What is a Layoff in Labour Law?
In Ontario, layoffs are one of the most misunderstood aspects of employment law. Terms like “laid off,” “terminated,” and “dismissed” are often used interchangeably, leading to confusion among employees about their rights and the implications of each.
Many people assume being “laid off” is the same as being fired. It’s not. A layoff is a specific legal event—governed by rules, timelines, and consequences. If you’ve been temporarily laid off, you may still be considered an employee. Or you might already be entitled to termination pay and severance, depending on the circumstances.
Let’s explore what a layoff actually is, how it works under Ontario’s employment standards legislation, and what options are available to you if it happens.
What Is a Layoff in Simple Terms?
A layoff happens when an employer suspends your job and pay—temporarily—with the possibility of bringing you back later. Unlike a termination of employment, which ends the employment relationship for good, a layoff is a pause. The intention is usually economic: slow business, budget constraints, or a downturn in demand. But despite the employer’s intent, layoffs can still cross the line into termination if they drag on too long or weren’t properly handled under the law.
Under Ontario’s Employment Standards Act (ESA), a layoff must meet strict criteria to be considered “temporary.” If it doesn’t, your employer may have legally terminated your employment, even if they don’t call it that. That distinction matters. Because if you’ve been effectively terminated, you may be owed severance pay, termination pay, and other entitlements.
What Is the Layoff Rule in Canada?
Across Canada, the law is fairly consistent: layoffs are only temporary if certain conditions are met. In Ontario, a layoff can last up to 13 weeks in a 20-week period—or up to 35 weeks in a 52-week period if your employer continues benefits or provides other forms of compensation.
If those thresholds are exceeded, and you haven’t been recalled, the law considers your employment terminated. At that point, you’re no longer just “off work.” You’re out of a job—and potentially owed compensation.
What Are the Rules of Getting Laid Off?
In Ontario, employers are not legally required under the Employment Standards Act (ESA) to provide a temporary layoff notice. However—and this is critical—the right to lay off an employee temporarily must exist either in the employee’s employment contract, a collective bargaining agreement, or be an established part of the employment relationship.
If the employment agreement does not include a clause allowing for layoffs, placing an employee on a temporary layoff could be considered a constructive dismissal—effectively a termination under the law, entitling the employee to termination pay, severance, or other compensation.
What Is the Difference Between a Termination and a Layoff?
It’s easy to confuse layoffs with terminations, but the distinction matters. A layoff is a temporary pause in continuous employment. A termination is permanent. One suggests you’ll be coming back. The other means your job is over.
If a layoff exceeds the ESA’s time limits, it automatically becomes a termination—even if the employer didn’t officially fire you. If the employer offers no recall date, or if they drastically change your role upon return, you may have grounds to treat the layoff as a termination. And if you were laid off without a valid contract clause allowing it, that could also qualify as constructive dismissal.
The difference may sound technical. But it can mean the difference between walking away empty-handed—or receiving months of compensation.
The Different Types of Layoffs
There are different forms of layoffs. A temporary layoff is the most common and typically lasts weeks or months. It allows employers to manage fluctuating business needs while maintaining the employment relationship. A permanent layoff, on the other hand, is essentially a termination—the job isn’t expected to come back. There’s also constructive dismissal, where a layoff is imposed without proper authority, and the employee is left with no meaningful choice but to treat the job as over. In large-scale layoffs—also called group terminations—there are additional termination notice requirements and timelines. And for unionized environments, collective agreements often define layoff rights and recall procedures for the affected employees in more detail.
What Can I Do if I Get Laid Off?
If you’ve been laid off, don’t assume your employer has done everything by the book.
Start by reviewing your employment contract. If it doesn’t mention layoffs—or if the layoff period has gone too long without a recall—you may be able to treat it as a termination and claim severance pay. You might also be eligible for Employment Insurance, though eligibility depends on how long you’ve worked and your total insurable hours. If you’re unsure about what applies, speak with an experienced employment lawyer. Too many employees accept layoffs without realizing they may have been wrongfully dismissed.
Whitten & Lublin – Trusted Employment Lawyers
When it comes to layoffs, terminations, and constructive dismissals, you need more than general advice—you need guidance backed by experience and a clear strategy. At Whitten & Lublin Employment Lawyers, that’s exactly what we deliver.
We’re one of Ontario’s most recommended employment law firms for a reason. Our legal team is focused exclusively on employment law. That means we know how to apply it effectively to your situation. We’ve worked with thousands of clients across the province, from junior staff to C-suite executives, guiding them through layoffs, wrongful dismissal claims, severance negotiations, contract reviews, and more.
We also offer a proprietary tool called the Severance Solution®, which helps assess your legal entitlements. After a consultation, we use Canada’s leading intelligence software and our proprietary databases to assess the financial compensation of your case, and the severance behaviour and traits of your employer to predict your most likely severance outcome.
We believe in empowering our clients with information and options. We provide honest evaluations, proactive strategies, and powerful representation—whether that means negotiating behind the scenes or taking your case to court.
If you’ve been laid off—or if you’re not even sure what your employer has done is legal—don’t wait for the situation to get worse. Contact us today for a confidential consultation or call (416) 640 2667 to learn more about how we can assist you.
We’ll help you understand where you stand, what you’re entitled to, and how to protect your future.