Author: Ezaque Lopes
Gallagher's 2025 Workforce Trends Report Series, based on responses from over 500 Canadian organizations, shows where employers are directing their efforts. Five trends stand out, which reveal practical approaches organizations are implementing now.
1. Balancing cost management with benefits flexibility
Canadian employers are adjusting their benefits packages in response to the continuing rise in healthcare costs. The shift from 100% coinsurance to 80%-85% models has introduced a shared responsibility: Employees have a greater say in their healthcare decisions while employers can manage costs without eliminating coverage.
Health spending accounts (HSAs) are becoming more prevalent. Rather than prescribing specific coverage, organizations provide each employee with a dedicated annual amount they can allocate based on their needs. One employee might use it for physiotherapy, another for a more complex treatment.
GLP-1 drugs for diabetes and weight management are forcing difficult decisions given their cost on top of traditional treatments. Prior authorization and delayed coverage are potential drawbacks, but give organizations time to understand utilization and budget impact before committing.
Mental health is also reshaping disability management. Wellbeing days and flexible leave are examples of this. Traditional return-to-work frameworks, built around physical injuries with clear recovery timelines, still need updating for the realities of mental health recovery.
"What we're seeing in benefits design is a fundamental shift in thinking," says Ezaque Lopes, chief revenue officer at Gallagher. “Cost predictability and employee satisfaction don't have to compete. Design changes like HSAs and adjusted coinsurance models give organizations both financial control and the flexibility employees need. That's the opportunity for 2026."
2. Financial wellbeing as a strategic priority
Source: Gallagher's 2025 Workforce Trends Report Series: Financial Benchmarks.
Financial pressure isn't relenting. The cost of living continues to be felt across all demographics. Workers are looking to their employers for support to help ease the burden.
Retirement savings remain foundational, with 92% of employers identifying this as their most impactful financial wellbeing initiative.
But the approach is broadening.
Employer offerings continue to expand: Half of employers now offer financial planning services or wealth management coaching, while 42% provide financial literacy resources. Yet only 11% enhanced their retirement plans in 2025, with one in three citing the integration of retirement plans within total rewards as a top challenge.
"Financial wellbeing programs are evolving in stages," says Lopes. "First came the awareness that these programs matter. Then came expansion: planning services and education resources. Now we're seeing the next phase: organizations asking how to integrate these programs more strategically into retirement design and total rewards. That's the competitive advantage for those who get there first."
The updated Canadian Association of Pension Supervisory Authorities (CAPSA) guidelines are driving reviews of default investment structures and member education. This kind of regulatory change moves things faster than good intentions alone. Indeed, 70% of employers now say their retirement programs are meeting organizational needs "well" or "very well," compared to 66% in 2024.
Should they expand beyond retirement-only offerings? That's the strategic question for Canadian employers in 2026. With half of employers now offering financial planning support, organizations that address monetary pressures will be more competitive in terms of talent attraction and retention.
3. Using mentorship to build engagement
While 60% of employers in Canada report that their workforce is highly engaged, 48% have a formal strategy to improve it. That gap represents risk. Without a deliberate organizational design approach, engagement levels can drift based on market conditions, management changes or competitive pressures.
Mentorship offers a practical way to boost engagement efforts. Indeed, half of employers now offer these programs, recognizing that these address what compensation can't — the message that "we want to invest in your future." This matters because while remuneration drives 41% of staff attrition, 59% comes from other factors such as career development, management quality or organizational culture.
"For 2026, the opportunity is in integration, not addition," says Lopes. "Most employers already have the building blocks — recognition, feedback, training and mentorship. The competitive advantage comes from connecting these into a formal engagement strategy."
Organizations competing primarily on compensation will always face the risk of being outbid. Those building mentorship programs and clear career pathways create something competitors can't easily replicate. With 36% of employers reporting that career wellbeing has become more important, there's scope to stand out through deliberate investment in people's growth and development.
4. Closing the total rewards communication gap
When it comes to total rewards communication, 47% of employers believe they communicate total rewards effectively. But 35% don't share that confidence. There is clearly a disconnect between what organizations offer and what employees are actually aware of.
Consider an employee evaluating a job offer. They can't recall what their current employer offers for mental health support, parental leave or retirement matching. That's a communication failure that can affect retention. A competitor's offer looks better simply because it's fresh in their mind.
Most communication on benefits follows a predictable pattern: Present the options during enrollment only, employees make their selections and then it all goes quiet.
Employees think about benefits when their child gets sick, when they're planning for retirement and when they're stressed about money. Organizations that excel communicate continuously — responding to life events, maintaining regular connection. That shift drives real impact.
Total rewards communication was a priority for 50% of organizations in 2025, yet only 19% have developed a comprehensive communication strategy.
"For 2026, this represents one of the highest-impact, lowest-cost opportunities available," mentions Lopes. "Better communication doesn't necessarily require more benefits, just helping people understand and use what already exists."
5. Integrating inclusion and diversity into operations
Source: Gallagher's 2025 Workforce Trends Report Series: Talent Benchmarks.
The importance of inclusion and diversity in Canada is there for all to see:
- 82% of employers implemented I&D initiatives in 2025, rising to 92% among large employers.
- 42% pursued I&D initiatives to align with organizational values.
- 18% tied I&D initiatives directly to talent attraction and retention.
Flexible work arrangements are a key component:
- 71% of businesses offer hybrid models, typically 2-3 days onsite.
- 27% provide full location flexibility.
- 50% offer flextime.
Perhaps the biggest challenge is in the execution: maintaining connection when your remote workforce isn't in the same place at the same time. "The 2026 focus is clear," states Lopes. "Organizations that integrate flexible work into their broader inclusion strategy, rather than treating it as a separate benefit, will be better positioned to attract diverse talent and maintain engagement across different work arrangements."
Key strategic opportunities to consider in 2026
- Develop a formal engagement strategy to create structure around retention.
- In addition to retirement, expand financial wellbeing support in other areas to address the immediate cost-of-living pressures.
- Improve total rewards communication for high impact and uptake.
- Integrate flexible work into your broader inclusion strategy.
Plan your workforce strategy
These five trends connect to a central opportunity: Building a people strategy that's both sustainable for the organization and meaningful for employees.
Benchmarking your programs against Gallagher's 2025 Workforce Trends Report data can reveal where you stand relative to other Canadian employers. To learn more and discuss how these trends apply to your organization, contact one of our specialist Gallagher consultants.
