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Job Lay-off vs Job Termination
Many employees treat layoff and termination as the same thing. Under Ontario employment law they are not, and the distinction matters significantly to what you are owed. A layoff is meant to be temporary. A termination is permanent and triggers notice and severance obligations immediately. What many employees do not know is that a layoff can legally become a termination and that many layoffs are not lawfully permitted in the first place.
Under Ontario's Employment Standards Act, 2000, an employer does not automatically have the right to lay off an employee. That right must come from an employment contract, a collective agreement, or established industry practice. Without it, a layoff may immediately amount to constructive dismissal, entitling you to termination notice and severance.
Were you laid off in Ontario and unsure whether it is lawful or whether you are owed termination pay?
A layoff that exceeds ESA time limits or that your employer had no contractual right to impose may trigger full termination entitlements. Get advice before the limitation period runs out.
Call: 1-800-771-7882 Speak With an Employment LawyerLayoff vs termination: the key differences
Temporary layoff
- Temporary interruption of work
- Employment relationship technically continues
- Employer may recall you
- Subject to strict ESA time limits
- Becomes a termination if ESA limits are exceeded
- Employer must have a contractual or legal right to lay off
Termination
- Permanent end of the employment relationship
- No recall employment is over
- Triggers notice and severance obligations immediately
- Entitles you to ESA minimum notice or pay in lieu
- Common law reasonable notice may apply and is frequently significantly higher
- Statutory severance may also apply where thresholds are met
When a layoff becomes a termination in Ontario
Ontario's Employment Standards Act, 2000 sets strict time limits on how long a temporary layoff can last. Where those limits are exceeded, the layoff is deemed a termination and your employer must pay termination pay as though the layoff had been a without-cause termination from the start.
| Layoff duration | What happens |
|---|---|
| Up to 13 weeks in any 20-week period | Generally a lawful temporary layoff |
| Up to 35 weeks in any 52-week period (where certain conditions are met) | May still be a lawful temporary layoff |
| Exceeds the applicable limit | Deemed a termination notice and severance obligations are triggered |
When a layoff may be constructive dismissal in Ontario
Your employer does not automatically have the right to lay you off under Ontario law. That right must exist in your employment contract, a collective agreement, or established industry practice. Where none of those sources gives the employer a layoff right, imposing a layoff may immediately constitute constructive dismissal meaning the employment is treated as terminated from the moment the layoff began, and you may be entitled to full notice and severance without waiting for the ESA time limits to run out.
This is one of the most important and least understood aspects of Ontario layoff law. Many employees wait through a layoff assuming it is lawful, when from day one they may have had a constructive dismissal claim and a right to termination pay. Get legal advice as soon as a layoff is announced, not after the time limits have passed.
Signs your layoff may not be lawful in Ontario
Were you laid off in Ontario and unsure whether it is lawful or whether you are owed termination pay?
A layoff your employer had no right to impose, or one that has exceeded the ESA time limits, may entitle you to full termination notice and severance. Get advice before the limitation period runs out.
Find Out What You Are Owed Or call us: 1-800-771-7882Frequently asked questions about layoff and termination in Ontario
What is the difference between a layoff and a termination in Ontario?
A layoff is a temporary suspension of work where the employment relationship technically continues. A termination is the permanent end of employment and triggers immediate notice and severance obligations. However, a layoff can legally become a termination where the ESA time limits are exceeded or where the employer had no contractual right to impose the layoff in the first place.
Can my employer lay me off without it being in my employment contract?
Not automatically. Under Ontario law, an employer does not have an inherent right to lay off employees. That right must come from an employment contract, a collective agreement, or established industry practice. Where no such right exists, a layoff may immediately constitute constructive dismissal, entitling you to termination notice and severance from the moment the layoff is imposed. Get legal advice as soon as a layoff is announced.
How long can a layoff last before it becomes a termination in Ontario?
Under Ontario's Employment Standards Act, 2000, a temporary layoff generally cannot exceed 13 weeks in any 20-week period. Where certain conditions are met such as the employer continuing benefits the period may extend to 35 weeks in a 52-week period. If the layoff exceeds the applicable limit, it is deemed a termination and your employer owes you termination pay. But remember: the layoff may also be constructive dismissal from day one if the employer had no right to impose it.
Am I entitled to severance pay during a layoff in Ontario?
Where a layoff becomes a termination either by exceeding the ESA time limits or because the employer had no right to lay you off you are entitled to ESA termination pay. Statutory severance pay may also apply where you have five or more years of service and the employer's payroll meets the threshold. Common law reasonable notice may also be available and is frequently significantly higher than the ESA minimum.
Can a layoff be wrongful dismissal in Ontario?
Yes. A layoff that is imposed without a contractual or legal right to do so may amount to constructive dismissal from the moment it begins. You do not have to wait for the ESA time limits to expire before asserting a constructive dismissal claim. Where the layoff amounts to constructive dismissal, you are entitled to treat the employment as terminated and claim reasonable notice or pay in lieu. Get legal advice promptly the two-year limitation period applies from the date of the constructive dismissal.
What should I do if I think my layoff is actually a termination?
Get legal advice as soon as possible. Do not wait for the employer to formally convert the layoff or for the ESA time limits to expire. Review your employment contract to see whether your employer had any right to lay you off. Document when the layoff began, what you were told about its duration, and any changes to your pay or benefits. A lawyer can assess whether you have a constructive dismissal claim and advise on how to preserve your rights before the limitation period runs out.
Were you laid off in Ontario and unsure whether it is lawful?
A layoff your employer had no right to impose, or one that has exceeded the ESA time limits, may entitle you to termination notice, severance, and common law reasonable notice. Our team advises employees across Ontario on termination without cause and constructive dismissal claims. Contact us for a confidential consultation.
Call us at 1-800-771-7882 or fill out the form below and we will be in touch.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Achkar Law Professional Corporation and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Achkar Law Professional Corporation. ©