We see it frequently: an employee told to stay home with little or no pay, told it is temporary, told to wait. Many assume they have no choice. But employers invoke temporary layoffs with a confidence that often is not backed by law. Misunderstanding what a layoff actually is and when and how it can be instituted costs workers real money and job security. Ontario employment law is far more protective for employees than many people realize. For clarity, for the purposes of this blog, when we refer to a “layoff” we are referencing a temporary layoff, not a termination of employment wherein the employment relationship ends permanently and explicitly in the traditional sense. The following addresses non-unionized employees regulated by Ontario employment law.
What the Law Actually Says
Under Ontario’s Employment Standards Act, 2000 and the judge-made common law, a temporary layoff is not the open-ended arrangement many employers think it is.
Here is what has to be true for a temporary layoff to be lawful:
- Your employer must have your agreement to the temporary layoff in the first place! There must be a term of your employment contract — usually in writing — allowing your employer to place you on a temporary layoff, unless you go along with the temporary layoff when it occurs. This requirement flows from Ontario’s common law (judge-made decisions from courts), confirmed in cases such as Bevilacqua v Gracious Living Corporation, 2016 ONSC 4127 (Bevilacqua). The Employment Standards Act, 2000 itself (under section 56) sets the maximum durations and minimum conditions for a lawful temporary layoff, but it does not grant employers a free-standing right to lay off employees who have not agreed to it.
- A temporary layoff cannot be longer than 13 weeks in any consecutive 20-week period (or up to 35 weeks in any 52-week period if your employer meets one of the conditions set out in s. 56(2)(b) of the Employment Standards Act, 2000, for example continuing to pay into a pension plan or group benefits plan on your behalf, providing you with supplementary unemployment benefits, or making some other substantial payment to you).
Note: as of November 2025, employers can apply to extend a temporary layoff even longer, up to 52 weeks in a 78-week period, but only with the employee’s written agreement and a firm recall date in place. If you did not agree in writing, this extended period does not apply to you.
If your employer fails to meet both of the above conditions, the temporary layoff is presumably unlawful. In response to an unlawful layoff, employees are generally entitled to take the legal position that they have been constructively dismissed from their employment. In plain terms, constructive dismissal means the employer has unilaterally and effectively ended the employment relationship without saying so outright by making a fundamental change to the terms of employment, and it attracts the same entitlements as a termination of employment: notice, or pay in lieu.
Claims for constructive dismissal can result in significant severance packages or awards from the court, typically based on the length of time the court estimates it would take the constructively-dismissed employee to replace their position, based on factors such as length of service, age, level of pay, type of position, and the job market having regard to the employee’s qualifications. Longer-serving, older employees, with higher-paying senior positions and a poor job market, are generally entitled to relatively greater severance packages or awards from the Court. In some cases of constructive dismissal, depending on the employer’s conduct, the court may even award additional aggravated damages.
Mythbusters
“Employers are allowed to place employees on layoffs.” Many employers are, in fact, not permitted to place an employee on a temporary layoff. But even where an employer technically has the contractual right to lay off an employee, a temporary layoff is not a free pass. It is designed for situations where there is a genuine, demonstrable business reason why the employer cannot continue to provide work: a drop in revenue, a slowdown in orders, a facility closure. It is not a tool for managing out a difficult employee by cutting off their income and waiting for them to find work elsewhere, thereby relieving the employer of its termination obligations. This was precisely the issue in Molina v Dynamic Automotive Engine Rebuilders Ltd, 2017 CanLII 147732 (ON SCSM), where an employer improperly used an unpaid disciplinary suspension disguised as a vacation, and later a purported temporary layoff, as a tactical weapon to push out a senior employee who had raised health and safety complaints. The Court found this to be a constructive dismissal and awarded the worker six months’ pay in lieu of notice of termination of employment.
Where the real purpose of the layoff is to push someone out rather than to respond to a legitimate business need, the employee’s constructive dismissal claim, and any argument about bad faith, becomes considerably stronger. The employee must still take steps to protect their legal rights promptly when placed on an unlawful or improper layoff.
“My employer will recall me back to work soon.” Many employers will draw out the temporary layoff to the bitter end of the applicable maximum period. Sophisticated employers will even seek to meet one of the minimum conditions to extend the layoff to 35 weeks. Employees are often left in the lurch for up to 8 months without any income other than perhaps Employment Insurance benefits.
“Three months is automatic.” Assuming the employer does not meet the conditions for an extended temporary layoff, 13 weeks in any 20-week period is the maximum. The 13 weeks (three months) is a cap, not a given. Once it has ended and the employee has not been recalled, the temporary layoff ends. And if you have been temporarily laid off before in the same year, that time counts too.
“If the Employer keeps your benefits in place, you cannot claim anything else.” Not so. The employer has to continue all your benefits running or pay cash to replace what you have lost. Benefits in this context include group health and dental coverage, group life insurance, and employer contributions to an RRSP or pension plan. Lose a $500-a-month dental plan and get nothing? The condition fails and the employee can likely claim constructive dismissal.
But here is the bigger point: even a lawful layoff at its commencement does not wipe out an employee’s right to notice or pay in lieu (i.e., a termination severance). If the employer eventually fails to recall the employee to work, the employee is typically entitled to reasonable notice or pay in lieu of notice (or perhaps some other entitlements depending on the wording of the employment contract, if any).
“You have to accept the temporary layoff or you are fired.” Not necessarily true. If your employer puts you on a temporary layoff in breach of the Employment Standards Act, 2000 rules (too long, or the benefits are not maintained), you can refuse it and insist on continuing to work or you can claim constructive dismissal. Your employer cannot force you to accept an unlawful layoff by threatening to fire you. That is bad faith, plain and simple, as well as retaliation which is prohibited under the Employment Standards Act, 2000.
