Your Layoff Questions, Answered
Layoffs. It’s a word dreaded by workers across industries because it’s the kind of situation that is completely out of your control. You could be at work one day, fulfilling your duties and responsibilities to the best of your ability, and then you hear the news. As thousands of Immigration, Refugees and Citizenship Canada (IRCC) employees learned recently, your employer’s budget situation could mean that you will soon be without a job.
If you are a worker in Ontario affected by a layoff, it’s natural for you to have questions. Lots of them. Do you have to give notice for a layoff? Is Ontario unemployment on the rise? How long can a layoff last? If I’m laid off will I lose my accumulated vacation pay? We have prepared this post to help you find some clarity, understand the rules—and where you stand.
What Are the Rules for Layoffs in Ontario?
In Ontario, the rules for layoffs are governed by the Employment Standards Act (ESA). Whether your employer must provide a notice of termination or pay for a layoff depends on the circumstances of your employment. If your employment contract does not explicitly permit temporary layoffs, then being placed on one could immediately constitute a constructive dismissal.
Generally, a temporary layoff occurs when an employer reduces or stops an employee’s work without ending their employment entirely. Employers aren’t always required to provide written notice for a temporary layoff, but the rules can vary.
If the layoff becomes permanent, a termination notice is required. The notice period or termination pay must align with the ESA’s requirements, which depend on the employee’s length of service and other factors.
If you’re laid off, your accumulated vacation pay is generally still owed to you. Ontario employers must pay out any accrued but unused vacation pay if your employment ends, whether due to termination or a layoff that exceeds the allowable time limits. However, if your layoff is temporary and your employment relationship remains active, your vacation pay may not be paid out immediately; it will stay on record until your employer recalls you to work or the layoff becomes permanent.
Layoffs & Temporary Layoffs
A temporary layoff is not the same as a termination. During a layoff, your employer intends to recall you to work, often within a specified timeframe. However, if a layoff exceeds the maximum period allowed by the ESA, your employment is deemed to have ended, requiring the employer to provide termination entitlements, including severance pay and outstanding wages.
A temporary layoff notice can also lead to complications if they involve a significant reduction in weekly hours or regular wages. A reduction of more than 50% over a four-week period could indicate that the layoff has transitioned into a termination, requiring action on the employer’s part. Employers must also comply with other rules. For instance, they may need to continue benefits, like an employee insurance plan or pension plan, during the layoff period if required by your employment terms.
How Long Can a Temporary Layoff Last?
Under employment standards legislation in Ontario, a temporary layoff can generally last up to 13 weeks in a 20-week period. In some cases, it can extend to 35 weeks if the employer continues benefits or makes substantial payments during the layoff. If the layoff exceeds this timeframe, it may become a termination under the law, requiring the employer to provide severance and termination pay.
Have You Been Affected by a Constructive Dismissal?
Even if a layoff is framed as temporary, if your employment contract does not allow for layoffs, being placed on one could immediately amount to a constructive dismissal. If a layoff results in a significant change to your employment—such as reduced hours, pay, or benefits—it may also be considered a constructive dismissal, meaning your employer has effectively terminated your employment without proper notice or severance. Our Severance Solution® can help you determine if your employer’s severance offer is reasonable.
At Whitten & Lublin, our team has extensive experience handling cases of wrongful dismissal, constructive dismissal, and temporary layoffs. We help clients navigate their options and find the best path forward.
If you believe your employer has treated you unfairly and breached the law, we’re here to help you take control of your situation. Call 416 640 2667 or contact us online to schedule a consultation.
