By: Stephanie McDonald and Baljinder (Bal) Singh Tiwana
A temporary layoff happens when your employer pauses your work and income but doesn’t officially fire you. Your job technically continues—but there’s no guarantee you’ll be called back. That uncertainty can be stressful and financially punishing.
There’s a common myth that employers can lay employees off without consequence. This is usually not true.
This guide explains where you legally stand under your employment contract, the Employment Standards Act (ESA), and common law (judge-made law).
1. Can Your Employer Legally Lay You Off?
Not always.
Your employer can only lay you off (without triggering a constructive dismissal) if your employer has an explicit or implicit right to do so.
Explicit Right to Lay you Off
The explicit right comes from express and lawful language in your employment contract.
Implicit Right to Lay you Off
An implicit right to lay you off includes situations where you’ve agreed to be laid off in the past, your industry commonly and regularly lays people off, or you work in a seasonal or temporary role.
No Implicit or Explicit Right to Lay you Off
If there’s no implicit or explicit right described above, the layoff may amount to a constructive dismissal, a form of wrongful termination.
If you’ve been constructively dismissed, you could be entitled to:
- Termination pay
- Severance pay
- Reasonable notice or pay in lieu of notice —up to 24+ months of salary under common law
Before you accept a layoff, always check your contract! Ask yourself: Does my employer actually have the right to do this?
2. When a Layoff Clause Doesn’t Hold Up
Even if your contract includes a layoff clause, it may not hold up in Court.
A layoff clause could be unenforceable if it:
- Contradicts the Employment Standards Act (ESA)
- Is vague, unclear, or overly broad
- Gives your employer too much discretion, undermining the ESA’s minimum protections
If the clause doesn’t stand, your employer could still be liable for constructive dismissal.
3. The ESA and Layoff Limitations
The ESA sets strict limits on how long a layoff can last in Ontario:
- Up to 13 weeks in any period of 20 consecutive weeks, or
- Up to 35 weeks in any period of 52 consecutive weeks, if your employer continues to pay benefits or other compensation
If your layoff exceeds these limits, it’s no longer considered “temporary.” The law treats it as a termination under the ESA, entitling you to termination pay, severance pay, and in most cases, common law notice.
The length of your layoff is critical. Once your employer crosses the ESA limit, you’re legally terminated, not laid off—and entitled to claim termination pay, severance pay, and in most cases, common law notice.
4. Common Law Rights
If your employment contract doesn’t contain a valid layoff clause, and your employer otherwise has no implied right to lay you off, a temporary layoff amounts to a constructive dismissal.
You may then claim:
- Termination pay
- Severance pay, and
- Reasonable notice or pay in lieu of notice
Common law compensation often exceeds the minimums under the ESA.
5. Employment Insurance (EI)
If you’re temporarily laid off, you may qualify for Employment Insurance (EI) benefits through Service Canada. These benefits can help bridge the gap while your employment status is uncertain.
Conclusion
A temporary layoff isn’t always legal — and it’s not always temporary.
1. Check your employment contract
2. Know your rights under the ESA and common law
3. Get legal advice before agreeing to anything
If your employer laid you off without the legal right to do so, you may be owed significant compensation.
Workplace Sage Legal can help you assess whether you have a potential claim for constructive dismissal and ensure your rights are protected.
Knowing your rights gives you power—and helps you move forward with confidence. Book a consultation today.
DISCLAIMER: This article/blog is provided for educational/informational purposes only. The views expressed are solely those of the author(s) and should not be attributed to any other party not listed as the author(s).
While reasonable efforts have been made to ensure the accuracy of the content provided, it does not constitute legal advice. Prior to relying on any aspect of this article, you should consult with a suitably qualified legal professional promptly in your relevant jurisdiction, to obtain advice tailored to your individual circumstances
Nothing in this article should be interpreted as forming a solicitor-client relationship or construed as a solicitation for legal services.
