Oct 7, 2026
Up to 500 Ontario steelworkers are about to learn the hard way what a broken job promise actually costs. It’s not just some abstract number on a corporate balance sheet — it’s next month’s mortgage payment and this week’s groceries.
Ottawa has given the American owner of Stelco a short deadline to explain how it will keep the job commitments it made when it bought the Hamilton steelmaker. If it doesn’t pay up, a courtroom battle is almost guaranteed. The company claims the trade war completely changed the playing field, but Ottawa’s stance is simple: a deal is a deal.
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That standoff could drag on for months, possibly years. If you’re affected, or working in an industry exposed to Trump’s tariffs, play it safe: budget as though you won’t be returning to this job, but take the necessary steps to keep your recall rights active.
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What is Ottawa demanding from Stelco’s owner?
Industry Minister Mélanie Joly sent a letter on Monday, Oct. 5, to Cleveland-Cliffs, an Ohio-based steelmaker. She gave the company five business days to share a plan to maintain jobs at Stelco or face potential legal action. Cleveland-Cliffs bought Stelco for $3.4 billion back in 2024. To get federal approval under the Investment Canada Act, they promised to keep all unionized jobs intact and hang on to the vast majority of non-union staff.
Cleveland-Cliffs CEO Lourenco Goncalves says the cuts are justified by the Canada-U.S. trade war. Joly disagrees. She wrote that the commitments “do not cease to apply simply because business strategy or market conditions have changed.”
If Ottawa doesn’t like what the company has to say, things head straight to court. As Joly’s letter points out, a superior court judge could force the company to stick to its promises, slap them with heavy fines or even order them to sell off the business entirely.
A court fight wouldn’t be a quick fix. Sandy Walker, co-chair of the competition and foreign investment review group at the global law firm Dentons, told CBC News the company could argue that circumstances beyond its control, such as U.S. tariffs, prevented it from meeting its undertakings. There’s plenty of precedent for a drawn-out legal battle, too. When Industry Canada dragged Stelco’s former owner, U.S. Steel, to court over job cuts back in 2009, that fight dragged on for two years before settling.
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How many Stelco jobs are at risk, and for how long?
The company said up to 500 workers across its Hamilton and Nanticoke, ON, facilities could be affected, with production concentrated at its Lake Erie Works in Nanticoke. According to union leaders, about 350 of those affected workers are based in Hamilton.
Stelco said it expects a significant number of affected Hamilton employees to be absorbed at Lake Erie Works. The union’s count is much lower. Ron Wells, president of United Steelworkers (USW) Local 1005, said only about 40 laid-off Hamilton workers have been offered a position in Nanticoke.
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Wells told CBC News he expects Stelco to push forward with the layoffs anyway, despite Ottawa leaning on them. As for how long people will be out of work? That’s anyone’s guess. “Christmas ain’t that far away, and we have no idea the duration of these layoffs,” Wells told CBC News.
Is a temporary layoff the same as losing your job?
Legally speaking, no, a layoff isn’t the same thing as being fired. Under Ontario law, a temporary layoff can run up to 13 weeks in a 20-week window. It can be stretched to 35 weeks out of 52, but only if the employer meets specific conditions. If a layoff runs longer than the law allows, the employer is considered to have terminated the worker’s employment. That can trigger termination pay and severance pay.
For unionized workers, there’s one more big fork in the road. If a unionized worker’s layoff lasts 35 weeks or more, and the collective agreement provides a recall period of at least 35 weeks, the worker may choose to take ESA termination and severance pay or keep their recall rights, but not both, according to employment law firm Emond Harnden.
How much income will EI actually replace?
For most claimants, Employment Insurance (EI) pays 55% of average insurable weekly earnings, up to a maximum of $729 a week in 2026, which are taxable.
Here’s an example: a worker earning $90,000 a year makes about $1,730 a week before tax. EI would replace $729, or roughly 42% of that gross pay.
Tariff relief helps soften the blow a bit. Back on Aug. 25, Ottawa announced it was waiving the standard one-week EI waiting period for another year. It also extended for a year the measure that lets workers collect EI without first using up severance or vacation pay. The 20 extra weeks of benefits for long-tenured workers were extended by eight months.
What to do now
- Apply for EI right after your last day of work, even if you expect to be recalled
- Reach out to your local union rep in writing. Make sure you get full clarity on your recall rights, how your benefits work during the layoff, and what’s happening with any Lake Erie Works offers
- Don’t sign anything that affects your recall or severance rights before getting advice from your union or an employment lawyer
- Look into retraining programs funded by the Canada-Ontario Workforce Tariff Response. Ontario says the initiative will help 75 Hamilton-area workers and jobseekers pivot into growing, in-demand careers
- Rebuild your monthly budget around EI income, not your old paycheque
- Stash your severance or unused vacation pay in a dedicated account — it’ll act as a crucial cushion until your next income stream kicks in.
- Treat a Registered Retirement Savings Plan (RRSP) withdrawal as a last resort, because withdrawals are taxed as income
Whatever Cleveland-Cliffs tells Ottawa this week, a court battle won’t pay this month’s bills. The workers who come through this best will likely be the ones who file early, know their rights and stretch every dollar.
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Amy Tokic is an SEO content editor for Money.ca. She holds a B.A. in Communications from the University of Windsor. Amy is an award-winning author and has been writing professionally for 15 years, publishing articles in the lifestyle and health sectors.
