Last Updated: January 1, 2026
The largest federal workforce reduction in a generation is reshaping Ottawa’s public service, with 40,000 positions targeted for elimination by 2028—and tens of thousands of employees now facing difficult decisions about their futures.
If you work for the federal government in the National Capital Region, 2026 brings unprecedented uncertainty. Budget 2025 announced sweeping cuts that will reduce the public service from approximately 368,000 to 330,000 positions over three years. The Early Retirement Incentive (ERI) programme has already sent information letters to 68,000 eligible employees, while departments like ESDC and Natural Resources Canada have begun issuing affected status notices. Whether you are considering early retirement, preparing for potential layoffs, or simply trying to understand your rights, this survival guide provides the information you need to protect your career and your family.
Key Highlights
TL;DR: The federal government is eliminating 40,000 positions by 2028, with 10,000 already cut through attrition. An Early Retirement Incentive programme offers reduced penalties for those close to retirement age. ESDC faces the largest cuts (up to 4,000 positions), while the return-to-office mandate may increase to 5 days weekly by 2027. Know your Workforce Adjustment Directive rights and consult your union immediately if you receive an affected status notice.
| Quick Facts | Details |
|---|---|
| Total Positions Cut | 40,000 by 2028 |
| Current Progress | ~10,000 cut through attrition |
| ERI Letters Sent | 68,000 employees |
| Largest Affected Dept | ESDC (4,000 positions) |
| Current RTO Requirement | 3 days/week (4 for executives) |
| Potential RTO by 2027 | 5 days/week |
| Key Union Contacts | PSAC, CAPE, PIPSC |
Understanding the Job Cuts
The November 2025 federal budget outlined the most significant reduction to Canada’s public service since the 1990s deficit-cutting era. Treasury Board President Anita Anand confirmed that the government intends to reduce the federal workforce from approximately 368,000 employees to 330,000 by the 2027-2028 fiscal year.
The Scale of the Reduction
The 40,000 position reduction represents roughly 11% of the entire federal public service. To put this in perspective for Ottawa-area employees:
- The National Capital Region employs approximately 42-46% of all federal workers
- This means roughly 17,000-18,000 of those eliminated positions could affect Ottawa-Gatineau
- The reduction equals roughly the combined workforce of several major federal departments
How the Cuts Are Being Implemented
The government has emphasized that it hopes to achieve most reductions through attrition—employees who retire, resign, or leave voluntarily without being replaced. As of late 2025, approximately 10,000 positions have already been eliminated through this natural turnover.
However, PSAC and other unions have warned that attrition alone cannot achieve the 40,000 target, meaning involuntary layoffs are increasingly likely for some departments. The government has acknowledged this reality by activating the Workforce Adjustment Directive in several departments and introducing the Early Retirement Incentive programme.
What This Means for Job Security
Unlike private sector layoffs that can happen with minimal notice, federal employees benefit from significant protections under collective agreements and the Workforce Adjustment Directive (WFA). However, these protections do not guarantee continued employment—they guarantee a process and certain benefits if your position is eliminated.
What To Do Now: Log into MyGCHR and review your current classification, tenure status, and years of service. These details determine your WFA entitlements if your position is declared surplus.
Early Retirement Incentive Programme
The Early Retirement Incentive (ERI) programme represents the government’s primary voluntary tool for achieving workforce reductions. In December 2025, Treasury Board sent information letters to approximately 68,000 employees who may be eligible.
How the ERI Works
Under the current federal pension plan, employees who retire before age 60 without meeting the “85 factor” (age plus years of pensionable service equals 85) face a 5% annual reduction to their pension. A 55-year-old with 25 years of service, for example, would see their pension reduced by 25%.
The ERI programme modifies this penalty structure:
| Factor | Standard Early Retirement | Under ERI |
|---|---|---|
| Pension Penalty | 5% per year before age 60 | Reduced or eliminated |
| Eligibility | Meet minimum criteria | Received ERI letter |
| Decision Timeline | Open | Expected 1-year window |
| Bridge Benefit | Standard calculation | Enhanced in some cases |
Who Received ERI Letters
The 68,000 employees who received ERI information letters generally meet these criteria:
- Age 50 or older with at least 10 years of pensionable service
- Currently employed in the core public administration
- Position may be at risk of elimination or in a department undergoing restructuring
Receiving a letter does not mean your job is being cut—it means you may have the option to leave voluntarily with reduced pension penalties.
