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Canadian employers are expected to pare back the bonuses they give employees at this time of year given the ongoing economic uncertainty, employment experts say.
“There’s just this level of nervousness and reticence and unease, so I do not see employers throwing cash around unnecessarily this year,” says Tara Parry, director of permanent placement services at Robert Half Canada. “I think employees should be ready for bonuses that are less than last year.”
Ms. Parry points to research Robert Half did last year showing the amount of holiday bonuses handed out were below expectations – and that was before U.S. President Donald Trump’s tariffs started to hit businesses this year.
In November and early December last year, Robert Half Canada polled 1,000 hiring managers, 95 per cent of whom said they planned to award holiday bonuses, and 45 per cent said they intended to increase bonus amounts over the previous year.
But when the organization recently surveyed 1,500 Canadian professionals about their 2024 bonus, 55 per cent said they received less than the previous year or no bonus at all, and just 17 per cent got more than expected.
Ms. Parry explains that when the data was first collected “[Justin] Trudeau was still prime minister and we hadn’t even had any of these big conversations around tariffs or the Federal budget crisis,” she says. “It’s what the market told us at that point, and it was wrong. That’s not what actually happened.”
Robert Half decided against doing another poll of Canadian hiring managers about holiday bonus intentions this year given the how volatile the economy is today.
“Nothing is predictable anymore,” Ms. Parry says, citing the on and off tariff talks between Canada and the U.S. in recent weeks.
Research from rewards solution provider Normandin Beaudry also suggests employees could be disappointed with their holiday payouts this year. In its latest employer survey, two-thirds anticipated either below-target or no year-end bonus payouts for 2025. Though the year-end bonus is distinct from the holiday bonus, the two tend to follow the same trend line, says Normandin Beaudry senior principal Darcy Clark.
“Forty per cent of companies said they are looking to tighten up costs and that’s in hiring freezes, spending on corporate events and other programs,” he says. “If companies are looking to cut costs, holiday bonuses would be in scope as well.”
Mr. Clark warns even steeper bonus cuts could come next year if Canada’s economy continues to struggle.
Not since the initial outbreak of the pandemic in 2020 have Canadian employers expressed as much interest in pulling back their compensation spending, Normandin Beaudry’s polling shows.
But Mr. Clark notes salary and bonus levels also increased more than the historical average in the post-pandemic years amid surging inflation that led to higher cost of living for most Canadians. Given the highly competitive talent marketplace, many employers were paying more to retain staff.
He says companies have started to pull back on their employee spending because of concerns about the economy.
“It’s not that ‘retain at all costs’ approach anymore,” he says. “It’s: ‘Let’s be strategic with our spend and our programs, tightening things up a little bit compared to what we’ve seen the last four or five cycles.”
Mr. Clark recommends companies that are making changes to their holiday bonus program be transparent about their decision, especially if the amount is less than last year.
“Nobody wants a surprise,” he says. “You want to try to level set employees and give them enough runway and understanding in terms of why those decisions were made from a bonus – or no bonus – perspective.”