How to Prepare for Job Loss in Canada: Financial and Career Tips

Financial uncertainty has weighed on many Canadians, and for good reason. Between persistent inflation, higher interest rates and growing concern about tariffs, households are right to worry about potential job losses and slower hiring. Preparing now can make it far easier to handle a downturn if one arrives.

Could tariffs trigger a recession in Canada?

To understand the risk, it helps to look at recent developments. U.S. President Donald Trump publicly discussed imposing tariffs on Canadian imports during his campaign and earlier in his presidency enacted tariffs on Canadian steel and aluminum. Since then, threats of broad 25% tariffs resurfaced after his inauguration. The implementation date has been postponed several times and, at the moment, widespread tariffs are scheduled to take effect on April 2 unless further delays occur.

If large tariffs are imposed and remain in place, economists warn they could significantly damage the Canadian economy. Tariffs act as taxes on imports and would raise costs for U.S. buyers, encouraging them to choose domestic alternatives. That could reduce demand for Canadian products, prompt some manufacturers to relocate operations to the United States and shave several percentage points off Canadian GDP growth. Many experts estimate that a sustained tariff regime could reduce growth enough to push Canada into recession.

How important is the U.S. as a trading partner?

Canada’s economy is heavily tied to the United States. In 2023, exports accounted for roughly one-third of Canada’s GDP and supported millions of jobs, particularly in natural resources and the automotive sector. About three-quarters of Canadian exports go to the U.S., so American tariffs could have a large ripple effect.

Tariffs not only reduce export volumes but also create uncertainty. Increased costs for U.S. buyers, supply-chain shifts and the prospect of plant relocations could lead to job losses in Canada. Estimates suggest that more than a million Canadian jobs could be at risk if substantial tariffs persist for over a year, a scenario that would be deeply disruptive to workers and communities.

Even talk of tariffs can harm business planning and investment. Companies that depend on cross-border trade may delay hiring or investment decisions while they wait for clarity, and many businesses are already adjusting strategies in anticipation of possible tariffs despite shifting timelines.

Below are practical steps you can take now to protect your finances and reduce the impact of a potential job loss.

Signs your company may be planning layoffs

Layoffs often come with advance warning. During an economic slowdown, employers look for ways to reduce costs—so watch for signs such as: the company repeatedly missing earnings targets, a sustained fall in the share price, industry peers announcing cuts, or internal cost-cutting measures. If you notice shrinking budgets, hiring freezes or reduced project work, those can be early indicators that layoffs might follow.

Know your rights when facing a layoff

Canadian employment law varies by province and territory, but there are common protections around notice and pay. Typically, if you are laid off you are entitled to two weeks’ notice or two weeks’ pay in lieu of notice. Some employers offer a mix of notice and severance pay. Exceptions exist—such as dismissal for just cause, short temporary layoffs, or employees with less than three months’ service—so the precise entitlements depend on your situation and local legislation.

Severance or notice pay is meant to cover living expenses for a few weeks or months while you look for new work or apply for employment insurance (EI). Employment lawyer Fiona Martyn of Samfiru Tumarkin LLP recommends having any severance offer reviewed by a lawyer before you sign. Termination clauses in older employment contracts may not reflect current law, and a lawyer can often negotiate a better package based on factors like age, length of service and position.

That approach worked for Michael (surname withheld). After losing his job at a large tech firm in 2019—shortly before his stock options vested—he was disappointed by the company’s initial offer. A one-hour meeting and a strongly worded letter from a lawyer cost him $500 but secured an extra month of severance, far exceeding the legal fee.

How to find an employment lawyer in Canada

If you need legal advice, contact the law society in your province or territory—such as the Law Society of Ontario or the Law Society of British Columbia—for a referral. These regulatory bodies maintain standards for lawyers and can direct you to qualified employment specialists.

When to apply for employment insurance

Employment insurance (EI) supports Canadians who lose their jobs through no fault of their own. EI regular benefits can be available for up to 45 weeks, with a maximum weekly payment equal to 55% of insurable earnings up to a weekly cap (currently up to $650 per week). EI generally begins once any employer-paid severance or notice period has ended.

You must be out of work and without pay for at least seven consecutive days to start receiving EI. Apply for EI as soon as you are laid off—even if you do not yet have all required documents—because Service Canada can place payments on hold if you are receiving severance, and then resume benefits once the severance period ends. If you find a new job before EI starts, you simply cancel the claim.

Three ways to prepare for a possible job loss

Kurt Rosentreter, a senior financial advisor at Manulife, recommends these practical steps to reduce the effects of an unexpected job loss.

1. Keep your skills marketable

Staying employable is your best defence. Keep your LinkedIn profile current, pursue relevant certifications, and maintain your professional network. Regularly updating your résumé and keeping references ready helps you move quickly if you need a new role.

Michael took these steps after noticing trouble at work and had a new job within two months once his severance ran out—so he never needed to claim EI or cut back sharply on spending.

2. Build an emergency fund and consider a standby line of credit

A cash emergency fund covering at least three months of essential expenses gives you immediate breathing room. Keep this money accessible rather than invested. You might also arrange a line of credit you don’t intend to use—say $50,000 to $100,000—so you have a safety net if you face a longer period of unemployment.

Debt should be used cautiously; borrowing to cover temporary shortfalls can help in a crisis if you’re confident in your ability to re-employ quickly, but aim to repay any balances as soon as possible.

3. Rework your debt strategy

Assess your debts and how payments would affect your savings if you lost your job. Avoid relying on high-interest credit cards; consider balance-transfer cards with introductory low rates or consolidating debt into a lower-cost loan or line of credit. If you have a mortgage, ask your lender about temporarily extending amortization or switching to interest-only payments to reduce short-term cash outflows.

Plan now to avoid crisis later

Job loss happens even in stable times, and the prospect of tariffs and a weaker economy only increases the chance of layoffs. Taking practical steps—keeping your skills current, maintaining an emergency fund, understanding your legal rights and preparing your debt—will help you weather a job loss without it becoming a financial catastrophe. With preparation, you’re more likely to emerge in a stronger position and ready for the next opportunity.

Read more about work and salaries:

• How to negotiate a higher salary and come out winning
• Side hustles and self-employment in Canada: taxes, business expenses and more
• How to become a digital nomad—and not go broke
• How to make more money in Canada: six side-hustle ideas