Building the Workforce Needed for Sustainable Manufacturing Growth

Manufacturers across Ontario are facing a common challenge: growth is outpacing the available supply of skilled workers. Expansion, retirements, succession pressures, and increased competition for experienced tradespeople are making it harder to build and maintain the workforce needed to support production and long-term growth. 

For many manufacturers, labour shortages are no longer simply a recruitment issue. They are a business planning issue. A vacant skilled position can lead to overtime costs, contractor premiums, production delays, and increased pressure on existing employees. When critical knowledge leaves with a departing employee, the impact may extend well beyond the cost of recruitment. 

Manufacturers that attract and retain talent most effectively often look beyond compensation alone. Employment agreements, incentive plans, succession planning, scheduling flexibility, and workforce development strategies can all support talent attraction and retention while reducing operational risk. As competition for skilled labour continues, strategic employment planning has become an important tool for supporting growth. 

Recruitment Decisions Shape the Cost Base 

Since January 1, 2026, Ontario's Employment Standards Act, 2000 has imposed new requirements on publicly advertised job postings by employers with 25 or more employees, subject to exceptions. These include rules about disclosing expected compensation and whether artificial intelligence is used in the hiring process. 

In a competitive labour market, compliance is only the starting point. A published pay range may expose compression between a new hire and experienced operators or technicians. Before posting, leadership should compare the proposed range with current pay and decide how to manage any gap. Filling one vacancy should not create several retention problems. 

The posting, offer, and employment agreement should be treated as a single package. Complete the agreement before acceptance and ensure it reflects the actual role, including duties, scheduling, incentives, confidentiality, and termination. Courts have scrutinized agreements presented after an employee accepted the job or started work. If a later agreement gives the employee nothing new in return, it may not provide the expected protection. 

Retention Spending Should Reduce Operational Dependency 

Retention bonuses and training investments should reduce operational dependency, not merely postpone a resignation. Leadership should ask whether the spending will extend tenure, transfer critical knowledge, create a trained backup, or improve coverage across shifts. 

A sound incentive plan states how an award is earned, when it vests, and what happens on resignation, leave, dismissal, shutdown, or ownership change. Under the Supreme Court of Canada's decision in Matthews v. Ocean Nutrition Canada Ltd., an employee may be entitled to compensation for an incentive that would have been earned during the common law notice period unless the governing language clearly removes that entitlement. These terms directly affect the severance budget. 

Manufacturers should also avoid treating a non-compete as the main protection for a critical role. Ontario generally prohibits non-compete agreements, subject to narrow exceptions. Confidentiality and non-solicitation terms can help, while cross-training, access controls, and documented processes provide practical protection against disruption. 

Where Organizations Commonly Lose Leverage 

Employers often wait for a retention problem before updating employment terms. If the plant depends on one maintenance lead or production supervisor, that means negotiating when the business can least afford disruption. Promotions, raises, transfers, and incentives create natural opportunities to update an existing agreement, provided the employee receives something of real value in exchange for new restrictions. 

Unilateral changes carry their own risk. A material reduction in compensation, responsibility, or status, or a significant change to hours, shifts, or location, may amount to constructive dismissal at common law. In a unionized facility, the collective agreement and bargaining obligations determine the path, and an individual arrangement may lead to a grievance. 

Labour shortages also tempt managers to postpone performance conversations. Unresolved issues affect output, safety, morale, and the employees who carry the extra load. Accommodation requests require individualized review under Ontario's Human Rights Code. Clear escalation rules help ensure that performance, accommodation, and dismissal decisions are reviewed before a manager commits the company. 

An Ontario Manufacturing Example 

Consider an Ontario parts manufacturer that promotes its only experienced maintenance technician. A manager promises a permanent day shift and a retention bonus by email. The formal agreement arrives after the promotion, adds a broad non-compete, and provides no new benefit. Six months later, the company moves the employee to a rotating night schedule and revises the bonus. The employee leaves for a competitor. 

The company may now face a constructive dismissal claim, a bonus dispute, and an unenforceable non-compete. It also has no trained successor, so overtime and downtime begin before the legal dispute is resolved. Earlier planning could have aligned the promotion, scheduling flexibility, incentive terms, and succession plan. A properly timed agreement, staged incentive, and cross-training would not eliminate risk, but they could keep the plant operating if the employee left or took an extended leave. 

Executive Actions to Take This Quarter 

• Identify roles without trained backup and estimate the exposure using overtime, contractor cost, downtime, delayed orders, and training time. 

• Compare hiring ranges with current compensation and complete employment agreements before candidates accept. 

• Use planned promotions, raises, and transfers to review existing terms while fresh consideration can be provided. 

• Test incentives against departure, leave, shutdown, and ownership change, and connect them to knowledge transfer or succession. 

• Require cross-functional review before material changes to pay, duties, shifts, status, or location. 

Manufacturers that build talent attraction, retention, and succession planning into their broader business strategy are better positioned to grow, maintain production capacity, and compete in an increasingly challenging labour market.  

Strategic employment planning cannot eliminate labour shortages, but it can help organizations attract skilled workers, retain critical knowledge, and reduce disruptions when workforce changes occur. By aligning employment strategy with operational objectives, manufacturers can build the workforce needed to support sustainable growth. 

Reach out to a member of Lerners’ Employment and Labour Law team to build a plan that reflects your business, workforce, and operational risk.