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Financial Exigency and Lay-offs

CAUT Policy Statement

The first duty of the academic institution is to ensure that its academic priorities remain paramount, particularly with regard to the quality of instruction and of research, and the preservation of academic freedom. The termination of academic staff appointments should occur only during a state of financial exigency; a state of financial exigency exists when substantial and recurring financial deficits threaten the survival of the institution as a whole. Academic staff lay-offs, contract termination or non-renewal of limited-term contracts should only be considered as a last resort after all efforts have been undertaken to alleviate the financial crisis by rigorous economies in all other segments of the institution, and only after all possible means of improving the institution's revenues have been exhausted.

In matters of financial exigency, the academic staff association should ensure that academic staff are protected by legally binding safeguards which prevent actions being taken on spurious grounds. The collective agreement should define financial exigency and describe the circumstances and procedures governing lay-off of academic staff or cancellation of academic staff contracts.

Only the board of governors may declare a financial exigency and only after an open and transparent investigation by a fact-finding commission, jointly appointed by the board and the academic staff association, has confirmed the existence of a bona fide financial exigency. A bona fide financial exigency should only arise through accounting for all the institution’s resources, not just the academic or salary budget. A bona fide financial exigency should not be declared for an individual academic unit or program.1

The collective agreement should contain explicit and precise language on the following: 

If the board believes that a financial exigency exists it should be required to immediately notify the academic staff association and provide the association with all relevant financial information.

The jointly appointed fact-finding commission should determine the validity and scope of the financial crisis and explore all alternatives to prevent the declaration of a financial exigency.

The board of governors may declare a financial exigency only if the fact-finding commission determines that there is a bona fide financial exigency.

Any reduction of the budget for salaries and benefits of bargaining unit members should not exceed the amount of the reduction specified by the fact-finding commission. The board should make every effort to prevent lay-offs through voluntary leaves of absence, retirement incentives and other cost reductions. There shall be no new academic or administrative appointments for the duration of the financial exigency. The reappointment of a member shall not be considered a new appointment.

The order of lay-off should be specified in the collective agreement.  Categories of employees should be identified based on type of appointment, and not based on academic discipline, program or administrative unit.  In all cases, individuals holding tenured, continuing appointments should be the last category of academic employees subject to lay-off. Within each category, lay-offs should follow the criteria outlined in the collective agreement.

The employer should offer positions elsewhere in the institution to members who are identified for lay-off or non-renewal of contract.

Members who are laid off should be entitled to the following:

a. at least 18 months’ notice
b. severance pay based upon years of service
c. accumulated sabbatical entitlement in the form of paid leave or one-time payment
d. pension and insurance (life, medical, dental, disability) coverage at the institution's expense until they have secured alternative full-time employment
e. full access to scholarly facilities, including office and laboratory space, library and computer services for five years or until alternative academic employment is secured. Members, their spouses and dependants should receive tuition waivers for courses taken at the institution during that period
g. right of first refusal for at least five years for any vacant position in the institution for which that member is qualified or for which they may become qualified with reasonable training.

Contract academic staff (full or part-time) whose limited-term contracts expire during a financial exigency should retain a right of recall consistent with the seniority and job security provisions of the collective agreement.

All grievances arising out of the procedures designed to deal with a state of financial exigency should be subject to the grievance process in the collective agreement.

Approved by the CAUT Council, May 1978;
Revised, May 1985;
Revised, June 2001;
Approved by CAUT Council, November 2001;
Revised, March 2009;
Approved by the CAUT Council, November 2009;
Approved by the CAUT Council, April 2024.


1.   Program redundancies should occur only for academic reasons and never for financial reasons and should never involve the layoff of academic staff.