Layoff vs. Termination: What’s the Difference?

Many people in Ontario, Alberta and British Columbia believe that the terms “laid off” and “terminated” mean the exact same thing. The truth is that there is a legal difference between these two terms.

Layoff vs. Termination: What is a Termination?

A termination takes place when an employer ends a contract of employment with an employee.

The termination of an employee may be for cause. In a “for cause” termination, an employer can terminate an employee’s employment without either advanced notice or severance pay. However, a for cause termination is considered capital punishment in employment law, and is very difficult for an employer to prove or defend, meaning that employees are still entitled to notice or severance pay in lieu of notice.

If a termination is absent legitimate cause, it is considered a dismissal without cause, and the employer is required to provide the employee with reasonable notice or severance pay (also known as termination pay) in lieu of notice. Be aware that a majority of employers offer either inadequate severance pay upon termination, or the bare minimum as determined by the Employment Standards Act.

When an employee is not paid the appropriate amount of severance, they do have the option of filing a wrongful dismissal claim.

Layoff vs. Termination: What is a Layoff?

A layoff is a temporary hold on work, or temporary layoff. This occurs when an employee’s workload is reduced or completely stopped, but the employment agreement is not terminated. Layoffs occur during certain seasons or when work is scarce. In any case, the employee expects that they will be called back to work at some point in the future.

According to section 56(2) of the Employment Standards Act, 2000 a temporary layoff occurs when:

• the employee in question is not laid off for more than 13 weeks in any period of 20 consecutive weeks;
• the employee is laid off for more than 13 weeks in any period of more than 20 consecutive weeks if the layoff is less than 35 weeks in any period of 52 consecutive weeks and,
  • the employee continues to receive substantial payments from the employer,
  • the employer continues to make payments for the benefit of the employee under a legitimate retirement or pension plan or a legitimate group or employee insurance plan,
  • the employee receives supplementary unemployment benefits,
  • the employee is employed somewhere else during the layoff and would be entitled to receive supplementary unemployment benefits if that were not so,
  • the employer recalls the employee within the time approved, or
  • in the case of an employee who is not represented by a trade union, the employer recalls the employee within the time set out in an agreement between the employer and the employee; or
• in the case of an employee represented by a trade union, a layoff longer than a layoff described in clause (b) where the employer recalls the employee within the time set out in an agreement between the employer and the trade union.

Unless stated otherwise by a contract, an employer is not required to provide a return or recall date to a laid-off employee.

DISCOVER MORE
• Temporary Layoffs in Ontario

A constructive dismissal may be pursued if the employer lays off an employee without proper contractual authorization or if the layoff exceeds the time permitted by the above provisions in the ESA. A constructive dismissal requires an employer to provide an employee with appropriate common law notice.

Comprehensive services for employees

The employment lawyers at Samfiru Tumarkin LLP have successfully represented thousands of non-unionized individuals in various regions across Ontario, Alberta, and B.C.

In addition to severance package negotiations, we can assist you on a broad range of employment matters, including:

For a comprehensive overview of employment, disability, and personal injury law, explore our Law Essentials page.

If you are a non-unionized employee who needs help with a workplace issue, contact us or call 1-855-821-5900 to get the advice you need and the compensation you deserve.