Collage HR Trends for Q3 2026:

The first half of 2026 gave HR teams plenty to keep up with. Economic uncertainty continued, AI moved further into everyday work, and employers remained cautious about hiring and headcount.

As we move through Q3, there are some encouraging signs in the Canadian labour market. At the same time, HR teams are being asked to think more carefully about who they hire, how work is changing, and how they manage difficult workforce decisions.

Here are three trends we’re watching.

1. Hiring is picking up, but employers are still cautious

For much of the past year, hiring has felt slow. Candidates have faced longer searches, employers have been more selective, and many organizations have been hesitant to add headcount.

There are finally some signs that this is shifting.

Statistics Canada reported that employment increased by 75,000 in July, while the national unemployment rate fell to 6.4%, its lowest level in two years. Since April, employment has increased by 181,000, largely driven by full-time work.

Ontario alone added 52,000 jobs in July. More unemployed Canadians are also finding work compared with this time last year, although the job-finding rate remains below its pre-pandemic average.

For employers, this creates an interesting hiring environment. There is still a relatively large candidate pool, but organizations shouldn't assume great candidates will remain available indefinitely. At the same time, finding the right skills continues to be a challenge. People First HR's 2026 recruitment outlook highlights skills shortages, changing candidate expectations, and increasingly complex hiring needs as issues employers are navigating this year.

Our Recommendation: If hiring has been on hold, revisit your workforce plan before Q4. Look at roles that have remained open, work that existing employees have absorbed, and positions you may need to fill heading into 2027. For difficult-to-fill, professional, or leadership positions, consider whether your internal team has the capacity and network to manage the search or whether additional recruitment support could help.

A slower hiring market shouldn't mean a slower hiring process. Clear job descriptions, realistic requirements, organized interviews, and timely communication still matter.

2. AI is changing jobs, not just making them faster

For the past few years, the conversation around AI at work has mostly focused on productivity. Can AI write this faster? Can it summarize that meeting? Can it automate this administrative task?

In Q3 2026, the conversation is becoming more complicated.

The Bank of Canada has started looking at the early relationship between AI and Canada's labour market. While there isn't evidence of a broad AI-driven transformation of employment yet, the research points to an important question for employers: what happens when AI changes individual tasks faster than it changes entire jobs?

We're already seeing this play out in workplaces. Work that once took several hours might take 30 minutes. Employees can use AI to analyze information, create first drafts, summarize documents, or automate repetitive administrative work.

That can make teams much more productive. It can also change what organizations need from certain roles, particularly at the entry level.

If some of the work junior employees traditionally used to learn a profession can now be automated, organizations need to think about how those employees develop the judgement and experience required to eventually become senior employees and managers.

Our Recommendation: Don't treat AI exclusively as a cost-cutting or productivity tool. Look at how it changes individual roles and career paths. Identify which tasks can reasonably be automated, which skills are becoming more valuable, and where employees still need hands-on experience to develop.

HR teams should also establish some basic structure around how AI is used. If you're still figuring out where to start, we recommend this HR Foundations webinar.

The goal shouldn't simply be doing the same work with fewer people. It should be figuring out how people and technology can work together more effectively while not sacrificing quality.

3. Restructuring and terminations need more thoughtful planning

Hiring may be showing signs of improvement, but many organizations are still navigating difficult workforce decisions and restructuring. 

Many Canadian companies are still managing uncertain economic conditions, changing technology, shifting priorities, and pressure to operate more efficiently. In some cases, that means role changes. In others, positions may be eliminated altogether.

These decisions are difficult for everyone involved, and the way a business handles a termination matters.

There are practical considerations before a termination meeting even happens, including documentation, final pay, benefits, access, communication, and legal requirements. People First HR's guide on how to manage an employee termination provides a useful overview of how employers can prepare for and conduct these conversations thoughtfully.

Cost is another consideration. For Ontario employers, the Ontario Severance and Termination Pay Calculator can help estimate minimum statutory termination pay, vacation pay on termination pay, and statutory severance pay under the ESA. Actual employee entitlements can be more complicated, so employers should seek appropriate advice before making decisions.

But the process shouldn't end with the termination meeting.

Employees are navigating a significant career disruption, while remaining employees are watching how their former colleagues are treated. Providing career transition and outplacement support can help departing employees navigate their next step while helping organizations manage difficult workforce changes more thoughtfully.

Our Recommendation: Plan terminations with the same care you put into hiring. Make sure managers are prepared for the conversation, understand your legal obligations, and think about what support employees will receive afterwards.

For organizations considering larger workforce changes, do the planning before decisions are announced. Understand the costs, communication plan, operational impact, and employee experience. A termination might happen in a short meeting, but its impact can last much longer.

What we’re watching heading into Q4

Q3 has brought some positive signs for Canada's labour market along with new tariff uncertainty. We're unlikely to return to the hiring environment we had a few years ago.

Organizations are still being careful about headcount. AI is changing the amount and type of work teams can accomplish. At the same time, employers need to think more deliberately about both sides of the employee lifecycle: how they bring people into the organization and how they support them when they leave.

Heading into Q4, the organizations that stand out won't necessarily be the ones hiring the most or adopting AI the fastest. They'll be the ones making thoughtful workforce decisions, communicating them clearly, and understanding what their business actually needs next.