive for Efficiency and Profit

The relentless drive for greater efficiency, higher profits, and increased international competition has led to a significant shift in the way companies operate. With artificial intelligence (AI) playing an increasingly prominent role, many middle management positions are becoming redundant. This is not a new phenomenon; research firm Gartner has reported that U.S. managers now oversee three times as many employees as they did in 2017.

The Productivity Gap

Declining productivity under the Liberal government has exacerbated the situation, resulting in a widening gap between Canadian and American employers. Higher taxes, reduced foreign investment, and the Trump administration’s emphasis on reshoring have further worsened the plight of Canadian employers. In contrast to their U.S. counterparts, who are demoting middle managers with relative ease, Canadian companies face an uphill battle due to the stringent labor laws.

The Cost of Severance

One alternative that is seldom used in Canada is providing advance written working notice of a downsizing. This option offsets severance costs by dollar for dollar when it comes to wrongful dismissal damages. Despite this benefit, most employers are unaware of this option, and new clients often express surprise when I recommend it to them.

Advance Notice: A Viable Solution

Advance notice makes perfect sense in the context of demotions where the employer wishes to retain the employee and is providing them with advance notice of their demotion. The length of notice for a demotion is identical to that of a dismissal, which serves as a reasonable opportunity for the employee to find new employment elsewhere.

Consequences of Downsizing

An abundance of management layoffs will result in far fewer comparable positions being available for laid-off employees to secure. This will lead to increased severance pay, further exacerbating the plight of Canadian employers and setting up an unanticipated corporate crisis for the next government to contend with.

A Call to Action

As we head into the new year, it’s essential for employers to be aware of this impending trend and take proactive steps to mitigate its effects. By providing advance notice and implementing cost-saving measures, companies can minimize the financial burden and ensure a smoother transition for affected employees.

About the Author

Howard Levitt is the 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 has authored six books, including "The Law of Dismissal in Canada."