More Canadian Companies Expect Layoffs in 2027 as Severance Packages Shrink

More Canadian companies are preparing for layoffs in 2027, and many have already reduced the severance packages they offer employees.

A new Canadian study released November 3, 2026, found that 58% of surveyed organizations expect layoffs within the next 12 months, while 39% have made their severance policies less generous over the past two years.

The findings come as Canadian workers face growing uncertainty about job security. But there’s something employees need to understand: an employer’s decision to reduce its severance policy doesn’t automatically reduce what it legally owes you.

What Does the New Canadian Layoff Study Reveal?

The 2027 Canadian Severance and Separation Benefits Benchmark Study, conducted by LHH and Censuswide, surveyed 400 HR and business leaders at Canadian organizations with at least 500 employees.

The findings reveal several notable trends:

• 58% expect layoffs within the next 12 months, compared with 36% in the previous 2024 survey.
• 39% have made their severance policies less generous over the past two years.
• 21% now calculate severance without a fixed formula.
• 81% define severance terms in employment agreements.
• 80% offer voluntary departure packages to non-exempt employees.

The study also found that 81% of surveyed CEOs anticipate layoffs, compared with 43% of HR leaders.

These are employer expectations, not confirmed job cuts. The earlier survey also covered a different mix of organizations, so the results aren’t a precise year-over-year comparison.

Can Employers Reduce Severance Packages in 2027?

Companies can change their severance policies, but that doesn’t mean employees lose their legal rights.

An employer might offer two weeks’ pay per year of service, impose a company-wide maximum or introduce a less generous termination policy.

That offer isn’t automatically everything you’re owed.

For non-unionized employees, severance can depend on age, length of service, position, compensation, availability of comparable employment and the terms of an enforceable employment contract. The amount can be as much as 24 months’ pay.

A long-service manager, for example, could be owed considerably more than the amount calculated under an employer’s standard formula.

Learn more about severance pay in Canada and why having your severance package reviewed matters.

What About Voluntary Departure Packages?

The study also found that more employers are offering voluntary departure programs as an alternative to layoffs.

These programs may include severance, retirement incentives or other financial benefits in exchange for employees agreeing to leave.

Voluntary doesn’t automatically mean the package is a good deal.

Employees who accept these offers may be required to sign away their right to pursue additional compensation. Before agreeing, understand how the offer compares with what you could receive if your employer terminated your employment.

Read our guide to voluntary departure packages in Canada.

Facing Layoffs in 2027? Check Your Severance Before Signing

The latest research suggests more large Canadian employers are preparing for workforce reductions. For employees, the concern isn’t just losing a job. It’s accepting less severance than they’re legally owed.

If you’re laid off or offered a voluntary departure package:

1. Don’t sign immediately. Your employer’s deadline doesn’t automatically end your legal rights.
2. Get your full offer in writing. Review salary, bonuses, benefits and other compensation.
3. Have your severance reviewed. Find out whether the offer reflects what you’re actually owed.

Most severance disputes can be resolved through negotiation without going to court.

The employment lawyers at Samfiru Tumarkin LLP represent non-unionized employees in Ontario, Alberta and British Columbia. We’ve helped thousands of employees challenge inadequate severance offers and get the compensation they deserve.

Before you sign, always check first. Contact us for a consultation or call 1-855-821-5900.