Laid Off vs Terminated in Ontario: What’s the Real Difference?
Employees in Ontario often say:
“I got laid off.”
“I was terminated.”
“My employer let me go.”
In everyday conversation, these all sound the same – you are out of a job. But under Ontario employment law, there is an important difference between being laid off vs terminated, and that difference can affect:
Whether you are owed severance pay
How much notice or pay in lieu you receive
Whether you may have a wrongful dismissal or constructive dismissal claim
This blog explains the difference between laid off and terminated in Ontario, focusing on non-unionized employees, and when you should speak with an Ontario employment lawyer at Vanguard Law.
At a glance: Laid off vs terminated in Ontario
Here is a simple, at-a-glance comparison.
Laid off (temporary layoff):
Your job is technically “on pause,” not formally ended.
You are not working and usually not being paid.
There are strict time limits under Ontario’s Employment Standards Act, 2000 (ESA) for how long a layoff can last before it is treated as a termination.
If those limits are exceeded, the layoff is deemed a termination under the ESA.
Even if the layoff is short, if your contract does not clearly allow temporary layoffs, it may be a constructive dismissal at common law.
Terminated:
Your employment is ended.
You may be terminated without cause (most common), in which case you are usually entitled to notice, termination pay and possibly severance.
You may be terminated for cause in serious cases of misconduct. Employers often claim “just cause,” but the legal standard is high.
In many cases, you may be entitled to more than the ESA minimums, under what is called common law reasonable notice.
What does “laid off” mean in Ontario?
A temporary layoff generally means your employer stops giving you work and pay for a limited time but says the employment relationship is not over.
Under the ESA, a layoff is considered “temporary” only if it stays within certain limits. In many situations, that means:
Up to 13 weeks in any 20-week period, or
Up to 35 weeks in any 52-week period, but only if specific conditions are met, such as:
Your employer continues making contributions to your benefits plan, or
You receive certain payments from your employer, or
You are receiving supplementary unemployment benefits.
Once a layoff goes beyond the ESA limits, your employment is usually treated as terminated, and you become entitled to termination pay and, in some cases, statutory severance pay.
The common law twist: constructive dismissal
Even if your layoff fits inside the ESA time limits, that does not automatically make it legal.
At common law, Ontario courts have repeatedly said that a temporary layoff can amount to constructive dismissal if:
Your employment contract does not clearly allow the employer to lay you off; or
There is no history or “past practice” of temporary layoffs in your workplace.
In plain language: if your employer suddenly tells you that you are “temporarily laid off” when your contract never mentioned layoffs, the law may treat this as if you were wrongfully dismissed.
That can mean entitlement to common law severance, which is often much higher than the ESA minimums.
What does “terminated” mean in Ontario?
A termination occurs when your employment is ended, either with cause or without cause.
Termination without cause
This is the most common scenario. An employer can generally terminate a non-unionized employee without cause as long as they provide proper notice or pay in lieu of notice.
You may be entitled to:
ESA termination pay / notice of termination, and
In some cases, additional ESA severance pay, and
Common law reasonable notice, unless your contract legally limits it.
Common law reasonable notice depends on factors such as:
Your age
Your length of service
The nature of your position
The availability of similar employment
In many cases, the common law amount is significantly more than the ESA minimums.
Termination for cause (with just cause)
A termination for cause (or “with just cause”) is reserved for serious misconduct, such as:
Serious dishonesty or fraud
Gross insubordination
Serious harassment or violence
If an employer can prove just cause, they may not have to pay ESA termination pay or common law notice. However, the legal test for just cause is high, and employers often overstate misconduct as “cause” when it is not. If you have been terminated “for cause,” you should obtain legal advice quickly.
When does a layoff become a termination?
There are two main ways a layoff can effectively become a termination in Ontario.
1. Deemed termination under the ESA
If a layoff exceeds the ESA’s temporary layoff limits (for example, it lasts too long or the required conditions are not met), the ESA treats your employment as terminated.
Importantly, in many situations, the termination is treated as having occurred on the first day of the layoff. That means your employer may owe you termination pay and potentially severance pay back to that date.
2. Constructive dismissal at common law
Even if your employer is technically within the ESA limits, you may still be considered terminated at common law if:
There is no layoff clause in your employment contract, and
The employer unilaterally stops giving you work and pay, or
The layoff is indefinite or overly long, with no clear recall date.
In that situation, you may be able to treat yourself as dismissed and seek common law damages, which often exceed the ESA minimums by a wide margin.
Laid off vs terminated: Which is “better” for an employee?
Clients often ask Vanguard Law:
“Is it better to be laid off or terminated?”
The legally accurate answer is: it depends on what is actually happening in law, not on the label your employer uses.
In general:
A true, temporary layoff that is clearly allowed under your contract and kept within ESA time limits may give you a chance to return to work. However, you may not receive severance right away.
A termination without cause normally triggers immediate ESA entitlements and, in many cases, a right to claim common law reasonable notice, which can be worth many months of pay.
