Introduction
As we enter a new year, Canadian employees should be aware of the impending storm that is about to hit their industry. According to a recent article in the Wall Street Journal, the massive downsizing of middle management positions is not just an American phenomenon but also has its roots in Canada. This trend is driven by the relentless pursuit of greater efficiency, higher profits, increased international competition, and the impact of artificial intelligence.
The Rise of Automation
With the increasing use of automation and AI, many companies are reassessing their organizational structures to stay competitive. Middle management positions are often seen as redundant or unnecessary in today’s fast-paced business environment. In an effort to cut costs and boost productivity, employers are eliminating these roles or reducing them to a bare minimum.
The Canadian Context
While the U.S. has been experiencing significant job losses among middle managers, Canada is also facing similar challenges. The decline in productivity under the Liberal government, higher taxes, reduced foreign investment, and the Trump administration’s emphasis on reshoring have created a perfect storm for Canadian employers.
Demotions: A Cost-Effective Solution?
Instead of outright termination, demoting middle managers to more junior roles has become a popular strategy. However, this approach is not without its challenges. In Canada, demotions can be considered constructive dismissals, allowing employees to resign and sue for wrongful dismissal. This reality makes demotions unworkable for most companies.
Advance Notice: A Viable Alternative
One alternative that employers often overlook is providing advance written notice of a demotion or layoff. This approach not only helps reduce costs but also gives employees a reasonable opportunity to find new employment, reducing the employer’s liability.
The Consequences of Layoffs
As an abundance of management layoffs sweeps across Canada, there will be fewer comparable positions available 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.
Conclusion
The middle management cull is a reality that Canadian employers must face head-on. By providing advance notice and exploring other cost-effective solutions, companies can mitigate the impact of layoffs and reduce their financial burden. However, it is essential for policymakers to be aware of this impending crisis and develop strategies to support affected employees and businesses.
Author Bio
Howard Levitt is a senior partner at Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta, and British Columbia. He practices employment law in eight provinces and has written six books, including the Law of Dismissal in Canada.
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