A temporary layoff in Ontario is not automatically legal.
While the Employment Standards Act (ESA) allows employers to impose temporary layoffs in limited circumstances, many non-unionized employees are surprised to learn that a layoff can still amount to constructive dismissal under common law.
If you’ve been temporarily laid off in Ontario, it’s important to understand:
- How long a temporary layoff can last
- When it becomes a termination
- Whether your employment contract allows it
- Whether you’re entitled to severance pay
What Is a Temporary Layoff in Ontario?
Under Ontario’s Employment Standards Act (ESA), a temporary layoff occurs when an employer temporarily stops providing work and pay but does not permanently terminate the employee.
Employers often use temporary layoffs during:
- Business slowdowns
- Economic downturns
- Restructuring
- Seasonal fluctuations
However, ESA compliance does not automatically make a layoff lawful under common law.
How Long Can a Temporary Layoff Last in Ontario?
Under the ESA, a temporary layoff in Ontario can last:
- Up to 13 weeks within a 20-week period, or
- Up to 35 weeks within a 52-week period if certain conditions are met
Those conditions may include:
- Continued benefit coverage
- Substantial payments to the employee
- Recall rights under a collective agreement
If a layoff exceeds ESA limits, it is automatically deemed a termination under the statute.
But even within those limits, legal issues can arise.
Does My Employer Need a Contract to Temporarily Lay Me Off?
In most non-unionized workplaces in Ontario, employers do not have an automatic right to temporarily lay off employees unless:
- The employment contract clearly allows temporary layoffs, or
- There is an established industry practice permitting them
When Does a Temporary Layoff Become a Termination in Ontario?
A temporary layoff may legally become a termination in two ways:
1️⃣ Statutory Termination (ESA)
If the layoff exceeds 13 weeks in 20 weeks, or 35 weeks in 52 weeks (where permitted), the ESA considers it a termination.
2️⃣ Constructive Dismissal (Common Law)
If your employment contract does not allow temporary layoffs, the layoff may be treated as a termination from the start.
This can trigger entitlement to severance pay under common law, which is often significantly greater than ESA minimums. In many cases, severance can amount to as much as 24 months’ pay.
Are Benefits Required During a Temporary Layoff in Ontario?
For a layoff to extend beyond 13 weeks to the 35-week maximum:
- Certain benefit coverage must continue, or
- The employer must make substantial payments
If benefits are improperly discontinued, the layoff may be deemed a termination.
Can I Refuse a Temporary Layoff in Ontario?
In some situations, yes.
If your employment contract does not authorize temporary layoffs, you may have the right to treat the layoff as constructive dismissal and pursue severance.
However, timing matters.
Temporary Layoff vs. Termination Without Cause in Ontario
A temporary layoff is intended to be temporary, with the possibility of recall.
Termination without cause ends the employment relationship permanently and requires the employer to provide notice or severance.
Severance Pay After a Temporary Layoff in Ontario
If a temporary layoff becomes a termination — either under the ESA or common law — you may be entitled to:
- Termination pay under the ESA
- Statutory severance pay (if applicable)
- Common law reasonable notice
Common law notice can often amount to significantly more than ESA minimums, depending on:
- Your age
- Length of service
- Position
- Availability of similar employment
Frequently Asked Questions About Temporary Layoffs in Ontario
Is a temporary layoff legal in Ontario?
A temporary layoff may be legal under the ESA. However, if your employment contract does not allow temporary layoffs, it may amount to constructive dismissal.
How many weeks can a temporary layoff last in Ontario?
Up to 13 weeks in a 20-week period, or up to 35 weeks in a 52-week period if specific conditions are met.
Can an employer extend a temporary layoff in Ontario?
Only within ESA limits and only if qualifying conditions are met. Extending beyond those limits results in termination under the statute.
Can I collect EI during a temporary layoff?
In many cases, yes. Employees placed on temporary layoff are often eligible for Employment Insurance (EI), depending on their circumstances.
Am I entitled to severance after a temporary layoff?
You may be entitled to severance if the layoff exceeds ESA limits or amounts to constructive dismissal under common law.
Key Takeaway
A temporary layoff in Ontario is not automatically lawful.
Even if your employer complies with ESA time limits, you may still have a constructive dismissal claim if your employment contract does not authorize layoffs.