Temporary Layoff in Ontario: Is It Constructive Dismissal?
Most Ontario employers have no legal right to lay you off. Unless your contract allows it, a temporary layoff can be a constructive dismissal you can treat as a firing.
Key takeaways
- At common law, most employers have no automatic right to lay you off. It usually takes a contract term.
- Unless your contract allows it, a temporary layoff can be a constructive dismissal from day one.
- The ESA only lets a layoff stay "temporary" for 13 weeks (or up to 35 in some cases). Past that, it is a deemed termination.
- You generally do not have to wait to see if you are recalled before treating a layoff as a dismissal.
- If it is a constructive dismissal, you can claim full severance, not just a return-to-work.
In this article
A lot of employees assume that if their employer calls something a "temporary layoff," they simply have to accept it and wait to be called back. In Ontario, that is usually wrong. Unless your employment contract specifically allows layoffs, your employer generally has no right to impose one, and doing so can be a constructive dismissal that entitles you to full severance right away.
✅Quick answer. Unless your contract expressly permits layoffs, a temporary layoff is usually a constructive dismissal at common law, which means you can treat your job as ended and claim severance instead of waiting for a recall. The Employment Standards Act separately limits how long a layoff can even be called "temporary" (about 13 weeks, or up to 35 in some cases) before it becomes a deemed termination. The two are different clocks, and both can work in your favour.
Can your employer even lay you off?
Often, no. This surprises people, but the common law does not recognize an automatic right to lay off an employee. In Elsegood v. Cambridge Spring Service (2001) Ltd. (2011 ONCA 831), the Court of Appeal confirmed that, absent an express or implied contractual right to lay off, a layoff is a unilateral change to a fundamental term of employment, which is a constructive dismissal. In other words, sending you home without work and pay is, in the eyes of the common law, effectively firing you, unless your contract clearly gave the employer that power.
The ESA temporary-layoff limits
The Employment Standards Act puts an outside limit on how long a layoff can be treated as "temporary." A layoff is temporary only if it lasts no more than 13 weeks in any period of 20 consecutive weeks, or, in limited circumstances (such as where the employer keeps up certain benefits or payments), up to 35 weeks in any period of 52 weeks. Once a layoff exceeds the applicable limit, the ESA treats it as a termination, backdated to the first day of the layoff, which triggers your statutory termination pay and, if you qualify, severance pay.
Two different clocks: ESA and common law
This is the part employers rely on you not knowing. The ESA limits above are the floor, but at common law you usually do not have to wait 13 or 35 weeks at all. If your contract did not authorize the layoff, the constructive dismissal happens when the layoff is imposed, so you can often treat yourself as dismissed and claim full common law notice immediately. The ESA clock and the common law claim run in parallel, and the common law route is frequently both faster and worth far more.
Do you have to wait to see if you are recalled?
Generally not. Employers sometimes argue that by not objecting immediately, you "condoned" the layoff and gave up your claim. The Court of Appeal rejected that in Pham v. Qualified Metal Fabricators Ltd. (2023 ONCA 561), holding that an employee placed on a temporary layoff with no contractual right to do so was constructively dismissed, and that taking a reasonable period to see whether he would be recalled did not amount to condoning the layoff. You are allowed a sensible window to consider your options without losing your rights, though you should still get advice quickly rather than sit on the claim indefinitely.
What can you claim?
If the layoff is a constructive dismissal, your claim is the same as any dismissal: common law reasonable notice based on your age, length of service, role, and the job market, up to around 24 months, minus anything you earn from new work during that period. That is usually far more than the statutory minimum, and far more than simply waiting unpaid for a recall that may never come.
What should you do if you are laid off?
- 1.Check your employment contract for any clause that expressly allows temporary layoffs.
- 2.Keep the layoff notice and any communications about recall or benefits.
- 3.Do not sign anything agreeing to the layoff or waiving your rights.
- 4.Get advice promptly. A free review can tell you whether the layoff is a constructive dismissal and what your severance is worth.
For the ESA basics of layoffs and recall, see your rights when laid off. A layoff is one form of constructive dismissal; a major pay or hours cut is another, and both let you claim severance as if you were fired.
Frequently asked questions
Can my employer lay me off without my agreement in Ontario?
Usually not. Unless your contract expressly allows layoffs, the common law gives no automatic right to lay off. Under Elsegood v. Cambridge Spring Service (2011 ONCA 831), an unauthorized layoff is a constructive dismissal.
How long can a temporary layoff last in Ontario?
Under the ESA, a layoff is temporary only up to 13 weeks in any 20-week period, or up to 35 weeks in any 52-week period in limited circumstances. Beyond that it becomes a deemed termination backdated to the first day of layoff.
Do I have to wait to be recalled before claiming severance?
Generally no. In Pham v. Qualified Metal Fabricators (2023 ONCA 561), the Court of Appeal held that a reasonable period to see if you are recalled does not mean you condoned the layoff. If it is a constructive dismissal, you can claim full severance.
Is a temporary layoff constructive dismissal?
Usually, if your contract did not authorize it. An unauthorized layoff is a unilateral change to a fundamental term, which is constructive dismissal, entitling you to common law severance rather than an unpaid wait for recall.
Daniel Carter
Legal Writer, Mirza Law
Daniel Carter is a legal writer at Mirza Law in Toronto. He writes about layoffs, employment contracts, and the steps to take before you sign anything from your employer.
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