Ontario Employment Laws – Layoff Rights in Ontario

Employee rights in Ontario are set out in the Employment Standards Act (ESA), as well as contact and common law. An employee has a right not to be laid off if it is not set out expressly in their employment contract, or if it is not something they have otherwise agreed to. In other words, if it is not a term of their employment, it cannot be enforced.

If an employee is temporarily laid off for covid related reasons, such as an economic downturn, it can entitle an employee to severance. Additionally, any significant change to your employment can be treated as a constructive dismissal, which may give rise to a wrongful dismissal claim.

If your employment has changed significantly and you believe you have been constructively dismissed, please give our firm a call. As each individual situation will vary, it is important to seek professional advice from a lawyer at our firm to discuss your options.

This blog discusses some of the main issues concerning layoffs.

What is a Temporary Lay Off?

A temporary layoff is when an employee is not permitted by an employer to work for a period of time, with an expectation that the employee will return to work at a future date.

A lay off can include either:

  • Time not worked by an employee; or
  • Where the employee is earning significantly less (50% or less) or their regular pay before the layoff.

During the coronavirus pandemic, employers are temporarily laying off their employees to reduce the cost of payroll, while they remain closed or partially open. Some layoffs will have exceeded the allowable time under Ontario employment laws and can become an unlawful termination. If this is the case, you have grounds to pursue a wrongful dismissal claim and should contact our firm immediately.

How Long Can I Be Temporarily Laid Off?

A temporary layoff in Ontario can last:

  • Not more than 13 weeks in any period of 20 consecutive weeks
  • If it is more than 13 weeks in any period of 20 consecutive weeks, than less than 35 weeks in any period of 52 consecutive weeks along with:
    • The employee continues to receive substantial payments from the employer
    • The employer continues to make payments under a retirement/pension plan or insurance plan
    • The employee receives supplementary unemployment benefits
    • The employee is employed elsewhere during the lay off and would be entitled for EI if that were not the case

If the situation does not fall within the above categories, then what may start as a temporary layoff may become a termination. If this happens, the employee is entitled to notice or pay in lieu of notice and/or severance. In this case, you should immediately seek professional advice from our firm.

What if I Agree To Be Laid Off?

If an employee agrees to be temporarily laid off because the employer did not have a contractual right to do so, then the employee should ensure, preferably in writing, which day the employer anticipates they can return to their job. This is important because if the employee is not able to come back to work on that date, the employee will have a claim for wrongful dismissal against the employer. The agreed to layoff may become a termination and severance may be owed.

Does my Employer Have to Give Me Notice for a Layoff?

Employers are not required to give notice of the layoff, as long as the employee comes back to work in the time specified by the employer. If the employee is not able to come back to work at the time the employer permitted, this may constitute a termination and the employee should consult our firm!

Can my Employer Lay Me Off Without Pay?

There is an implied term (a default term that is read into a contract when the written contract does not address it) that an employer will allow the employee to perform their job as per their contract. A temporary layoff violates this implied term, and therefore if the employer wants to exercise their power to temporarily lay off an employee, the employer must incorporate this right into the written terms of the employment contract.

In other words, absent such written terms in the employee’s employment contract, that employee is entitled to treat the layoff as a constructive dismissal and is entitled to damages.

What is Constructive Dismissal?

Constructive dismissal is a fundamental change to an employment contract by the employer, and therefore, an employee can treat it as an effective termination of the employment contract. For example, a layoff that is not expressly put in an employment contract may amount to a constructive dismissal. In a case like this, an employee might have a claim for wrongful dismissal and should consult our firm.

Can I get Severance Pay If I am Laid Off Because of Covid?

What is Severance Pay?

Severance pay is compensation that an employer must pay to a qualifying employee who has been dismissed and it is in addition to what is required by statutory notice obligations.

Am I Entitled to Severance Pay?

Severance pay is owed when an employee is dismissed without cause.

In Ontario, only employees with at least five years of service are eligible for severance pay. If you are employed under the federal jurisdiction, the minimum threshold is 12 consecutive months of service. Additionally, severance is also restricted to employers who meet one of the following:

  1. The severance occurred because of a permanent discontinuance of all of part of the employer’s business and the employee is one of 50 or more employees who have their employment relationship severed within a six-month period as a result; or
  2. The employer has a payroll of $2.5 million of more.

How is Severance Pay Calculated?

Severance pay is calculated using a number of factors such as:

  • The employee’s age
  • Years of service
  • Position; and
  • The terms of their employment contract.

To find out how much severance pay you are entitled to, use our severance pay calculator. It is also best to consult our firm to determine if other claims arise from your case.

Generally, in Ontario, an employee is entitled to one week’s pay per year of service, up to a maximum of 26 weeks pay. In the federal jurisdiction, the formula is two days for each complete year of service, with no maximum but a minimum benefit of five days pay. To receive the adequate severance pay you are owed, please consult our firm.

Do I Get Severance If I Quit?

If an employee quits or is dismissed for cause, they are disqualified from severance pay, unless the employee quit because of a constructive dismissal. If the employee quit because of a constructive dismissal, they will be owed severance pay. Constructive dismissal claims can become very complicated and are time sensitive. If you believe you have been constructively dismissed, please call our firm immediately.