It’s still early, but an HR leader and an employment lawyer look at what could lie ahead on the federal labour landscape
In the wake of recent federal byelections that handed Prime Minister Mark Carney a narrow Liberal majority, HR leaders may be wondering what this new political reality could mean for federal labour and employment law.
Employment lawyer David Whitten of Whitten and Lublin LLP says early federal moves raise concerns about the broader environment in which employers operate. “My headline is I don't think it bodes well for government spending or for employment in Canada,” he says, suggesting that it translates into questions about the cost of terminations, the availability of talent, and the stability of key government labour programs.
Whitten views the Carney government as largely extending its predecessor’s approach. “What we've seen so far is more of the same under Carney as what we saw under Trudeau, and what I mean by that is just giving money away in an attempt to garner votes,” he says.
As an example, he points to the government’s pilot project for employment insurance (EI) implemented in March 2025 that eliminated the one-week waiting period after the end of receiving severance pay. “Under this pilot program, the government eliminated the waiting period and they don't account for any severance payments, that means you can be terminated and immediately start collecting EI even if you're receiving a severance from your employer,” he says. “So it actually made it more profitable for an employee to be terminated than when they were employed, because now they get to double-dip with EI and a severance — and this pilot project is still in play until October of this year.”
Whitten frames the change as damaging for both public finances and labour‑market functioning and he believes that for HR leaders, the worry is that a majority government can extend or entrench this design without needing to compromise with opposition parties.
Cuts to the civil service, pressure on service delivery
Alongside EI reform, the Carney government has signalled an intent to shrink the federal workforce. Whitten welcomes tackling bloat but is wary of a blunt approach. “[Carney has] talked about cutting all these jobs and I applaud that initiative as a general proposition,” he says. “But what we're hearing now is that the civil service in certain instances is going to be so bare after all of these terminations and these people now collecting severance from the government, but also eligible for EI at the same time.”
Whitten warns that public-sector downsizing, paired with richer income supports, could leave departments under‑resourced while former employees face little urgency to return to work. “So we're going to have under-resourced government departments and people who were terminated that aren't eager to get back into the workplace because they can collect the EI and severance at the same time,” he says. “Now he doesn't even have to pass legislation with the assistance of other parties, he can continue on this trajectory where we're undermining the whole purpose of EI programs and all the while cutting people when the some of these departments are already threadbare.”
Immigration tightening and the talent pipeline
Immigration and temporary foreign workers is another area where a majority government could reshape the talent landscape, and Whitten says he worries about tighter pathways to permanent residency for lower‑wage and care workers. “It's making it harder for people to get permanent resident status, and I can speak from my own personal experience — I have a nanny from the Philippines who's been working here for the last three years now and has been told that she may have to wait seven years before she's eligible for [permanent resident status.” For HR leaders, extended uncertainty for foreign workers makes long‑term planning more complex, he adds.
In addition, Whitten says that many temporary foreign workers are “filling jobs that Canadians don't want to do,” and he believes that extended delays can push them out of Canada altogether. “The harder we make it for them to get permanent residency status and the longer we make them wait, the greater the chances that they're going to just give up and leave.,” he says, adding that sectors such as agriculture, care, construction, and hospitality may face renewed labour shortages.
By contrast, Michelle Dulmadge, Executive Vice‑President of HR, at pipeline and infrastructure firm Surerus Murphy, underscores potential benefits from stronger guardrails for vulnerable workers that the newly-minted Carney majority could bring related to restrictions it’s already implementd. “We’ve utilized temporary foreign workers in the past, especially if they have unique and specialized skill sets,” says Dulmadge. “But I think that the government putting restrictions or requirements around those workers, potentially has a benefit.”
For Dulmadge, ethical recruitment and employment remain central regardless of which party governs. “At the end of the day, we want to see that there are not just regulations around it, but that we're ensuring that we're bringing in people who are being paid fairly, that they're entering the country legally,” she says. “We've seen that with some of the modern slavery requirements of companies to make sure that we’re ensuring that our workforce isn’t being taken advantage of, especially because they may be marginalized.”
Legislation only part of the labour law landscape
A majority government has limited room to change the overall legal‑risk landscape, because much of Canadian employment law is judge‑made, says Whitten. “There’s only so much that [Carney] can do to make us competitive on a labour market factor, bcause a lot of the rights and obligations in the employment world are driven by the common law of Canada, the judge-made law,” he says. “Our legislation sets the minimum standards, but the rest of it is by virtue of court decisions.” He points to recent court decisions that have repeatedly undermined contractual severance limits and termination clauses, increasing the cost and uncertainty of terminations for employers and making Canada “an extremely expensive jurisdiction to operate in” compared with US employment‑at‑will norms, he says.
From Dulmadge’s vantage point, the new majority hasn’t yet produced a visible federal labour‑law agenda, as Carney’s focus has been on the economy and trade. “It'll be interesting to see how it plays out, as I haven't really seen that they've been forecasting anything related to federal employment or labour laws,” she says. “Right now, the focus has absolutely been on our international relations, the cost of fuel, and those kind of things.”
That relative quiet doesn’t allow employers stand still, says Dulmadge. Dulmadge says the political environment itself demands new levels of agility from HR. “In our changing political environment in Canada and abroad, it’s happening so rapidly that employers have to stay on top of those changes and even try to anticipate to some extent where things are going to go, because you just have no idea,” she says. “And we've seen things not just change rapidly, but do ‘180s’ where you're one way and now significantly in another direction.”
With Carney’s majority still fresh, Dulmadge takes a cautious approach to her expectations around federal labour law reforms. “It's hard to say right now, because of inflation and the economic forecast — by lifting the excise fuel tax, he’s trying to triage that area right now.”
There haven’t yet been any proposed changes recently to the Canada Labour Code, but Whitten expects some will be coming. “If there are any amendments to this legislation that will facilitate more Liberal votes, they will do that at the expense of prudent expenditure of taxpayer dollars,” he says. "They haven't taken a run at anything that I'm aware of, but I expect it'll be more of the same as things go forward.”