Critical Considerations Before Accepting
The Professional Institute of the Public Service of Canada (PIPSC) has cautioned members to carefully evaluate ERI offers before accepting:
- Calculate your actual pension: Use the Pension Centre’s tools to compare your ERI pension versus waiting until full retirement age
- Consider health benefits: Retirees under 60 may not qualify for the Public Service Health Care Plan until they reach pension eligibility
- Factor in bridge benefits: The bridge benefit that supplements your pension until age 65 is calculated differently under early retirement
- Review your financial plan: Consult a financial advisor who understands federal pensions before making a decision
Legislative Status
As of January 2026, the ERI programme is pending legislative approval. Parliament must pass enabling legislation before the programme can be formally implemented. Employees who received letters should monitor updates from Treasury Board and their unions.
What To Do Now: If you received an ERI letter, request a personalized pension estimate from the Pension Centre. Compare your projected pension under ERI versus continuing to work. Do not make decisions based solely on the information letter.
Which Departments Are Affected
While the workforce reduction affects the entire federal public service, some departments face disproportionately large cuts. Understanding which organizations are most affected helps employees assess their personal risk.
Employment and Social Development Canada (ESDC)
ESDC faces the largest absolute reduction, with cuts initially planned at 2,000 positions now expected to reach 4,000. This represents roughly 10% of ESDC’s workforce and affects multiple branches:
- Service Canada centres across the NCR
- Benefits processing units
- Labour programme staff
- Policy and programme development
Many ESDC employees in Ottawa work at the Place du Portage complex in Gatineau, the Service Canada Centre on Slater Street, and various regional offices.
Natural Resources Canada (NRCan)
Natural Resources Canada has already issued affected status notices to employees, with 219 workers receiving formal notification and over 400 positions identified as at risk. The cuts affect:
- Scientific and technical staff
- Policy analysts
- Administrative positions
- Regional offices
The Canadian Association of Professional Employees (CAPE) has been particularly active in representing NRCan employees facing job loss.
Shared Services Canada (SSC)
Shared Services Canada, headquartered in Ottawa, faces significant restructuring as the government reviews IT and technology spending. Specific numbers have not been publicly confirmed, but employees in technology-related positions should monitor departmental communications closely.
Other Affected Departments
| Department | Status | Impact Level |
|---|---|---|
| Immigration, Refugees and Citizenship Canada | Workforce adjustment active | High |
| Environment and Climate Change Canada | Under review | Medium-High |
| Transport Canada | Attrition-based reductions | Medium |
| Agriculture and Agri-Food Canada | Restructuring announced | Medium |
| Statistics Canada | Hiring freeze | Low-Medium |
How to Assess Your Risk
Your risk level depends on several factors:
- Department restructuring status: Is your department under workforce adjustment?
- Position classification: Are similar positions being eliminated?
- Programme funding: Is your work funded by temporary programmes ending?
- Tenure status: Indeterminate employees have more protection than term or casual workers
- Performance history: Strong performers may have more options for redeployment
What To Do Now: Request a meeting with your manager to understand your branch’s workforce planning. Review recent departmental communications about restructuring. Check if your department has activated the Workforce Adjustment Directive.
Return-to-Office Mandate Changes
Alongside workforce reductions, the return-to-office (RTO) mandate continues to evolve, creating additional pressure on employees who relocated during the pandemic or who rely on flexible work arrangements.
Current Requirements
As of January 2026, most federal employees must work on-site at least 3 days per week. Executives (EX classification and above) are required to be present 4 days weekly. These requirements took effect in September 2024 and have been strictly enforced in most departments.
Anticipated Changes
Multiple sources indicate the government is considering further RTO expansion:
| Timeline | Requirement | Status |
|---|---|---|
| Current | 3 days/week (4 for EX) | In effect |
| July 2026 | 4 days/week (possible) | Under consideration |
| January 2027 | 5 days/week (possible) | Rumoured |
City of Ottawa Municipal Comparison
The City of Ottawa provides context for where federal RTO may be heading. Starting January 1, 2026, City of Ottawa employees are required to work 5 days per week in-office. This local precedent has been cited by federal officials as evidence that full-time office return is workable.
