As employers navigate slowdowns and restructurings, “temporary layoffs” are increasingly common. But many employees, and plenty of employers, don’t realize that a temporary layoff is only lawful in specific circumstances. Handled wrong, it can amount to a constructive dismissal.

What the ESA allows

The Employment Standards Act, 2000 (the “ESA”) sets limits on how long a temporary layoff can last:

  • Up to 13 weeks of layoff within any period of 20 consecutive weeks; or
  • Up to 35 weeks within 52 consecutive weeks, if certain conditions are met, such as the employer continuing benefits or the employee continuing to receive some pay, among other requirements.

If a layoff runs past these limits, the ESA treats it as a termination, entitling you to severance.

The catch employers miss

Here’s the part that surprises people: the ESA permits temporary layoffs, but it doesn’t automatically give an employer the right to impose one. Unless your employment contract expressly allows temporary layoffs, or there’s a well-established practice in your industry, being placed on a temporary layoff without your agreement can itself be a constructive dismissal at common law.

In other words, you may be able to treat the layoff as a termination and pursue full severance, even if the employer intended it as temporary and even if it stayed within the ESA’s time limits.

Timing matters

Constructive dismissal claims are sensitive to how you respond. If you accept the layoff and wait too long without objecting, you risk being seen as having agreed to it. If you treat it as a dismissal, you need to do so properly and promptly. This is genuinely a situation where a quick conversation early can change your options significantly.

For employers

If you’re considering layoffs, don’t assume the ESA’s time limits are the whole story. Without a clear contractual right to lay off, you may be exposing yourself to constructive dismissal claims, turning a cost-saving measure into a severance liability. Getting the contract language and the process right beforehand is far cheaper than defending a claim afterward.

Not sure where your layoff stands?

Whether you’ve just been laid off and aren’t sure it’s legitimate, or you’re an employer trying to do this correctly, the rules are easy to get wrong. Reach out for a consultation and we’ll help you sort out where you actually stand.