What is a Layoff?

What is a layoff?  This question may seem simple to many, but it is not.  Employees and employers often misuse the term layoff and the effects can be significant.

A True Layoff

A true lay off involves a situation where the employee knew in advance that her employment would end at a certain point.  At the time of the layoff, the employer and the employee intend for her to return to work at a later date.  The temporary layoff, according to the Employment Standards Act, must be 13 weeks or less in a given 20-week period.  If the layoff is to be longer than 13 weeks, it must be less than 35 weeks and the employer will typically continue benefits during this period.

An example of a true layoff is a seasonal employee whose employment contract states that each year at winter-time she will be laid off for 10 weeks.

Common use of Layoff

Many people say they have been ‘laid off’ when they have actually been terminated.  If an employee has been laid off and there is no possibility that he will return to work for the employer this is a termination.  A termination means the employer has obligations to provide notice or pay in lieu of notice of termination.  See here for information about employee entitlements at termination.

An example of this situation is when an employee receives a severance or termination package from his employer, but the employer says “we have to lay you off.”

When is a Layoff Actually a Termination? 

Occasionally, an employer will lay off an employee with the intention to recall the employee at some point in the future.   Unless the employee has agreed to the possibility of a layoff in writing in a legally enforceable contract, or a layoff is an industry custom like the construction industry a layoff is generally a termination at law.  In this situation, the employer generally has a legal obligation to provide the employee with notice of termination (or pay in lieu of this notice).  This was confirmed by the Ontario Court of Appeal Elsegood v. Cambridge Spring Service (2001) Ltd. and many times since then.

If you have been laid off, you may have rights beyond being recalled to work at some point and a lawyer at MacLeod Law Firm would be happy to assist you. Please contact us at [email protected] or 647-204-8107.