A permanent layoff in Ontario means your employment is over. Whether your employer calls it a “layoff,” “restructuring,” “downsizing,” “redundancy” or “position elimination,” you have been terminated and are entitled to the notice or compensation required by law.
For many non-unionized employees, that means substantially more than the minimum termination pay required by Ontario’s Employment Standards Act (ESA). Your full Ontario severance package can reach 24 months’ pay, depending on your age, position, length of service and the availability of similar work.
The Quick Answer: Is a permanent layoff the same as being fired in Ontario? Yes. If there is no expectation that you will return to work, the employment relationship has ended. Your employer must provide proper termination compensation.
On This Page:
- 1. What Is a Permanent Layoff?
- 2. Permanent vs. Temporary Layoff
- 3. How Much Severance Are You Owed?
- 4. Notice and Termination Pay
- 5. Restructuring, Closures and Mass Layoffs
- 6. What Should You Do?
- 7. Frequently Asked Questions
What Is a Permanent Layoff in Ontario?
A permanent layoff happens when your employer eliminates your job with no intention of bringing you back.
Common reasons include:
- Corporate restructuring
- Downsizing or cost-cutting
- Your position being eliminated
- A shortage of work
- Outsourcing
- Automation or technological change
- A location or business closing
These are business reasons for ending employment. In legal terms, the situation is normally a termination without cause in Ontario.
You don’t lose severance because your employer calls the termination a layoff. The label does not change your legal entitlement.
Permanent Layoff vs. Temporary Layoff in Ontario
| Temporary Layoff | Permanent Layoff |
|---|---|
| Employment is intended to continue | Employment has ended |
| There is an expectation of recall | There is no expected return to work |
| ESA time limits apply | Termination rights apply immediately |
| Can still create constructive dismissal issues | Notice or termination compensation is owed |
Ontario’s ESA permits temporary layoffs within specific statutory limits. Since November 27, 2025, Ontario also has an extended temporary-layoff process for some non-unionized employees that requires employee agreement and approval from the Director of Employment Standards.
Those rules are different from a permanent layoff. See our complete guide to temporary layoffs in Ontario.
When does a temporary layoff become a termination?
If a layoff exceeds the period Ontario’s ESA allows, the employee is deemed terminated under the statute. The termination date is treated as the first day of the layoff.
There is another important issue for non-unionized employees: an employer does not automatically have a common-law right to temporarily lay you off simply because the ESA contains temporary-layoff rules.
If your employment agreement does not permit temporary layoffs, imposing one without your agreement can amount to constructive dismissal before the ESA maximum is reached.
How Much Severance Are You Owed After a Permanent Layoff?
Your severance is not determined simply by how many years you worked for the company.
There are three potential layers of termination compensation in Ontario:
1. ESA termination pay
Ontario’s ESA provides minimum notice or termination pay for eligible employees. Individual termination notice is capped at eight weeks under the ESA.
Eight weeks is not the maximum severance an Ontario employee can receive. It is only the maximum individual termination-notice minimum under that part of the ESA.
2. ESA severance pay
Some employees also qualify for statutory severance pay under the ESA. This is separate from termination pay and can provide up to 26 weeks of additional compensation.
Whether you qualify depends on your length of service and your employer meeting the ESA’s payroll or business-closure requirements.
3. Common-law severance
For many non-unionized employees, common law provides the largest entitlement.
Unless an enforceable employment contract validly limits your rights, reasonable notice is assessed using factors including:
- Your age
- Your length of service
- Your position and responsibilities
- The availability of comparable employment
These are commonly known as the Bardal factors.
Depending on your circumstances, full severance can reach 24 months’ pay.
See our guide to termination pay versus severance pay in Ontario for a full breakdown.
Does Your Employer Have to Give Notice Before a Permanent Layoff?
Yes. If your employer ends your employment without cause, it must satisfy its termination-notice obligations.
It can do that through:
- Working notice: You continue working until a future termination date
- Pay in lieu of notice: Your job ends immediately and you receive compensation instead
- A combination: You work part of the notice period and receive compensation for the remainder
If you have been given advance notice that your position will disappear, see our guide to working notice in Ontario.