On the other hand, if your “temporary layoff” is:
Too long, or
Not authorized by your contract, or
Poorly documented and indefinite,
then in practice you may have even stronger rights, because you can often argue that you were constructively dismissed and are entitled to compensation as if you were terminated without cause.
Practical examples
Example 1: “Temporary layoff” that becomes a termination
You are laid off for many months, beyond the ESA limits, and your benefits stopped partway through. Your employer keeps saying “you’re still laid off” but offers no firm recall date.
Legally, this may no longer be a valid temporary layoff. It may be treated as a termination, and you may be owed ESA termination pay, possible ESA severance, and common law damages.
Example 2: No layoff clause in your contract
Your employer tells you there is no work and that you are on unpaid “temporary layoff until further notice.” Your written employment contract never mentions layoffs.
Even if the layoff is short, a court may say your employer had no right to unilaterally lay you off. That can amount to constructive dismissal, giving you the right to seek severance as though you were terminated.
Example 3: Recall date keeps moving
Your employer gives you a recall date, then pushes it back several times. Months pass, and you still have no clear return to work.
At some point, this may no longer be a true “temporary” layoff. The longer the situation drags on, and the less certain the recall date becomes, the stronger a constructive dismissal argument you may have.
What to do if you’ve been laid off or terminated in Ontario
Whether you’ve been laid off or terminated, the steps below can help protect your rights.
1. Get it in writing
Ask for written confirmation of:
Whether you are being laid off or terminated
The effective date
Any stated recall date (for layoffs)
Whether your benefits will continue and for how long
Having a paper trail makes it easier to assess your rights.
2. Do not rush to sign anything
Many employers present a “standard” severance package and ask you to sign quickly, often within a few days.
That first offer is often negotiable and frequently below what the employee is actually owed.
3. Review your employment contract
Your contract may contain:
A layoff clause
A termination clause limiting notice or severance
Other language that affects your rights
These clauses can make a huge difference to your entitlements. Some are enforceable, some are not. An Ontario employment lawyer can review and interpret them.
4. Consider applying for EI
If you are out of work due to layoff or termination, you may be eligible for Employment Insurance (EI). Your EI rights are separate from your ESA and common law rights.
5. Speak with an Ontario employment lawyer
Before accepting a severance package or agreeing to a layoff, it is wise to speak with a lawyer. At Vanguard Law, we can:
Review your layoff or termination letter
Assess whether you are actually dealing with a temporary layoff, deemed termination, or constructive dismissal
Estimate your possible ESA and common law entitlements
Negotiate improved severance packages, and if necessary
Represent you in a wrongful dismissal or constructive dismissal claim
Your legal rights do not depend on what your employer calls it. They depend on what the law says it is.
SEO-friendly FAQs: Laid off vs terminated in Ontario
You can use these as FAQ sections on your website to capture additional search traffic.
1. What is the difference between laid off and terminated in Ontario?
In Ontario, being laid off usually means your job is temporarily suspended, with the possibility of recall, subject to strict ESA time limits. Being terminated means your employment has ended.
If a layoff lasts too long, or if your employer has no contractual right to lay you off, it may become a termination or constructive dismissal, giving you rights to severance.
2. How long can I be laid off before it counts as a termination in Ontario?
Under the ESA, a layoff can only last for a limited period (for example, up to 13 weeks in 20, or up to 35 weeks in 52 in certain circumstances). If your layoff exceeds those limits, it is generally treated as a termination, and your employer must provide termination pay and may owe severance pay.
3. Can my employer lay me off if my contract does not mention layoffs?
Often, no – at least not without legal risk.
If your contract does not clearly allow temporary layoffs, a sudden layoff can amount to constructive dismissal. In that case, you may be able to treat your employment as terminated and seek common law severance. Always get legal advice before agreeing to a layoff in this situation.
4. If I am laid off in Ontario, do I get severance pay?
Not always immediately.
During a valid, short temporary layoff, you may not receive severance right away. However, if:
The layoff exceeds ESA temporary layoff limits, or
Your employer had no right to lay you off under your contract,
then you may be considered terminated or constructively dismissed and become entitled to termination pay, severance pay (if the ESA test is met), and potentially common law damages.
5. Is it better to be laid off or terminated in Ontario?
There is no universal answer. A short, lawful temporary layoff may preserve your job if the business recovers. A termination without cause, on the other hand, usually triggers immediate payment obligations, and your total entitlement may be significantly higher than what your employer first offers.
The key question is not what your employer calls it, but whether, in law, you have experienced a temporary layoff or an actual termination/constructive dismissal. An Ontario employment lawyer can help you understand the difference in your specific case.
How Vanguard Law can help
Vanguard Law advises both employees and employers across Ontario on:
Temporary layoffs and recalls
Termination without cause and “for cause” dismissals
Wrongful dismissal and constructive dismissal claims
ESA minimum standards vs common law reasonable notice
Severance package reviews and negotiations
If you have been laid off, terminated, or are simply confused about your status, contact Vanguard Law before you sign anything. Getting legal advice early can protect your rights and improve your outcome.