Oct 14, 2026
When the Canadian government approved an American company’s takeover of Stelco in 2024, the deal came with strings attached: keep Hamilton’s steel jobs. Two years later, layoff notices are going out anyway, and the company insists it hasn’t broken a single promise.
Stelco is now in a public standoff with Ottawa over up to 500 jobs at its plants in Hamilton and Nanticoke, Ontario. The federal government is threatening legal action. Stelco calls the government’s accusations false.
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The fight also tests something many Canadians assume but rarely question: that a government-backed job promise can protect individual paycheques. With U.S. tariffs squeezing manufacturers across the country, the answer matters well beyond Hamilton.
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What is Stelco accused of — and why does it say it’s in the clear?
Ottawa says it’s Stelco who broke its job promises. Stelco says they never promised that they could avoid layoffs.
Cleveland-Cliffs, an Ohio-based steelmaker, bought Stelco in 2024. The federal government approved the deal under the Investment Canada Act (ICA), which regulates foreign takeovers, on the condition that the company accept five years of legally binding commitments.
Industry Minister Mélanie Joly says those undertakings include keeping at least the same number of unionized employees. She argues in a statement to CBC News that the commitments “do not cease to apply because of changing business strategy or market conditions.” CBC also reports that Ottawa sued Stelco’s previous owner, U.S. Steel, over similar commitments in 2009.
Paul Simon, Stelco’s president and general counsel, disagrees. In a letter reported by the Globe and Mail, he wrote that the undertakings “do not stipulate a commitment to avoid layoffs.” The company blames 50% U.S. tariffs on Canadian steel for sales collapsing south of the border.
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Why doesn’t a federal job promise protect individual workers?
The ICA undertakings are an agreement between Cleveland-Cliffs and the federal government. Workers aren’t a party to it.
Ron Wells, president of United Steelworkers (USW) Local 1005, told Global News in an interview that the union never saw the signed agreement. He said both the company and Ottawa had assured workers that employment levels would hold for five years. “In other words no layoffs,” he said.
Even if the federal government wins in court, any penalty or settlement would be negotiated between the government and the company. That process won’t put money in workers’ bank accounts while the layoffs, which CBC reports are rolling out over three weeks, take effect.
How are EI rules different for Canadians who lose their jobs right now?
Recent federal tariff-relief measures make Employment Insurance (EI) more generous than usual.
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In a statement released Aug. 25, 2026, the Department of Finance said it would:
- extend by one year the waiver of the one-week EI waiting period
- extend by one year the rule that allows claimants to collect EI before using up severance or vacation pay
- extend by eight months the extra 20 weeks of benefits for long-tenured workers
That means a worker who loses their job and receives a severance payment may be able to collect EI at the same time, rather than waiting until the severance is used up.
Is a layoff temporary or a termination?
The distinction between layoff and termination shapes what workers are owed. Cleveland-Cliffs CEO Lourenco Goncalves told Global News the company isn’t shutting down Hamilton and needs access to the U.S. market to restore production.
Layoff rules vary by province. Under Ontario’s Employment Standards Act, a temporary layoff generally can’t exceed 13 weeks in any 20 consecutive weeks. Unionized workers, on the other hand, can be laid off longer, but only if they’re recalled within the time set by their collective agreement. Once a layoff exceeds the legal limit, it may count as a termination, which can trigger termination pay and, in some cases, severance.
What to do now
For Canadians working in tariff-exposed industries such as steel, aluminum, autos or forestry, the Stelco fight is a reminder to prepare before a layoff notice arrives:
- Check whether your employment contract or collective agreement allows for temporary layoffs
- Learn how EI works now, including the temporary tariff measures and when they expire
- Build an emergency fund that could cover a stretch on EI-level income
- Treat a Tax-Free Savings Account as your backup cushion before a Registered Retirement Savings Plan, since RRSP withdrawals are taxable and the contribution room doesn’t come back
- Know your lender’s options for deferring or restructuring payments in case your income drops
Ottawa and Stelco can spend months arguing over what a promise really meant. For everyone else, the takeaway is simpler: a commitment made to the government is not the same as a commitment made to you. The best protection is knowing your rights and having savings in place before you need them.
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Leslie Kennedy served as an editor at Thomson Reuters and for Star Media Group, followed by a number of years as a writer and editor and content manager in marketing communications, before returning to her editorial roots. She is a graduate of Humber College’s post-graduate journalism program and has been a professional writer and editor ever since.