Can an employer lay you off permanently with no notice?
Your employer can end your active employment immediately, but it can’t simply ignore the compensation it owes you. If no working notice is provided, termination pay or damages in lieu of reasonable notice become the issue.
If your employer does not provide your full legal entitlement, you can have a wrongful dismissal claim in Ontario.
Permanent Layoffs During Restructuring, Closures and Mass Layoffs
Restructuring or downsizing
A restructuring does not eliminate your severance rights. Your employer is allowed to reorganize its business and eliminate positions, but it must still provide proper termination compensation.
The same is true when your position becomes redundant because work is outsourced, automated or distributed to other employees.
Company closure
A business closing its doors also does not automatically erase its obligations to employees. Termination and severance rights still apply, although insolvency or bankruptcy can affect how compensation is recovered.
Mass layoffs
Additional ESA notice rules can apply when an employer terminates 50 or more employees at an establishment within a four-week period.
Employees affected by a large workforce reduction should review our guide to mass termination in Ontario.
Can your employer choose who gets permanently laid off?
Employers can choose which positions to eliminate for legitimate business reasons, but they can’t select employees for illegal reasons.
A layoff connected to age, disability, pregnancy, family status, race, religion or another protected ground can raise workplace discrimination issues.
The same concern applies when an employee is targeted after exercising a protected workplace right. See our guide to workplace retaliation in Ontario.
What Should You Do After a Permanent Layoff?
- Don’t sign the severance package immediately. A release usually prevents you from pursuing additional compensation later.
- Keep your termination letter. Save all documents explaining the layoff, termination date and compensation offered.
- Review your employment contract. A termination clause can affect your rights, but don’t assume it is enforceable simply because you signed it.
- Check the entire package. Salary, benefits, bonuses, commissions and other compensation can all matter.
- Apply for EI promptly if you qualify. You don’t need to wait for a severance dispute to be resolved before starting the application process.
- Check your Record of Employment. See our guide to the Record of Employment in Ontario.
- Have the severance package reviewed before signing.
Permanent Layoff Ontario: Frequently Asked Questions
Is a permanent layoff the same as termination in Ontario?
Yes. If your employer has permanently ended your employment with no expectation of recall, you have been terminated. Calling it a “layoff” does not reduce your termination or severance rights.
Do you get severance if you are laid off permanently?
Yes, if you are a non-unionized employee terminated without cause, you are entitled to the proper notice or compensation required by law. Your full common-law entitlement can be substantially greater than Ontario’s statutory minimums.
What if my employer says there isn’t enough work?
A shortage of work is a business reason for ending employment. It does not erase your severance rights.
What if my employer calls the layoff temporary?
Don’t assume you have to sit at home without pay and wait to be recalled. Ontario’s ESA has specific temporary-layoff rules, and your employment contract also matters.
An unauthorized temporary layoff can amount to constructive dismissal even before the ESA time limit expires.
Can I negotiate my permanent-layoff severance package?
Yes. Your employer’s first offer does not determine your legal entitlement. If the package is too low, you can ask for the amount you are actually owed.
See our guide to negotiating a severance package in Ontario.
How long do I have to pursue severance?
In Ontario, the basic limitation period for a civil wrongful dismissal claim is two years from discovery of the claim. Your employer giving you three or five days to sign does not replace that legal limitation period.
Have Your Permanent Layoff Severance Reviewed
A permanent layoff can happen for legitimate business reasons. That doesn’t mean you should accept less compensation than the law provides.
The Ontario employment lawyers at Samfiru Tumarkin LLP can review your termination letter, employment contract and severance package, calculate what you’re owed and negotiate with your employer if the offer falls short.
Employees in the GTA can speak with our Toronto severance pay lawyers. Employees in Eastern Ontario can contact our Ottawa severance pay lawyers. We also assist employees through our Hamilton severance pay lawyers.
The process doesn’t need to be overwhelming. Find out what you’re owed before you sign away your rights.