Temporary Layoffs in Ontario: The Quiet Way Employers Create a Termination They Never Meant to Give

Work slows down. Orders stop arriving. Sending part of the crew home for a few weeks looks like the decent option, gentler than cutting jobs outright, and most owners treat it as a pause rather than an ending. Ontario law does not always read it the same way. The gap between what an employer intends and what the statute actually counts is where the money disappears.

Here is why the first phone call matters. A Toronto employment lawyer tends to ask one question before anything about the business case, and owners are often surprised by it. Does the written employment contract give you the right to lay this person off at all? That single clause, or the absence of it, decides most of the exposure that follows.

How Long a Temporary Layoff Can Last Under Ontario Employment Standards

The Employment Standards Act, 2000 sets the ceiling. A layoff stays temporary for up to 13 weeks in any 20 consecutive weeks. It can run longer, to less than 35 weeks in 52, when the employer keeps something in place during the break, such as continued benefits or pension contributions, substantial payments, or supplementary unemployment benefits. Since 27 November 2025, there is a third route for non-union employees: an extended layoff of 35 weeks or more in 52 weeks, or under 52 weeks in 78 weeks. That one is not automatic. It requires a written agreement, a written recall date given to the employee in advance, and approval from the Director of Employment Standards.

Why the Employment Contract Decides More Than the Statute Does

Staying inside the statutory window does not, on its own, make a layoff safe. Where the contract says nothing about layoffs, sending an employee home without pay can amount to constructive dismissal at common law, because the employer has changed a major term of the deal without agreement. The employee can treat the job as finished and claim common-law notice, which runs well past the ESA minimums and can reach 24 months in the right circumstances. What stings is the timing. Employers usually learn this option exists only when the demand letter arrives.

When a Temporary Layoff Becomes a Deemed Termination

Cross the applicable ESA limit without recalling the employee, and the layoff will convert to a deemed termination. The termination date is not the day the clock ran out. It is the first day of the layoff. Termination pay and severance pay, where the employee qualifies, were owing weeks or months before anyone in the office realised the situation had changed. Interest and a Ministry of Labour claim can follow, and by then the paperwork trail is already whatever it is.

Five things worth having on file before any layoff notice leaves the building:

• A layoff clause the employee actually agreed to in writing
• A recall date, communicated in writing before the layoff starts
• Proof of any benefit or pension contributions continued during the break
• The Record of Employment filed with Service Canada on time
• A calendar tracking every layoff week against the rolling 20, 52 and 78 week windows

That last one catches people out more than it should. The windows roll forward from the first day of layoff rather than being tied to the calendar year, and separate layoff periods are added together within the same window. A business that sends staff home for six weeks in February and another eight in June has quietly used 14 weeks, not eight.

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What a Layoff Mistake Costs an Ontario Employer

The arithmetic is unkind. A layoff meant to save payroll during a slow quarter can result in common-law notice for a long-service employee, legal costs on both sides, and a settlement that outstrips the savings several times over. Add the internal cost, which nobody budgets for, of managers pulled into producing records that were never properly kept. Smaller employers feel this the hardest, since a single claim from a single supervisor can outweigh a year of careful cost control.

None of this means layoffs are off the table. Plenty of Ontario businesses use them properly, recall on schedule, and never hear another word about it. The difference is almost always preparation, and preparation happens before the notice goes out rather than after.

Next steps for any employer weighing a slowdown: pull the contracts of everyone who might be affected, check whether a layoff right exists in writing, and get the wording of the notice and the recall date reviewed before delivery. Employment counsel who acts for management can do that review in a short sitting. The alternative is finding out what the contract says at the same time the other side does.