Shopify laying off 20% of staff, slashing severance offers

Less than a year after cutting its workforce by 10 per cent, Shopify is trimming its headcount even further.

In an open letter to staff on May 4, CEO Tobi Lutke said the e-commerce giant is reducing its workforce by approximately 20 per cent and selling Shopify Logistics to Flexport, a supply chain management company.

“For the past year we’ve been subtracting everything that’s in the way of making the best possible product,” Lutke said.

“This is extremely important, because we are heading into a decade of high velocity and massive change. We will require speed, agility, and a great deal of innovation.”

According to reports, Shopify had around 10,000 employees before eliminating 1,000 jobs last summer.

20 per cent of the remaining workers would amount to about 1,800 people.

Impact on Canadian staff

Shopify didn’t disclose how many Canadian employees are affected by the latest round of cuts.

In addition to its headquarters in Ottawa, Ontario, the e-commerce giant has offices in major cities across the country, including Toronto, Waterloo, Montreal, and Vancouver.

According to LinkedIn, Shopify has more than 6,400 workers in Canada.

Major tech layoffs continue

Shopify joins the growing list of major North American tech companies that have announced sweeping layoffs in 2023.

Several big names, including Dropbox, Meta, Amazon, Kyndryl, Alphabet, Dell, Clearco, and Microsoft, are significantly scaling back their staffing levels as they continue to navigate challenging economic conditions.

SEE ALSO
• Employment lawyer on recent tech layoffs and severance
• Layoffs in Canada

Termination agreements for Shopify employees

As part of the layoff announcement, Lutke said affected Shopify employees will:

• Receive a minimum of 16 weeks of severance pay — plus a week for every year of tenure at the company
• Have access to medical benefits, the company’s employee assistance program (EAP), and outplacement services
• Be able to keep all office furniture that was provided by the company (work laptops will need to be returned)
• Have free access to the advanced Shopify plan (for staff looking to take an entrepreneurial path in future)

However, Canadian workers could be owed significantly more compensation than Shopify’s initial offer.

In Canada, non-unionized employees at the e-commerce giant are owed full severance pay when they lose their jobs due to downsizing or corporate restructuring.

This includes individuals working full-time, part-time, or hourly in Ontario, Alberta, and B.C.

Severance can be as much as 24 months’ pay, depending on a number of factors.

LEARN MORE
• Severance for technology industry employees
• Severance for provincially regulated employees
• Severance packages in mass layoffs

WATCH: Employment lawyer Lior Samfiru explains why you are still owed severance if you have been downsized on an episode of the Employment Law Show.

Before you accept any severance offer, have an experienced employment lawyer at Samfiru Tumarkin LLP review it and your employment contract.

We can tell you if what you have been provided is fair and how to get proper severance if it falls short of what you are actually owed.

If you don’t receive the full amount, which happens often, you have been wrongfully dismissed and are entitled to compensation.

Shopify employees hired by Flexport

Flexport employees hired from Shopify Logistics bring their length of service with them.

The logistics company must recognize seniority of employees hired from Shopify — the clock doesn’t reset on their tenure.

If you are fired at a later date, you will be entitled to a severance package based on your total length of service with both companies.

Have your employment contract reviewed

If Flexport offers you a new employment contract during your transition from Shopify, have it reviewed by an employment lawyer at Samfiru Tumarkin LLP.

We can tell you if the contract tries to eliminate your past years of service, carries a termination clause that could limit your severance pay, or gives Flexport the ability to make changes to your job.

If you decline a job offer from Flexport for valid reasons such as changes to your title, position, duties, work location, hours, or pay, you may be eligible for full severance pay from Shopify.

Contact our team to learn more about your rights before refusing employment.

Even without a good reason you can still get severance — but there is a very good chance that you would only receive your minimum entitlements.

LEARN MORE
• Who pays severance when a business is sold in Ontario?
• Sale of business in Alberta: Employee rights
• How does severance work when a B.C. business is sold?

Shopify employees not hired by Flexport

Employees who aren’t hired by Flexport and lose their job are entitled to full severance pay from Shopify Logistics.

The seller of the business is responsible for providing this severance package.