Impact on Workforce Reduction
Unions including PSAC have argued that aggressive RTO mandates are being used as a “soft layoff” strategy—pushing employees to voluntarily resign rather than comply with return requirements. This is particularly impactful for:
- Employees who moved to other cities during remote work periods
- Parents and caregivers who rely on flexible schedules
- Employees with disabilities who benefited from telework accommodations
- Workers facing long commutes to downtown Ottawa or Gatineau
Accommodation Requests
If you cannot comply with RTO requirements due to a disability, family status, or other protected ground, you have the right to request accommodation. Document your request in writing and work with your manager and union representative.
What To Do Now: Review your current telework agreement and understand what happens if RTO requirements increase. If you have accommodation needs, begin the formal accommodation process now rather than waiting for policy changes.
Your Rights Under Workforce Adjustment
The Workforce Adjustment Directive (WFA) provides significant protections for indeterminate federal employees whose positions are eliminated. Understanding these rights is essential if you receive an affected or surplus notice.
Key WFA Provisions
| Protection | What It Means |
|---|---|
| Affected Status | Your position may be eliminated; you have 6 months to find alternative employment |
| Surplus Status | Your position will be eliminated; WFA entitlements are activated |
| Priority Entitlement | Surplus employees receive priority consideration for open positions |
| Transition Support | Financial support to help transition including education allowances |
| Severance Options | Choice between guaranteed reasonable job offer or cash payout |
The 6-Month Affected Period
When your position is declared affected, you enter a 6-month period during which:
- Your department must make reasonable efforts to find you another position
- You receive priority consideration for positions at your level or below
- You can apply for internal positions across the federal government
- Your pay and benefits continue unchanged
Surplus Notification Rights
If no alternative employment is found during the affected period, you may be declared surplus. At this point, you choose between two options:
Option A - Guarantee of a Reasonable Job Offer:
- The government guarantees to find you a position at your salary level
- You may be required to relocate
- Retraining support is available
- Extended priority period
Option B - Cash Payout:
- Transition Support Measure (TSM) payment
- Based on years of service
- Waiver of priority entitlements
- May include additional negotiated benefits
Priority Entitlements
Priority status means your application must be considered before external candidates for positions you are qualified to fill. Priority levels include:
- Surplus Priority: Highest priority for employees declared surplus
- Leave of Absence Priority: For employees returning from leave
- Layoff Priority: For employees who were laid off
Calculating Your Entitlements
Your WFA entitlements depend on:
- Years of continuous service
- Salary level at time of surplus declaration
- Choice between Option A and Option B
- Negotiated provisions in your collective agreement
What To Do Now: Download and read the complete Workforce Adjustment Directive. Contact your union representative to understand how WFA applies to your specific situation.
What Unions Are Doing
Federal public service unions have been actively opposing the workforce reductions through multiple channels. Understanding union activities helps members know what support is available.
Public Service Alliance of Canada (PSAC)
PSAC, representing over 230,000 federal workers, has been the most vocal opponent of the cuts:
- Filed grievances challenging workforce adjustment implementation
- Organized rallies and information sessions across the NCR
- Lobbied parliamentarians to oppose Budget 2025 measures
- Demanded transparency about which positions will be eliminated
- Challenged the ERI programme’s adequacy
PSAC National President Chris Aylward has called the cuts “devastating for public services Canadians depend on” and warned that reduced staffing will lead to longer wait times for benefits, passports, and other services.
Canadian Association of Professional Employees (CAPE)
CAPE represents economists, translators, and other professional employees. CAPE has focused on:
- Legal challenges to workforce adjustment processes
- Protecting members at NRCan and other affected departments
- Advocating for fair ERI terms
- Providing individual member support and representation
Professional Institute of the Public Service of Canada (PIPSC)
PIPSC represents scientists, IT professionals, and other technical workers. Their efforts include:
- Highlighting the impact of cuts on scientific capacity
- Opposing Shared Services Canada restructuring
- Providing financial planning resources for members
- Negotiating enhanced transition supports
How to Engage with Your Union
| Action | How to Take It |
|---|---|
| Join your local | Contact your union’s regional office |
| Attend meetings | Check your union’s event calendar |
| File a grievance | Work with your steward if rights are violated |
| Access resources | Log into your union’s member portal |
| Get representation | Request a steward for meetings with management |
What To Do Now: Confirm your union membership is current and your contact information is updated. Attend the next local meeting to understand what actions are being taken in your department.
Financial Planning During Uncertainty
Job uncertainty requires proactive financial planning. Even if you do not ultimately lose your position, preparing for multiple scenarios reduces stress and improves outcomes.
