In this blog, we will illustrate the definitions of layoff and termination and the distinction between them.


The Definition

A layoff refers to a temporary cessation of work. If an employee is laid off, they will temporarily stop working for their employer with the employment agreement still intact. The employee is expected to be called back to work by the employer after a period of time. It often occurs when there is a shortage of work or an economic downturn.

Constructive Dismissal

Employers are expected to abide by the layoff provisions in the Employment Standards Act, 2000. In normal circumstances, a temporary layoff cannot be no more than thirteen (13) weeks in any period of twenty (20) consecutive weeks. If the employer breaches this provision, the layoff may be deemed constructive dismissal. Thus, the laid off employee is entitled to the termination pay.

However, it is important to note that as of March 21, 2020, employees cannot claim constructive dismissal based on the Employment Standards Act (“ESA”) for temporary cuts to their pay or hours of work because of COVID-19, according to Regulation 228/20 issued by the Ontario government on March 29, 2020. These employees are deemed to be on “emergency leave”. On December 17, 2020, the Ontario Government amended Regulation 228/20 by extending the “COVID-19 Period” to July 3, 2021. In other words, employees who experience a temporary layoff due to COVID-19 will be on a deemed emergency leave until July 3, 2021.

Since the Regulation only deals with constrictive dismissal claims under the Employment Standards Act but not the common law, it may not necessarily bar employees from bringing common law constructive dismissal claims to the court.

If you are experiencing constructive dismissal issues in connection to your temporary layoff, it is advisable to seek legal advice from an experienced employment lawyer.


The Definition

Unlike a layoff, termination occurs when an employer permanently severs the working relationship with its employees. Once an employee is terminated, the employer does not intend to call them back to work in future.

There are two types of termination, namely termination without cause and termination for cause.

Termination Without Cause

In Ontario, an employer is entitled to terminate any employee at any time for any reason that is not discriminatory. However, it must provide notice or pay in lieu of notice of termination. This is what we call termination without cause. Examples of termination without cause due to the Covid-19 includes, inter alia, lack of work, reorganization, redundancy of work force.

If you are terminated without case, you are entitled to termination/severance pay determined by either your Employment Standards Act (“ESA”) minimums or common law reasonable notice. In most cases, a terminated employee could receive a much greater severance package under common law than the minimum standards under the ESA. Common law severance pay is available to any employee, as long as they are not terminated for just cause and as long as they are not subject to a valid termination clause that replaces the common law entitlements.

The common law severance package that an employer should pay to a terminated employee depends on a number of factors. Relevant factors include, inter alia, length of service, age, salary, the position the employee held within the company, whether the employee was actively recruited and the general economy. There is no easy calculation to determine the amount of severance that an employee will receive at common law. Therefore, it is advisable to consult an experienced employment lawyer about this.

Termination for Cause

In the case of termination for cause, it means that an employer may not have to provide with an employee with common law severance.

It is a high bar to terminate someone with cause. Generally, there must be some serious misconduct that harms the employment relationship, such as theft, violence, fraud rising to the level of gross misconduct. The reason for the high bar is that in the event of willful misconduct, an employee will not receive any termination or severance pay.

If you are an employee who has been fired for cause, you should absolutely reach out to a lawyer to review the circumstances of your dismissal.  You may have a case for wrongful dismissal.

If you are experiencing any issues in connection to layoff or termination, Top Toronto employment lawyer, Stacey Ball can help you determine your legal options. Please call us at 416-921-7997, extension 227.