By OptiVal Editorial Desk
When orders slow down, most small business owners face the same ugly choice: lay people off now and hope to rehire later, or keep everyone on payroll and burn cash. There is a third option. The Work-Sharing Program Canada runs through Employment Insurance lets you cut everyone’s hours instead of cutting heads, and EI picks up part of the wages for the hours not worked. If your business is feeling the U.S. tariffs, the rules are the most generous they have ever been: agreements can run up to 76 weeks, and the tariff special measures now run to March 31, 2028.
What the Work-Sharing Program actually is
Work-Sharing is a three-party agreement between you, your employees, and Service Canada. Everyone in the unit agrees to work fewer hours and share the available work. Each participant must see at least a 10% reduction in normal weekly earnings, and employees collect EI for part of the income lost on the hours not worked, at the standard EI rate of 55% of insurable earnings.
The point is retention. You keep trained people on payroll and avoid the cost of layoffs, severance disputes, and rehiring when demand returns.
Under the normal rules, an agreement runs 4 to 26 weeks, with a possible 12-week extension for a 38-week maximum. Agreements must start on a Sunday to line up with the EI payment cycle.
The tariff special measures: what changed and who qualifies
The federal government introduced temporary special measures for tariff-affected businesses in March 2025 and has extended them twice since. The official program page on canada.ca now confirms the measures run to March 31, 2028, and the program has been rebranded as the Workforce Retention and Retraining Program, Work-Sharing stream.
You may be eligible if tariffs have reduced your business activity, or if you are adapting your business because of tariff impacts and plan to provide training and recovery measures to your workforce during the agreement. The flexibilities are significant:
- Agreements up to 76 weeks, roughly double the normal 38-week maximum, with extensions possible if the downturn lasts longer than expected.
- No cooling-off period between successive agreements while the measures are in place, so you can renew without a gap.
- One year in operation instead of the normal two, which opens the door to younger companies.
- Non-profits and charities with tariff-linked revenue declines can apply, a group normally excluded.
- Seasonal and cyclical employers are included, and the normal requirement of at least a 10% drop in work activity over six months does not apply.
- Utilization above 60% is allowed, so EI can cover a bigger share of lost hours than the normal cap permits.
- Employee eligibility extends to seasonal or cyclical staff and to employees helping with your recovery efforts, not just permanent year-round staff.
You need at least two EI-eligible employees in the work-sharing unit who agree to the reduced schedule. That is a low bar: this is not a program reserved for large manufacturers.
The new Workforce Retention and Retraining Program: training money added
On August 25, 2026, the federal government announced a $7.5 billion package of new and enhanced supports for workers and businesses hit by U.S. tariffs. Its centrepiece for employers trying to avoid layoffs was the new Workforce Retention and Retraining Program, which folds EI Work-Sharing and the Retraining Grant (formerly the Worker Retention Grant) into one program.
The practical addition is training funding. Employers in the program are eligible for up to $1,000 per participant to cover training and administrative costs during reduced-work periods. The logic is straightforward: if your people are working fewer hours anyway, use the slack to upskill them. Training tied to your tariff adaptation plan, new markets, or new processes fits the program’s intent.
Layoffs are expensive in ways owners underestimate. Between severance obligations under Ontario’s Employment Standards Act, recruiting and training replacements, and the productivity lost while new hires get up to speed, replacing an experienced employee routinely costs several months of salary. Work-Sharing spreads a smaller pain across the whole team instead of concentrating a large one on a few people, and the training funding turns idle hours into an investment.
A quick example of the math
Say a 12-person shop supplying parts to a U.S. customer sees orders drop by a third. Instead of laying off four people, it puts the production team on a 30% hour reduction under a Work-Sharing agreement.
Your wage bill for that unit drops roughly 30%. Each employee keeps 70% of normal pay from you, plus EI at the standard 55% rate on the hours lost. Nobody is severed, and when orders recover you ramp back to full hours with the same crew. Under the tariff measures that arrangement can run up to 76 weeks, with training funding available to cross-train staff during quieter weeks.
Who should be looking at this now
Work-Sharing fits a temporary, measurable drop in business activity where you expect work to return. If the decline is permanent, honest restructuring is the better path. If you are in one of these positions, it deserves a serious look:
- Manufacturers or exporters whose U.S. orders have softened under tariff pressure.
- Suppliers to tariff-hit industries (auto parts, steel and aluminum fabrication, food processing, machinery) seeing second-order slowdowns.
- Seasonal or cyclical businesses that now qualify under the expanded rules.
Work-Sharing applications roughly doubled in 2025, with about four in five citing tariffs. Service Canada has recent, repeated practice processing tariff-related applications.
How to apply, and the details that trip people up
Applications go to Service Canada, and the agreement is three-way: you, your employee representative (and the union, if there is one), and Service Canada all sign on. Practical points:
- Agreements can only start on a Sunday, so plan around the EI payment cycle.
- Everyone in the unit must genuinely agree to the reduced schedule; you cannot impose it unilaterally.
- Document the tariff link: lost orders, cancelled contracts, or cost increases. The special measures require the decline or the adaptation effort to be attributable to tariffs.
- Have a recovery plan. The program assumes the business recovers, and the tariff flexibilities expect you to be adapting, training, or pivoting, not just waiting.
Start the conversation with Service Canada before you are drafting layoff notices. The application takes time to process, and the program works best when it prevents layoffs rather than following them.
The bottom line
With the tariff special measures running to March 31, 2028, 76-week agreements, no cooling-off period, and up to $1,000 per participant in training funding under the new Workforce Retention and Retraining Program, the terms have never been better. If tariffs have dented your order book, run the numbers on reduced hours before you run the numbers on layoffs.
Not sure which programs you qualify for? We help small businesses find funding and prepare applications. Book a free consultation, or run your numbers through our funding eligibility calculator. Our consulting rate is $125 per hour, HST extra. The official program details are on the canada.ca Work-Sharing page, and you can browse more guides in our Learn hub.