“Paying you half-salary or partial salary makes a temporary layoff legal.” Also wrong. Some employers pay reduced wages possibly to bridge a difficult time with limited cash flow, thinking it permits the temporary layoff. Such a reduction in wages does not cure an otherwise unlawful temporary layoff. Substantial payments during a lawful temporary layoff could, however, allow an employer to extend a lawful temporary layoff to the 35-week limit.
“A temporary layoff breaks your seniority.” It generally does not. A lawful temporary layoff still counts toward your length of service assuming employment resumes after it is over. If the layoff is unlawful, though, you are generally deemed to be dismissed when the layoff started and your length of service period would notionally end there.
“Layoff clauses are in all employment contracts these days.” In the past, in many sectors and industries, it was quite unusual for an employment agreement to include any provision allowing the employer to place the employee on temporary layoff. Employers started including them more frequently following the Covid-19 Pandemic and resulting angst; however, the trend may be fading as employees become more educated about the severe potential impacts of executing an employment agreement or accepting an offer of employment with a temporary layoff clause.
What the Courts Have Said
Ontario’s Courts have drawn a critical distinction between Employment Standards Act, 2000 compliance and actual lawfulness. A layoff that meets the Employment Standards Act, 2000‘s technical rules still does not necessarily protect an employer from a constructive dismissal claim if the employee never agreed to the temporary layoff in the first place.
Bevilacqua, introduced above as one of the leading authorities on the contractual-right requirement, is worth examining more closely. In that case, a 15-year Facilities Manager was placed on a three-month temporary layoff. The employer maintained his benefits and complied with the Employment Standards Act, 2000 rules to the letter. But, the Court held that because the employment contract did not include a layoff provision and the plaintiff did not consent to the layoff, the unilaterally-imposed layoff was deemed by the Court to be akin to termination of employment (i.e., constructive dismissal). Compliance with the Employment Standards Act, 2000 did not matter. The employee was awarded common law notice of three months based on his 15 years of service, age, position, and compensation.
In Taylor v Salytics Inc, 2025 ONSC 3461 (Taylor), the Court upheld a clause permitting the employer to place the employee on a temporary layoff even though the termination provisions in the same employment contract were void. The takeaway from Taylor for employees: a temporary layoff clause may still be used against you even if the termination clause in your employment contract is unenforceable. If your contract has no layoff clause at all, you are in a stronger position to claim constructive dismissal at imposition of a temporary layoff.
In a 2023 decision out of the Ontario Court of Appeal called Pham v Qualified Metal Fabricators Ltd, 2023 ONCA 255, a welder with nearly 20 years of service was laid off without any contractual layoff provision and the employee waited nine months before asserting his legal rights. The employer argued he had accepted the layoff by staying silent for so long. The Ontario Court of Appeal disagreed on both points: an implied right to lay off an employee will rarely be found, and silence is not condonation. An employee is entitled to a reasonable period to obtain legal advice and assess their options before claiming constructive dismissal. Waiting for a recall that never comes does not strip you of your rights.
The bottom line: even a temporary layoff that is technically compliant with the Employment Standards Act, 2000 can be deemed a constructive dismissal if you never agreed to it. If your employment agreement with a temporary layoff clause is unenforceable, you may have remedies available to you regardless of whether your employer followed the Employment Standards Act, 2000‘s timelines and rules.
What to Do Right Now
If you have just been notified of a temporary layoff, the first thing you should do is speak with an employment lawyer before you do anything else. Do not sign or agree to anything your employer puts in front of you before getting legal advice. Every situation is different and your options can narrow quickly with the passage of time.
If you are already on a temporary layoff, the following steps apply:
Count the weeks: Once you hit 12 weeks or 34 weeks, you may be close to the limit of a temporary layoff. Account for any prior temporary layoffs in the same year or so, which could reduce the permissible length of the temporary layoff. The clock matters.
Verify your benefits: Call your insurer, check your pension. If the employer promised to maintain benefits but has not, that may trigger a breach.
Keep records: emails, correspondence, ROE (records of employment) documents, pay stubs, benefits statements, intranet policies or employee handbooks, if any. If the layoff looks unlawful or just keeps going with no recall date in sight, talk to an employment lawyer. Waiting too long may hurt your claim.
Do not wait passively for the recall period to expire. If you are recalled to work before you have taken legal advice and objected to the layoff, it may be too late to exercise certain legal rights. Or, if too much time passes without action, you may be deemed to have acquiesced to the layoff. It may also be more difficult to object to a future — and perhaps longer — temporary layoff.
Takeaways for Employees
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- Consult with or hire an employment lawyer to review any offer of employment or employment agreement presented to you before you accept and/or sign. In most cases, the inclusion of a temporary layoff provision could be highly detrimental to an employee’s job security and livelihood.
- Get legal advice immediately upon being placed on any temporary layoff. Once you are recalled, or perhaps even when the limit is hit or the Employment Standards Act, 2000-prescribed recall date elapses, your options narrow quickly.
- If you were not given a choice about whether to accept a temporary layoff, you may have constructive-dismissal rights.
- Certain conditions must be met for an employer to place an employee on a temporary layoff, and to extend a temporary layoff beyond 13 weeks in any 20-week period. Obtain legal advice to determine if you have been placed on a lawful layoff and to discuss your rights.
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The Bottom Line
Temporary layoffs exist for a reason: to give employers a real breather when times are tough. But, they are not supposed to be indefinite, and they cannot be unilateral. Employers often overreach when it comes to temporary layoffs, and workers are often unaware of their rights and options.
If you have been placed on a temporary layoff and want to understand where you stand or exercise your rights, contact Zubas Flett Liberatore Law LLP for counsel at 416-593-5844 or questions@employment-lawyers.ca.