The Difference Between Laid Off and Terminated

Updated July 8, 2021

difference between laid off and terminatedThe terms laid off and terminated are sometimes used interchangeably when talking about the end of an employment relationship. However, each of these terms has a unique legal meaning that imposes rights and responsibilities on employees and employers. Read on to find out the meaning of each of these terms and the distinction between them.

What does it mean to be “laid off”?

A layoff is a temporary suspension of work. If an employee is “laid off” by their employer, this means that the employee will stop working and being paid for a period of time, but the employment relationship is still intact and there is an intention on the part of the employer to bring the employee back to work. This often occurs when there has been a reduction in work available and the employer cannot pay employees for a certain duration of time. This has occurred on a large scale as a result of the lockdown measures imposed in response to the COVID-19 pandemic.

What is the law in regard to layoffs in Ontario?

At common law, there is no basis upon which an employer can temporarily layoff an employee, and any layoff under the common law is considered a constructive dismissal (meaning it’s not an explicit termination but the employer has breached a fundamental term of the employment agreement, ending the relationship). A layoff can be based on a provision in the employment contract or an industry norm, such as in seasonal work.

Under the Employment Standards Act, in normal circumstances, an unpaid temporary layoff can be no longer than 13 weeks in any period of 20 consecutive weeks. This means that under normal circumstances, if a layoff is longer than 13 weeks, and there is no temporary layoff clause in the employment contract, it amounts to a constructive dismissal and an employee is entitled to termination pay.

As a result of COVID-19, the Ontario government has extended the amount of time that an employee can be laid off, without it amounting to a constructive dismissal under the Employment Standards Act. As opposed to the usual 13 weeks, an employee laid off after March 1, 2020 will have to be called back to work by September 25, 2021.  However, employees may still have access to judge-made common law remedies. If an employee is not returned to their position under the same conditions and at the same rate of pay, the employee could have a claim for constructive dismissal.

What does it mean to be terminated?

In contrast to a layoff, a termination is a permanent cessation of the relationship between the employer and the employee. A termination occurs one of two ways: with cause or without cause.

Unlike a temporary layoff, if an employee is terminated without cause, they are entitled to advanced notice of the end of their employment. An employee is entitled to the minimum amount of notice stipulated in the Employment Standards Act, the notice outlined in their employment contract, or reasonable notice at common law. This notice can be “working notice” or paid as a lump sum as payment in lieu of notice.

If an employer fails to provide the amount of notice to an employee that is legally required, this is a “wrongful dismissal”.

Conversely, if an employee is terminated with cause, meaning they have committed some sort of wilful misconduct, they are not entitled to any notice of termination or payment in lieu thereof when they are terminated.

If you have been terminated or placed on a temporary layoff, you should consult with an employment lawyer to learn about your options and your rights. We offer free 30-minute phone consultation with a licensed legal professional.

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