Immediate Steps
1. Build Emergency Savings
Financial advisors typically recommend 3-6 months of expenses in easily accessible savings. Given the uncertainty, consider building toward 6-9 months if possible.
2. Review Your Pension Status
Understanding your pension position helps you evaluate ERI offers and plan for various retirement scenarios:
- Request a current pension estimate from the Pension Centre
- Calculate your “85 factor” to understand early retirement penalties
- Review your survivor benefit elections
3. Assess Your Debt
Reducing debt improves your flexibility if income changes:
- Focus on high-interest debt first
- Consider whether mortgage pre-payments make sense
- Review lines of credit and credit card balances
Understanding Your Pay and Benefits
If you are declared surplus, you have rights to continued pay during the adjustment period. However, terms vary:
| Scenario | Pay Continuation |
|---|---|
| Affected Period | Full pay for 6 months |
| Surplus - Option A | Pay continues until placement |
| Surplus - Option B | Transition payment based on service |
| Lay-off | Severance per collective agreement |
Resources for Financial Planning
Several organizations offer free or low-cost financial planning support:
- Credit Counselling Ottawa: Free budgeting and debt counselling
- Federal Employees’ Credit Unions: Member financial planning services
- Your collective agreement benefits: Some include financial planning assistance
- Pension Centre workshops: Understanding your federal pension
Tax Implications
Severance payments, transition support measures, and pension cash-outs have significant tax implications. Before accepting any payout:
- Consult with a tax professional
- Understand RRSP contribution room for deferrals
- Consider timing of payments across tax years
What To Do Now: Schedule a meeting with a financial advisor who understands federal pensions and severance. Request a comprehensive pension estimate and calculate various retirement scenarios.
Alternative Employment Options in Ottawa
Ottawa’s economy extends beyond the federal government. Understanding alternative employment options helps you plan for various outcomes.
Ottawa’s Diverse Employment Sectors
Technology Sector
Ottawa’s tech industry employs over 70,000 workers and continues to grow. Major employers include:
- Shopify (headquarters in Ottawa)
- Ciena
- Nokia
- Mitel
- BlackBerry QNX
Many federal employees have transferable skills valued in tech, particularly in IT, project management, policy analysis, and communications.
Healthcare
Ottawa’s healthcare sector offers stable employment:
- The Ottawa Hospital
- CHEO
- Bruyère Continuing Care
- Royal Ottawa Mental Health Centre
- Numerous clinics and private practices
Post-Secondary Education
Universities and colleges employ thousands in the NCR:
- University of Ottawa
- Carleton University
- Algonquin College
- La Cité
- St. Paul University
Provincial Government
Ontario’s provincial government maintains significant presence in Ottawa, particularly in health and education ministries.
Skills Translation
Federal experience translates to private sector opportunities:
| Federal Skill | Private Sector Application |
|---|---|
| Policy Analysis | Business Strategy, Consulting |
| Programme Management | Project Management (PMP) |
| Financial Management | Corporate Finance, Accounting |
| IT Administration | IT Management, DevOps |
| Communications | Marketing, PR, Content Strategy |
| Bilingualism | Client Services, Translation |
Professional Development Opportunities
If you anticipate transition, consider developing marketable skills:
- Project Management Professional (PMP) certification
- Cloud computing certifications (AWS, Azure, Google Cloud)
- Data analysis and visualization
- Digital marketing
- Change management
Networking in Ottawa
Building a professional network improves job search outcomes:
- Attend Ottawa Board of Trade events
- Join professional associations in your field
- Connect on LinkedIn with industry professionals
- Consider informational interviews in sectors of interest
For more information about federal employment, see our complete guide to federal government jobs in Ottawa.
What To Do Now: Update your resume and LinkedIn profile. Identify 2-3 sectors or employers that interest you and research their hiring processes. Consider whether any professional development would strengthen your candidacy.
FAQ
Q: I received an ERI information letter. Does this mean I’m being laid off?
Receiving an ERI letter does not mean your job is being eliminated. The letter indicates you may be eligible to voluntarily retire early with reduced pension penalties. You are under no obligation to accept, and keeping the letter has no impact on your employment status. Approximately 68,000 employees received these letters as part of the government’s effort to reduce the workforce through voluntary departures.
Q: What is the difference between “affected” and “surplus” status?
Affected status means your position has been identified as potentially redundant, but you have a 6-month period to find alternative employment within the public service. Surplus status means your position will definitely be eliminated and you must choose between Option A (guaranteed reasonable job offer) or Option B (transition payment). The affected period precedes surplus status.
