When Does a Temporary Layoff Become a Termination?achkarlaw-admin
When an employer faces challenging circumstances, they may have no choice but to lay off a hardworking employee. Although meant to be temporary, layoffs are nevertheless unfortunate for all parties. The employee must deal with the stress of having no source of employment income, and the employer temporarily loses a good employee.
In Ontario, a layoff may result in an employee’s termination under the Employment Standards Act, 2000 (“ESA”) or a constructive dismissal of their employment. This entitles employees to their minimum statutory entitlements, unemployment benefits, and potentially more, depending on their unique circumstances.
If you recently got laid off from work, for many reasons you might wonder about the difference between termination and layoff. You may also be curious about your entitlements and what actions to take. This article will answer these questions, and explain how an employment lawyer can help in getting you your unemployment compensation and benefits.
What is the Difference Between a Termination and a Layoff?
Layoffs are intended to be temporary, while terminations are meant to be a permanent end to an employment relationship. Employers may save money by temporarily laying off employees and recalling them later. However, if an employer uses the term “permanent layoff” or implies that they’re ending the employment permanently, it counts as termination.
In Ontario, most layoffs longer than 13 weeks in any period of 20 consecutive weeks result in automatic termination of employment under the ESA. This entitles an employee to their minimum ESA entitlements for termination without cause.
Further, if an employment agreement does not contain a written clause that allows an employer to lay an employee off temporarily, this could result in a constructive dismissal of an employee. This is because there is an implied fundamental term to an employment contract that employers provide employees with work and pay them for that work. A layoff is a material breach of that fundamental implied term.
What Are Your Entitlements If You Are Terminated?
If layoffs are terminations, employees get ESA entitlements. If an employment agreement does not contain an enforceable termination clause, you may also be entitled to common law reasonable notice as part of the complete severance package.
The ESA entitles an employee to receive termination pay of 1 week per year of service up to a maximum of 8 weeks. For 5+ years at an employer with an annual payroll of 2.5M+, an employee may get 1 extra week per year, up to 26 weeks, for statutory severance.
If you sue your employer following a layoff through the Ontario Superior Court of Justice for severance, the Court would determine the length of your reasonable notice by considering factors like:
- The character of the employment;
- Length of service;
- Age; and
- Availability of similar employment, having regard to the experience, training, and qualifications of the employee.
A total severance package as a result of a layoff could be as high as 24 months of severance pay, and include all parts of your compensation, including prorated bonus, commissions, or even stock options. In exceptional circumstances, the employer can award employees more than 24 months of reasonable notice.
What Should You Do If You Are Temporarily Laid Off?
When you face a temporary layoff, you typically have two options. The first option is to accept the layoff and wait for recall or termination. Try to maintain written communication with them as they may never recall you.
The second option is to refuse the layoff and treat it as constructive dismissal, but only if your agreement does not allow temporary layoffs. Delaying rejection can greatly weaken your claim.
The third and best option is to contact an employment lawyer to know your unique rights and entitlements.
Usually, employers intend temporary layoffs to be temporary. They cannot surpass the time limitations stipulated in the ESA, or else they amount to permanent terminations. In some cases, they can also amount to a constructive dismissal of employment.
Both ESA terminations and constructive dismissal are forms of termination without cause. Termination without cause can entitle you to a severance package that covers ESA minimums and reasonable notice.
If laid off, wait to be recalled, reject as a breach, or consult an employment lawyer before taking any legal actions.