If you are placed on a temporary layoff in Ontario and your contract does not explicitly allow it, you can immediately claim constructive dismissal and demand full severance. Even if the layoff is legal, if it exceeds 13 weeks (or 35 weeks with benefits), it automatically becomes a permanent termination under the ESA. Filing a civil claim costs $339 CAD at the Superior Court.
During economic downturns or supply chain shortages, many Ontario employers attempt to cut costs by placing workers on a temporary layoff. 📍 They tell you to go home, apply for Employment Insurance (EI), and wait for a phone call to return to work. However, what most employers fail to realize-or purposely ignore-is that under Ontario common law, an employer does not have an automatic right to temporarily lay off an employee.
Unless you signed an employment contract that specifically contains a temporary layoff clause, or you work in an industry where it is standard practice (like seasonal construction), sending you home without pay is fundamentally a breach of your contract. You have the right to treat it as a constructive dismissal right away. Furthermore, even if the layoff is permitted, the Employment Standards Act (ESA) places strict time limits on how long you can be kept waiting before the layoff magically transforms into a permanent, wrongful dismissal.
Step-by-Step Process in Ontario
Whether you work at a factory in Brampton, a tech firm in Waterloo, or a retail store in Toronto, you do not have to wait in limbo forever. 📚 Follow these steps to trigger your right to severance pay.
Step 1: Reviewing Your Employment Contract
The instant you are handed a temporary layoff notice, check your original employment agreement. Does it explicitly state the employer has the right to lay you off temporarily? If there is no clause, the employer has technically fired you without cause. You can choose to accept the layoff, or you can immediately consult a lawyer to claim constructive dismissal.
Step 2: Monitoring the ESA Timelines
If you choose to wait, or if your contract allows the layoff, you must track the time carefully. ⌛ Under the Ontario ESA, a temporary layoff automatically becomes a permanent termination if it exceeds certain legal limits.
| Layoff Condition | Maximum Time Allowed | Result After Deadline |
|---|---|---|
| Standard Layoff (No benefits continued) | 13 weeks in any 20-week period. | Automatic Termination (Severance Owed) |
| Layoff with Benefits Continued by Employer | 35 weeks in any 52-week period. | Automatic Termination (Severance Owed) |
Step 3: Applying for Employment Insurance (EI)
You should immediately apply for regular EI benefits through Service Canada to secure a temporary income. The employer must issue a Record of Employment (ROE) stating the reason for the interruption of earnings is a shortage of work. Receiving EI does not stop you from eventually suing for severance pay.
Step 4: Refusing to Accept a Pay Cut Upon Recall
Sometimes, an employer will “recall” you before the 13-week deadline expires, but they will offer you fewer hours, a lower salary, or a demotion. ⚠️ You do not have to accept a lesser job. If they recall you to a fundamentally worse position, it is a constructive dismissal, and you can demand your full common law severance.
Step 5: Consulting an Employment Law Firm
Once the 13-week (or 35-week) deadline passes, your employment is legally deemed terminated retroactively to the very first day of your layoff. You must immediately hire an Ontario employment lawyer to issue a demand letter to your employer for your full common law notice period.
Step 6: Issuing a Statement of Claim
If the employer ignores the ESA rules and refuses to pay your severance, your lawyer will launch a wrongful dismissal lawsuit by filing a Statement of Claim at the Superior Court of Justice. 💼
How Much Does it Cost in Ontario?
Pursuing a claim for a deemed termination involves standard legal costs:
- Court Filing Fees: Initiating a lawsuit at the Superior Court of Justice requires a $339 CAD filing fee.
- Law Firm Fees: Employment lawyers usually handle these straightforward ESA violations on a contingency basis, taking roughly 25% to 35% of the final settlement. If you prefer hourly, rates range from $300 to $650 CAD.
- Mediation: If private mediation is required to avoid a trial, a half-day session generally costs $1,500 to $3,500 CAD, split between both parties.
How Long Does the Process Take?
The timeline is dictated strictly by the ESA rules and your limitation period. 📅
- The Waiting Period: You must wait either 13 weeks or 35 weeks depending on whether your employer continued to pay your health benefits during the layoff.
- Statute of Limitations: Once the deemed termination date occurs, you have exactly 2 years to file your civil lawsuit.
- Litigation Process: Negotiating a settlement or progressing through the court system usually takes 8 to 18 months once the lawsuit is filed.
Frequently Asked Questions (FAQ)
Do I have to accept a temporary layoff if it is not in my contract?
No. If your contract does not mention layoffs, you can refuse it, treat your employment as terminated immediately, and sue for constructive dismissal. However, once you agree to the layoff and wait at home, you may be stuck waiting for the 13-week limit to expire.
What happens if my employer goes bankrupt during the temporary layoff?
If the company formally files for bankruptcy under the BIA while you are laid off, you become an unsecured creditor. You will not be able to sue them for severance in court, but you can apply for the federal Wage Earner Protection Program (WEPP) to recover some lost funds.
If I find a new job during the layoff, do I lose my severance?
If you find a new, comparable job before the 13 or 35-week deadline expires, you are generally considered to have resigned, which may forfeit your severance. If you find the job after the deadline (when you are officially terminated), it simply acts to mitigate your damages.
Can my employer extend the layoff by bringing me back for one day?
Under the ESA, the 13-week limit is calculated as 13 weeks of layoff within a rolling 20-week period. Bringing you back for a single shift might temporarily pause the clock, but it does not completely reset the 13-week counter.
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