The Difference Between Layoff and Termination in Ontario
In Ontario, the terms "layoff" and "termination" are often misunderstood or used interchangeably, but they have distinct legal meanings under the Employment Standards Act. Each has different implications for an employee's rights and entitlements. Here’s a breakdown to help you understand the differences and what they mean for you.
What Is a Layoff?
A layoff occurs when an employer temporarily suspends an employee’s work without ending the employment relationship. Layoffs are often used during periods of reduced business operations, economic downturns, or seasonal work slowdowns.
Under the ESA:
- A layoff can last up to 13 weeks in a consecutive 20-week period, with no obligation for the employer to provide severance or termination pay during this time.
- If the employer continues certain benefits or provides a written agreement, the layoff period can extend up to 35 weeks in a 52-week period.
What Rights Do Employees Have During a Layoff?
While a layoff is temporary, employees still retain certain rights:
(1): Reinstatement: If the employer recalls the employee within the allowed timeframe, they must return to their previous position or a comparable one.
(2): Constructive Dismissal: If an employer imposes a layoff without the employee’s agreement and no such provision exists in the employment contract, the layoff may be treated as a constructive dismissal. This allows the employee to resign and seek compensation as if they were terminated.
If the layoff extends beyond the maximum allowable period, it is considered a termination under the ESA, triggering severance or termination pay obligations.
What Is a Termination?
A termination occurs when an employer ends the employment relationship, either with or without cause. Terminations can take three primary forms:
(1): Termination With Cause: The employer ends the relationship due to serious misconduct by the employee. In these cases, the employer is not required to provide notice or pay in lieu of notice.
(2):Termination Without Cause: The employer ends the relationship for reasons unrelated to misconduct, such as downsizing or restructuring. In this case, the employer must provide notice or pay in lieu of notice, and potentially severance pay.
(3):Constructive Dismissal: As noted above, significant changes to an employee’s job or working conditions can be treated as a termination.
What Rights Do Employees Have Upon Termination?
If your employment is terminated, you are entitled to:
- Notice of Termination or pay in lieu of notice as outlined in the ESA.
- Severance Pay if you qualify under the ESA (e.g., if you’ve worked for at least five years for an employer with a payroll of $2.5 million or more).
- Additional compensation under common law, depending on your length of service, role, and age.
How an Employment Lawyer can help your case?
Understanding the difference between a layoff and a termination is essential for protecting your employment rights in Ontario. While layoffs are meant to be temporary, they can lead to a termination if they exceed ESA limits or violate your contract.
Free Consultation with Ottawa Employment Lawyers
If you’re facing either scenario, consulting an employment lawyer can help you determine whether your employer is acting within the law and ensure you receive any compensation you’re entitled to. Please do not hestitate to reach out to our team of experienced Ottawa employment lawyers for a free legal consultation. Randy Ai Law Office can be contacted at (343) 321-0800 or fill out the contact form.
