Introduction

Temporary layoffs can leave employees in a state of uncertainty, unsure of their rights or whether they’ll return to work. In Ontario, employers must follow strict rules under the Employment Standards Act (ESA) when implementing layoffs. This blog clarifies when temporary layoffs are legal, how to protect your rights, and what steps to take if your employer oversteps their bounds.

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What Is a Temporary Layoff?

A temporary layoff is a non-permanent pause in employment initiated by the employer, often due to economic downturns, seasonal work, or restructuring. Unlike termination, layoffs are intended to be short-term, with the expectation that the employee will return to work.

Key ESA Rules for Temporary Layoffs:

● Duration Limits:

○ 13 weeks in any 20-week period.

○ 35 weeks in a 52-week period if the employer continues benefits (e.g., health insurance) and makes pension contributions.

● Recall Rights: Employers must provide written notice to recall employees to work.

Important Note: If the layoff exceeds these limits, it automatically becomes a termination, entitling the employee to termination pay, severance (if eligible), and potentially common law damages.

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When Are Temporary Layoffs Legal?

A temporary layoff is lawful only if:

1. The employment contract explicitly permits layoffs.

2. The layoff complies with ESA time limits.

No Layoff Clause? If your contract lacks a layoff provision, even a short-term layoff may constitute constructive dismissal. Employees can treat this as a termination and pursue severance entitlements.

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Employee Rights During a Temporary Layoff

1. Employment Insurance (EI): Apply for EI benefits immediately to offset lost income.

2. Continued Benefits: If the employer maintains benefits (e.g., health insurance), ensure they are not abruptly cut off.

3. Recall Obligations: You must return to work if recalled within the ESA time limits. Refusal may forfeit entitlements.

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When a Layoff Becomes a Termination

If the layoff exceeds ESA duration limits, the employer must:

● Provide termination pay: 1 week per year of service (up to 8 weeks).

● Pay severance (if eligible): 1 week per year (up to 26 weeks) for employees with 5+ years at a company with a $2.5M+ payroll.

● Common law notice: Courts may award 1–24 months’ pay based on age, tenure, and job prospects.

Action Step: If your layoff exceeds ESA limits, send a written demand for termination entitlements.

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How to Respond to a Temporary Layoff

1. Review Your Contract: Check for a layoff clause. If absent, consult a lawyer about constructive dismissal.

2. Document Everything: Save layoff notices, emails, and records of benefits.

3. Apply for EI: File immediately to secure income support.

4. Negotiate or Challenge:

○ If the layoff is improper, demand termination pay.

○ If recalled, ensure the return aligns with your original role and terms.

5. Seek Legal Advice: A lawyer can help negotiate severance or file a claim for wrongful dismissal.

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Employer Risks and Penalties

● Constructive Dismissal Claims: Layoffs without contractual rights expose employers to lawsuits.

● ESA Violations: Failing to pay termination/severance can result in Ministry of Labour fines.

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FAQs

Q: Can my employer lay me off repeatedly?

A: Yes, but total layoff days must stay within ESA limits (13 or 35 weeks).

Q: What if I’m laid off due to COVID-19?

A: Temporary pandemic measures (e.g., Infectious Disease Emergency Leave) expired in 2022. Current ESA rules apply.

Q: Are part-time employees eligible for layoffs?

A: Yes, if the contract permits it and ESA rules are followed.

Q: Can I sue if my layoff is illegal?

A: Yes. File a wrongful dismissal claim within 2 years.

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Conclusion

Temporary layoffs are a legal gray zone that demands vigilance. Employees must verify their contracts, track layoff durations, and act decisively if their rights are violated. By understanding ESA rules and leveraging legal protections, you can navigate layoffs without sacrificing your financial security.

Remember: A layoff is only legal if your contract allows it and ESA limits are respected. When in doubt, consult an employment lawyer.

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