Press Release
77% of Canadian Employers Make Workforce Changes Amid Economic Pressures as U.S. Tariffs Add to Strain, Littler Survey Finds
(October 21, 2026) – Littler, the world’s largest employment and labour law practice representing management, has released its 2026 Canadian Employer Survey Report. The survey finds Canadian employers responding to business and economic pressures—including by pausing hiring, conducting layoffs and increasing automation—while also navigating an evolving regulatory environment, rapid artificial intelligence (AI) adoption, changing workplace expectations and ongoing labour relations challenges.
The report draws on responses from 200 in-house lawyers, C-suite executives and HR leaders at organizations across a range of industries and company sizes.
Economic Pressures and U.S. Tariffs Are Impacting Canadian Workforce Decisions
Challenging economic headwinds are impacting Canadian workplaces, with 77% of respondents taking at least one workforce-related action in response to business or economic pressures over the past year. Paused or reduced hiring was the most common response, cited by 46% of respondents, followed by layoffs or reductions in force (35%) and increased use of automation or AI to reduce labour needs (28%).
U.S. tariff-related disruption is factoring into these decisions. Among employers that took workforce actions, 83% say such disruptions played a role—with 54% saying they contributed to a large or moderate extent.
“Economic uncertainty and trade disruption are clearly influencing workforce decisions, and those impacts could intensify if U.S.-Canada trade tensions escalate further,” said Stephen Shore, Office Managing Partner for Littler’s Canadian offices. “Employers must remain flexible as conditions change, while carefully considering the legal and workforce implications of AI adoption, layoffs and other cost-saving measures.”
New Employment Requirements Test Canadian Employer Readiness
Canadian employers are confronting legal and regulatory pressures, with some more prepared than others to meet a patchwork of new and evolving requirements at the federal and provincial levels. More than half (55%) have updated job postings to address pay transparency requirements and expectations, while 37% have conducted pay equity, compensation or pay-gap reviews.
Progress also varies in response to recent and/or proposed changes addressing forced labour, child labour and human rights risks. Nearly half (48%) of respondents have developed or updated policies, codes of conduct, contractual provisions or governance processes in response to such legislation in Canada—but just 29% have conducted risk assessments or mapping of their operations or supply chains.
“Whether the issue is pay transparency or other emerging requirements, it’s important for businesses to do more than just monitor developments,” said Paul Pulver, a Littler partner in Vancouver. “Employers should be evaluating what the rules mean for their own policies and practices and considering practical changes to guide compliance.”
Québec Employers Navigate French Language and Psychosocial Risk Requirements
Among respondents with operations or employees in Québec, 61% say that complying with French-language obligations presents a moderate or large challenge. Meanwhile, just 40% of Québec employers have developed or updated prevention programs, policies or action plans to address new requirements for managing psychosocial risks in the workplace.
“Québec employers shouldn’t assume that existing policies or smaller headcounts mean they’re covered as workplace regulations evolve,” said Olivia Girouard, of counsel in Montréal. “When it comes to the newer psychosocial risks and other health and safety requirements, employers need to make sure they’re assessing risks, putting preventive measures in place and training their people.”
AI Is Influencing Workforce Decisions as Governance Develops
AI is already affecting how Canadian employers approach workflows and hiring. Nearly half of respondents (44%) have reassessed or are reassessing job responsibilities because of actual or anticipated increases in AI use. More than a third (36%) have reduced or are reducing hiring, while 33% have made or are making workforce reductions.
At the same time, many organizations are still putting formal governance structures in place. Fewer than half of respondents report having a formal workplace AI policy (49%) or a formal review or approval process for AI tools or use cases (42%). By contrast, among U.S. employers surveyed by Littler earlier this year, 68% reported having a formal AI workplace use policy and 55% reported having a formal review or approval process for AI tools and use cases.
In-Office Requirements Bring More Requests for Flexibility and Accommodations
While flexible and hybrid work arrangements remain widespread, half of respondents have increased required on-site workdays over the past two years. Among those employers, 81% report some increase in remote-work requests based on protected grounds, while 91% report more requests based on personal preference. Separately, 59% of respondents report increased requests for leaves or accommodations related to employee mental health.
Employer Preparedness Varies for Union Organizing and Collective Bargaining
The survey shows that unionized employers have fairly high confidence in their ability to respond to escalated bargaining tactics, with 81% saying they are very or moderately prepared. Nonunionized employers show considerably more uncertainty, with just 29% characterizing their organization as very or moderately prepared to respond to potential union organizing activity.
When it comes to managing differences in labour relations requirements and strategy across jurisdictions, employers report similar levels of difficulty within Canada as they do across the Canada-U.S. border. Roughly half (52%) say Canada-U.S. differences present a moderate or large challenge, compared with 44% who say the same about Canadian provinces and territories.
Download Littler’s 2026 Canadian Employer Survey Report
About Littler
With more than 2,000 labour and employment attorneys in offices around the world, Littler provides workplace solutions that are local, everywhere. Our global team and proprietary technology foster a culture that celebrates original thinking, delivering groundbreaking innovation that prepares employers for what’s happening today, and what’s likely to happen tomorrow.
