In Ontario, placing an employee on a temporary layoff without explicit permission in their employment contract is usually considered constructive dismissal under common law. Even if the layoff strictly follows the timelines of the Ontario Employment Standards Act (ESA), you may still be legally entitled to treat the layoff as a termination and demand your full severance package immediately.
When an economic downturn hits or a business loses a major client, employers in cities like Windsor, Hamilton, and Toronto often turn to temporary layoffs to cut costs. 📈 They assume that because the Ontario Employment Standards Act (ESA) contains rules regarding temporary layoffs, they have a blanket legal right to send workers home without pay. This is one of the most common and costly misconceptions in Canadian employment law. Unless you explicitly agreed to the possibility of a temporary layoff in your employment contract, your employer generally cannot just stop paying you.
Under Ontario common law, an employment contract requires you to perform work and the employer to pay you for that work. ⚖ Removing your duties and halting your wages is a fundamental breach of that contract. Therefore, you do not have to sit at home for months waiting for a recall. You have the right to treat the sudden layoff as a “constructive dismissal,” meaning you consider yourself fired, allowing you to pursue your full severance entitlements immediately.
Step-by-Step Guide to Responding to a Temporary Layoff
If you have just been handed a temporary layoff notice, you must act strategically. 📋 Accepting the layoff or waiting too long to object can severely damage your legal standing. Follow these steps to protect your financial rights.
Step 1: Reviewing Your Employment Contract
The very first thing you need to do is locate your original employment contract or any updated agreements you signed. 🔍 Look for any specific clause that mentions “temporary layoffs.” If there is a valid, clearly written clause allowing the employer to lay you off, your ability to claim constructive dismissal is limited. If the contract is silent on the matter, you are in a very strong legal position.
Step 2: Evaluating the ESA Layoff Terms
Even if an employer attempts a layoff, they must still comply with the ESA. 💵 Under the ESA, a standard temporary layoff can last no more than 13 weeks in any 20-week period. This can be extended to 35 weeks in a 52-week period if the employer continues to pay into your benefit plans or pension. If the employer fails to follow these strict statutory timelines, the layoff automatically becomes a termination under the ESA, guaranteeing you minimum statutory severance regardless of your contract.
Step 3: Objecting and Notifying the Employer
If you wish to claim constructive dismissal, you must object to the layoff quickly. ✉️ If you remain silent or wait three months to see what happens, Ontario courts may rule that you implicitly accepted (condoned) the layoff. Have an employment lawyer draft a formal letter to your employer explicitly rejecting the layoff and stating that you view their actions as a constructive dismissal.
Step 4: Pursuing Your Common Law Severance
Once you declare a constructive dismissal, your lawyer will begin negotiating your severance package. 💰 In Ontario, common law severance is based on your age, years of service, and the nature of your position. If the employer refuses to pay, your lawyer will escalate the matter by filing a lawsuit at the Superior Court of Justice, demanding full compensation for the reasonable notice period you were denied.
How Much Does it Cost to Challenge a Layoff?
Navigating a temporary layoff dispute requires professional help, but the costs are manageable for most Ontario workers. 💸 Here is what you can expect to pay a legal professional:
- Contract and Layoff Review: Most employment lawyers will review your layoff notice and employment contract for a flat fee ranging from $300 CAD to $500 CAD.
- Contingency Billing: Because constructive dismissal claims involving layoffs are often straightforward, many lawyers work on a contingency fee, taking 25% to 35% of the total severance package recovered.
- Hourly Rates: If you elect to pay hourly, rates typically fall between $350 CAD and $750 CAD per hour in major hubs like Toronto.
- Court Fees: If a lawsuit must be initiated, expect to pay approximately $330 CAD in filing fees at the Superior Court of Justice.
How Long Will It Take to Get My Severance?
The timeline depends entirely on the employer’s willingness to accept their legal mistake. ⌛ If they realize you have proper legal representation and no contract clause allows the layoff, a settlement can often be reached in 4 to 10 weeks. If the employer insists on testing the matter in court, litigation could extend the timeline to 12 to 18 months before a final resolution.
ESA Temporary Layoff Rules vs. Common Law Constructive Dismissal
| Legal Framework | Rules Regarding Temporary Layoffs | Result for the Employee |
|---|---|---|
| Employment Standards Act (ESA) | Permits temporary layoffs of up to 13 weeks (or 35 weeks if benefits are maintained). | Provides a minimum standard. If the timeline is breached, it is an automatic ESA termination. |
| Common Law | Does NOT permit layoffs unless explicitly agreed upon in a valid employment contract. | Allows the employee to immediately claim constructive dismissal and demand full severance. |
Frequently Asked Questions (FAQ)
Do I lose my severance if I wait for a recall?
Yes, this is a major risk. If you quietly accept the layoff and wait months hoping to be called back, Ontario courts may decide you ‘condoned’ the layoff. This severely weakens your ability to claim constructive dismissal later. You must object promptly.
Can I work somewhere else during a temporary layoff?
Yes, and you are actually encouraged to. Under common law, you have a duty to ‘mitigate’ your damages by looking for replacement income. Finding a new job does not necessarily erase your employer’s obligation to pay severance for the wrongful dismissal.
What if my industry relies heavily on seasonal layoffs?
If you work in an industry where seasonal layoffs are standard practice (like construction or landscaping), and it has been a historical part of your employment year after year, courts generally accept it as an implied term of your contract. Claiming constructive dismissal in these specific industries is much harder.
Can I collect EI while on a temporary layoff?
Yes. If you choose not to pursue a constructive dismissal claim and wait for a recall, your employer must issue a Record of Employment (ROE) with code ‘A’ (Shortage of Work). This allows you to apply for standard Employment Insurance benefits through Service Canada during the layoff period.
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