Temporary Layoff in Ontario: What Employees Should Know

Your employer tells you that you are being laid off temporarily. They say it is just for a little while, that things will pick up, and that they plan to bring you back. You are told not to worry.

But should you be worried? Possibly, yes.

Temporary layoffs in Ontario are legally more complicated than most people realize. The rules around them depend on your employment contract, how your employer handles the layoff, and what you do in response. This article explains what a temporary layoff actually means in Ontario and what your rights may be.

What Is a Temporary Layoff?

A temporary layoff is when your employer stops your work and your pay for a period of time, with the stated intention of recalling you when things improve. It is different from being fired, at least on the surface. The employer is not saying the job is gone permanently. They are saying it is on hold.

The problem is that Ontario's common law has generally not recognized a unilateral right for employers to lay off employees. In other words, unless your employment contract or a specific agreement specifically allows for a temporary layoff, your employer may not have the right to impose one on you without your consent.

What Ontario's Employment Standards Act Says

Ontario's Employment Standards Act, 2000 does set out rules for temporary layoffs. Under the Act, a temporary layoff can last up to 13 weeks in any 20-week period. It can be extended to up to 35 weeks in a 52-week period in certain circumstances, such as when the employer continues to pay benefits during the layoff.

If a layoff exceeds these time limits without the employee being recalled, the Employment Standards Act treats the employee as having been terminated, which may trigger entitlements to termination pay and, in some cases, severance pay.

However, and this is an important point, just because the Employment Standards Act sets out rules for temporary layoffs does not necessarily mean that every employer has the right to impose one. The Act sets out minimum standards, but it does not override an employee's common law rights in all circumstances.

Does Your Contract Allow for a Layoff?

The first thing to look at is your employment contract or offer letter. Does it contain language that expressly allows your employer to place you on a temporary layoff? If it does, and if that language is clear and was agreed to upfront, it may give your employer a stronger argument that the layoff was permitted.

If your contract says nothing about layoffs, or if you never had a written contract at all, the situation is more complicated. In many cases, courts in Ontario have found that imposing a temporary layoff without contractual authority or the employee's consent amounts to constructive dismissal, which is a significant legal finding with real consequences for both sides.

Constructive Dismissal and Temporary Layoffs

Constructive dismissal is the legal concept that applies when an employer makes a fundamental, unilateral change to your employment that you have not agreed to. Being told you no longer have work and will not be paid is, in many cases, one of the most significant changes an employer can make.

If a temporary layoff amounts to constructive dismissal, you may have the right to treat your employment as having been terminated and pursue a claim for notice or severance pay. Whether this applies to your situation depends heavily on the specific facts, including your contract, your length of service, your role, and how the layoff was handled.

This is not a determination you should make on your own. If you believe you may have been constructively dismissed through a temporary layoff, you should speak with an employment lawyer before deciding how to respond.

What Happens If You Accept the Layoff?

How you respond to a layoff matters legally. If you accept a layoff without objecting, there is a risk that a court could find that you agreed to the change, which could affect your ability to bring a constructive dismissal claim later.

This does not mean you need to immediately quit your job or file a claim the moment you are laid off. But it does mean that if you want to preserve your legal rights, you may want to communicate in writing that you are not accepting the layoff as a legitimate change to your employment, and that you are complying under protest while you seek legal advice.

Getting this step right matters, and doing it incorrectly can create problems. You should speak with a lawyer before sending anything to your employer.

Recall Rights and What Happens at the End of a Layoff

If your employer recalls you to work within the time limits under the Employment Standards Act, and you return, the layoff is generally treated as having ended. If you refuse a recall without a reasonable explanation, it could affect your entitlements.

If the layoff exceeds the statutory time limits without a recall, the Employment Standards Act may deem your employment to have been terminated. In that case, you may have entitlements to termination pay under the Act, and potentially severance pay depending on your circumstances and the size of your employer's payroll.

Your common law entitlements, meaning your right to reasonable notice of termination, may be separate from and greater than what the Employment Standards Act provides on its own. An employment lawyer can help you understand the difference and what you may be entitled to.

A Few Practical Reminders

• Read your employment contract carefully and look for any language about layoffs or changes to your hours and pay.

• Keep records of when the layoff started, what you were told, and any communications with your employer.

• If you want to object to the layoff, do it in writing and promptly, but speak with a lawyer first about how to do this properly.

• Do not assume that because your employer called it temporary, it is legally permitted.

• Do not wait too long before getting legal advice. Delays can sometimes affect your options.

A temporary layoff can feel like a pause, but legally it may be something more. Knowing where you stand before you decide how to respond can make a real difference to the outcome.

FREQUENTLY ASKED QUESTIONS

Q: My employer laid me off and said it is temporary. Do I have to wait to see if they recall me?

A: You do not necessarily have to wait and see. Whether you can treat the layoff as a termination and pursue a claim, rather than waiting for a recall that may never come, depends on the specific facts of your situation. Factors like your employment contract, the length of the layoff, and how your employer communicated the change all matter. If you wait too long without taking any steps, it could affect your position. Speaking with an employment lawyer sooner rather than later is generally a good idea so you understand your options while they are still available to you.

Q: My employer never mentioned layoffs in my contract. Can they still lay me off?

A: The absence of a layoff provision in your employment contract can work in your favour. Ontario courts have generally held that unless an employment contract expressly allows for temporary layoffs, an employer may not have the right to impose one without the employee's agreement. If your employer laid you off without that authority, it may amount to constructive dismissal. The analysis depends on the specific facts, so you should speak with an employment lawyer to understand how this applies to your situation.

Q: How long can a temporary layoff last in Ontario before it becomes a termination?

A: Under Ontario's Employment Standards Act, 2000, a temporary layoff generally cannot exceed 13 weeks in any 20-week period. In certain circumstances, such as when the employer continues to pay benefits, the layoff can be extended to up to 35 weeks in a 52-week period. If the layoff goes beyond these limits without a recall, the Act may treat the employee as having been terminated, which can trigger entitlements to termination pay. That said, your common law entitlements to notice may go beyond what the Act provides, so it is worth getting legal advice on the full picture.

Q: Am I entitled to severance pay if I am laid off temporarily and never recalled?

A: Possibly. If your layoff exceeds the time limits under Ontario's Employment Standards Act, 2000 and is treated as a termination, you may be entitled to termination pay under the Act. Whether you are also entitled to severance pay depends on additional factors, including the size of your employer's payroll. Beyond the Act, your common law entitlements to reasonable notice of termination may be greater than what the Act requires. The right answer for your situation depends on the specific facts, and an employment lawyer can help you understand what you may be owed.

CONTACT

If you have been placed on a temporary layoff and are not sure what your rights are, DevLaws can help you understand your options. Contact DevLaws today to schedule a consultation and get a clearer picture of where things stand.

contact@devlaws.com  |  +1 437 290 0424  |  devlaws.com

DISCLAIMER

This article is provided for general information purposes only and does not constitute legal advice. It is not intended to create a lawyer-client relationship. Laws and regulations can change, and the information here may not reflect the most current developments. Every situation is different, and the information in this article may not apply to your specific circumstances. If you have questions about a temporary layoff or any other employment matter in Ontario, you should consult a qualified lawyer for advice tailored to your situation. DevLaws does not guarantee any particular outcome or result.