Can a Company Layoff and Hire at the Same Time?
Layoffs are never easy. Despite being necessary for some businesses, they are often a contentious issue for affected employees because they can feel like an unfair tactic.
For employees who have been laid off, they can bring a sense of betrayal, while the remaining employees must contend with uncertainty about their future. Employers must balance operational needs with difficult decisions about staff. But what happens when layoffs coincide with hiring? Is it fair—or even legal—for a company to lay off employees and bring on new hires simultaneously?
The short answer is yes, it’s possible. But the reasons behind this staffing conundrum matter deeply. Layoffs are often required out of economic necessity. Hiring typically reflects evolving business needs, shortfalls in human resources, or a shift in company priorities. When handled poorly, this overlap can lead to confusion and distrust.
This blog explores the rules around layoffs and hiring in Ontario, the protections in place for affected workers, and what you can do if you believe your layoff was unjust.
Layoffs & Temporary Layoffs: Rules and Implications
In Ontario, layoffs—whether permanent or temporary—are governed by the Employment Standards Act (ESA). There are clear guidelines for how employers can lay off workers and under what conditions these layoffs become terminations. Layoffs are often required out of economic necessity, as employers seek ways to reduce operational costs and save money. This may involve scaling back staff or restructuring departments.
A temporary layoff under the ESA allows an employer to suspend an employee’s work for up to 13 weeks in a 20-week period without officially terminating their employment. If you are not in a unionized work environment, this stipulation must be written into your contract. If the layoff lasts longer, it’s deemed a termination unless the employer and employee have agreed otherwise.
Employers must also communicate clearly with laid-off workers. Employees should receive written notice explaining the reasons for the layoff, its expected duration, and any rights they retain during this period. Returning company equipment or adjusting work hours for remaining team members may signal an employer’s intention to resume normal operations soon.
However, complications arise when layoffs coincide with new hires—especially if the hiring fills the same or similar roles. In such cases, questions may be raised about whether the layoff was truly temporary or whether it masked an improper termination.
Layoffs & Continuity of Employment
Under Ontario law, a layoff does not always mean the end of an employment relationship.
For example, if an employee is rehired after a temporary layoff, their previous service may still count toward key entitlements, such as vacation pay, termination notice, or severance. This protects employees; they don’t lose their accumulated benefits simply because they experienced a temporary interruption in work.
Here’s a practical scenario: imagine an operations manager laid off due to restructuring. Months later, as the business rebounds, the manager is rehired. According to the ESA, the time spent at the company before the layoff may still contribute to the employee’s total service for entitlement purposes.
If your layoff exceeds the ESA’s 13-week limit without proper termination procedures, it becomes an employee’s termination by default under the law.
Can a Company Layoff and Hire Employees Simultaneously?
Yes, it’s legal for a company to lay off employees and hire others at the same time.
This practice often occurs for valid reasons, such as:
- Filling positions in different departments or locations that weren’t affected by layoffs.
- Addressing specific skill gaps to meet evolving business demands.
- Replacing lower-performing employees with candidates better suited to the company’s needs.
Issues arise when a company hires for the same position (or a similar position) shortly after laying off employees. For instance, if an employer claims that a position was eliminated due to financial difficulties but immediately hires someone new for that same job, it could suggest that the layoff wasn’t justified.
Such situations may lead to claims of wrongful dismissal or bad faith termination. If this describes your situation, you have every right to question whether their layoff was a legitimate business decision or a tactic to replace you under false pretenses.
What Options Do You Have If You’ve Been Laid Off?
If you’ve been laid off, it’s natural to feel uncertain about what to do next. Layoffs can feel deeply personal, especially if your role is later filled by a new hire. But you don’t have to navigate this alone.
Here’s what you need to know:
- Temporary layoffs must comply with Ontario law. If your layoff exceeds the ESA’s 13-week limit without proper termination procedures, it becomes a termination by default.
- Hiring for your role may signal wrongful dismissal. If your employer fills your position while claiming your layoff was temporary, you may have grounds to challenge their actions.
- Severance pay and entitlements must be respected. Employers cannot simply bypass notice or compensation requirements when restructuring their workforce.
You may also question whether your layoff was a disguise for performance concerns or other issues unrelated to your role’s necessity. In such cases, it’s worth consulting with an employment lawyer to review your situation.
Request a consultation to learn how our Severance Solution tool could help you secure an improved severance package.
Have You Been Affected by a Layoff?
At Whitten & Lublin, we understand how disorienting layoffs can be. We can review your situation and determine whether your layoff was handled fairly. If it wasn’t, we’ll work to secure the severance you’re entitled to and ensure your employer is held accountable for any improper actions.
Layoffs are never easy, but you have options–don’t wait to take action. Call 416 640 2667 or contact us online to schedule a consultation. Whether you are dealing with a contentious layoff or employment contract negotiations, you’re never alone in fighting for what you deserve with Whitten & Lublin in your corner.