Q: How much severance will I receive if I lose my job?
Severance and transition payments depend on your years of service, salary level, and whether you choose Option A or Option B under the Workforce Adjustment Directive. Option B payments typically range from a few weeks to over a year of salary depending on service. Request specific calculations from your compensation advisor and union representative.
Q: Can I be laid off if I’m an indeterminate employee?
Yes, indeterminate status provides significant protections but does not guarantee permanent employment. If your position is eliminated and no alternative employment is found during the adjustment period, you may ultimately be laid off. However, you retain rights to priority consideration for future positions and are entitled to severance under your collective agreement.
Q: What happens to my pension if I’m laid off before age 55?
If you are laid off before becoming eligible for an immediate pension (typically age 55 with sufficient service), you have several options: leave your pension in the plan as a deferred annuity, transfer the commuted value to a locked-in RRSP or LIRA, or receive cash (with significant tax implications). Consult the Pension Centre for personalized guidance.
Q: Will the return-to-office requirement increase to 5 days per week?
This is currently uncertain. The government has indicated it may increase RTO requirements to 4 days by mid-2026 and potentially 5 days by 2027, but no formal announcements have been made. The City of Ottawa’s move to 5 days starting January 2026 may influence federal policy.
Q: I cannot comply with RTO due to a disability. What are my options?
You have the right to request accommodation under the Canadian Human Rights Act. Submit a formal accommodation request to your manager documenting your needs and supporting medical information. If accommodation is denied, consult your union representative about filing a grievance or human rights complaint.
Q: Which departments are safest from cuts?
No department is entirely safe, but departments with essential public-facing services, national security functions, or recently expanded mandates may face smaller proportional cuts. Immigration, public safety, and revenue collection typically maintain staffing during reductions, though no guarantees exist.
Q: Should I accept an ERI offer or wait?
This is a highly personal decision depending on your age, service, financial situation, health, and career goals. Generally, the ERI makes more sense for employees close to retirement eligibility who were already planning to leave within a few years. Consult a financial advisor and your union before deciding.
Q: How can I increase my chances of being redeployed?
Expand your job search beyond your current department and classification. Update your GC Jobs profile, apply for internal positions, volunteer for projects that build transferable skills, and network within the public service. Bilingual employees typically have more redeployment options.
Q: What support is available for job searching and career transition?
Departments must provide transition support to affected employees, which may include resume writing assistance, interview coaching, career counselling, and access to job postings. Your collective agreement may include additional benefits. Employee Assistance Programmes (EAP) also offer career transition support.
Q: Can my union stop the job cuts?
Unions cannot prevent the government from eliminating positions, but they can ensure the Workforce Adjustment Directive is properly followed, negotiate enhanced transition supports, challenge unfair processes through grievances, and advocate for alternatives to layoffs. Stay engaged with your union to support these efforts.
Q: What is the priority entitlement and how long does it last?
Priority entitlement gives you preferential consideration for open positions matching your qualifications. Your application must be assessed before external candidates. For surplus employees, priority typically lasts one year but may be extended. Priority status is a valuable benefit that significantly improves redeployment chances.
Q: Should I start looking for work outside the federal government now?
Diversifying your options is prudent regardless of your current risk level. Updating your resume, networking, and understanding alternative employment does not commit you to leaving and positions you to respond to various scenarios. Many employees explore options while remaining open to redeployment within the public service.
Final Summary
The 40,000-position reduction to Canada’s public service represents a significant challenge for Ottawa’s federal workforce. While the government emphasizes attrition and voluntary departures through the Early Retirement Incentive programme, many employees face genuine uncertainty about their futures.
Your most important steps are understanding your rights under the Workforce Adjustment Directive, engaging with your union, and proactively planning for multiple scenarios. Whether you ultimately retire early, redeploy to another position, or transition to the private sector, informed preparation improves outcomes.
Stay connected to your union, monitor departmental communications, and do not hesitate to seek professional financial advice when evaluating significant decisions like ERI acceptance. Ottawa’s economy offers alternatives beyond the federal government, and skills developed in public service transfer to many private sector roles.
For comprehensive information about federal employment, visit our guide to federal government jobs in Ottawa and stay updated through Ottawa local news.
Sources: Treasury Board of Canada Secretariat, PSAC, PIPSC, CAPE, Government of Canada Pension Centre, Budget 2025 documentation
