Layoff vs. Termination in Ontario: What Is the Difference?

No. Being laid off is not necessarily the same as being terminated under Ontario employment law. A termination permanently ends the employment relationship, while a temporary layoff is intended to pause an employee’s work and pay for a limited period, with the possibility that the employee will be recalled.

However, employers sometimes use the word “layoff” to describe a permanent job loss caused by restructuring, downsizing, or a shortage of work. A temporary layoff can also become a termination if it continues beyond the limits permitted under Ontario’s Employment Standards Act, 2000. In some circumstances, an employee may be able to claim constructive dismissal as soon as the layoff begins.

Understanding the difference between being laid off and terminated is important because it may affect whether you should expect to return to work and whether you are entitled to termination pay, severance pay, or additional compensation. This article explains the difference between a layoff, termination, and being fired under Ontario employment law.

What Is the Difference Between a Layoff and a Termination?

A termination permanently ends the employment relationship. An employee may be terminated with cause or without cause.

A termination without cause does not necessarily mean the employee did anything wrong. An employer may terminate an employee because of restructuring, financial difficulties, the elimination of a position, changing business needs, or other reasons. However, the employer generally must provide the employee with appropriate notice of termination, pay instead of notice, or a combination of the two.

A temporary layoff is different because the employer does not initially treat the employment relationship as permanently over. Instead, the employee’s work and compensation are temporarily reduced or stopped, with the possibility that the employee will return to work.

Temporary Layoff

It is intended to be temporary.
The employee may be recalled to work.
The employee’s work and pay may temporarily stop or be reduced.
It may become a termination if it continues beyond the time permitted under Ontario law.
It may amount to constructive dismissal if the employer did not have the right to impose it.

Termination

It permanently ends the employment relationship.
The employee is not expected to return to work.
The employer may owe notice of termination, termination pay, severance pay, or other compensation.
The employment relationship has already ended.
The employee may have statutory and common law entitlements.

Does Being Laid Off Mean You Were Fired?

Not necessarily. Being fired generally means the employer has permanently ended the employment relationship. A temporary layoff is intended to be temporary, and the employee may be recalled to work.

However, employers sometimes use the word “layoff” to describe a permanent job loss, particularly when employees lose their jobs because of restructuring, downsizing, a business closure, or a shortage of work. In that situation, the employee has still been terminated and may be entitled to notice of termination, termination pay, severance pay, or common law compensation.

Being fired also does not necessarily mean an employee was terminated for cause. Many employees who are dismissed are terminated without cause. This means the employer may end the employment relationship, but it must provide the employee with the notice or compensation required by law.

Is Being Terminated the Same as Being Fired?

In everyday conversation, “terminated,” “fired,” “dismissed,” and “let go” may all describe an employer ending someone’s employment.

The word “fired” is sometimes associated with misconduct or poor performance, but it does not have a single legal meaning. An employee who says they were fired may have been terminated without cause and may still be entitled to compensation.

A termination may fall into one of two general categories:

Termination without cause: The employer ends the employment relationship without alleging serious misconduct. The employee is generally entitled to notice, termination pay, or other compensation.
Termination for cause: The employer alleges that the employee engaged in sufficiently serious misconduct to justify dismissal without notice or pay instead of notice.

The legal standard for terminating an employee without compensation is high. An employer’s use of the words “cause,” “misconduct,” or “fired” does not determine whether the legal standard has actually been met.

Learn more about termination for cause in Ontario.

Can an Employer Temporarily Lay You Off in Ontario?

An employer does not necessarily have an automatic right to temporarily lay off a non-unionized employee.

Ontario’s Employment Standards Act establishes how long a layoff may continue before it becomes a termination for the purposes of the legislation. However, these statutory rules do not automatically give every employer the contractual right to impose a temporary layoff.

An employer’s right to temporarily lay off an employee may arise from:

an enforceable temporary-layoff provision in the employment agreement;
an established and accepted practice of temporary layoffs in the workplace;
the nature of the industry or employment relationship; or
the employee’s agreement to the layoff.

If the employment agreement does not permit temporary layoffs, a significant interruption in the employee’s work and pay may amount to constructive dismissal. The employee may be entitled to treat the layoff as a termination and pursue compensation rather than waiting to be recalled.

Whether a layoff amounts to constructive dismissal depends on the employee’s contract and the circumstances. Employees should obtain legal advice before resigning, agreeing to a layoff, or refusing to return to work.

For a more detailed explanation of these rules, read our guide to temporary layoffs in Ontario.

How Long Can a Temporary Layoff Last in Ontario?

Under Ontario’s Employment Standards Act, 2000, a temporary layoff can generally last:

no more than 13 weeks of layoff in any period of 20 consecutive weeks; or
more than 13 weeks in a 20-week period, but fewer than 35 weeks of layoff in any period of 52 consecutive weeks, when at least one of the conditions established by the legislation applies.

For employees with a regular workweek, a week generally counts as a week of layoff if they earn less than half of what they would normally earn during that week, subject to the rules set out in the legislation.

A temporary layoff may continue beyond 13 weeks, but for fewer than 35 weeks in a period of 52 consecutive weeks, if at least one of the following applies:

The employee continues to receive substantial payments from the employer.
The employer continues making payments for the employee’s benefit under a legitimate insurance, retirement, or pension plan.
The employee receives supplementary unemployment benefits.
The employee would be entitled to supplementary unemployment benefits but is not receiving them because they are working elsewhere.
The employer recalls the employee within a period approved by the Director of Employment Standards.
The employer recalls a non-unionized employee within a period established in an agreement between the employee and employer.

These time limits determine whether a layoff remains temporary under the Employment Standards Act, 2000. However, they do not necessarily prevent an employee from claiming constructive dismissal under the common law before the statutory layoff period expires.

What Is the Difference Between a Temporary and Permanent Layoff?

A temporary layoff pauses an employee’s work without initially ending the employment relationship. The employer expects that the employee may return to work before the applicable layoff period expires.

A permanent layoff ends the employment relationship. Although the employer may use the word “layoff,” an employee who is permanently let go has generally been terminated.

Employees should ask their employer to confirm in writing:

whether the layoff is temporary or permanent;
the date on which the layoff begins;
whether the employer expects to recall the employee;
whether benefits will continue during the layoff; and
whether the employee will receive any payments while laid off.

An employer does not have to specify a recall date for a standard layoff to qualify as temporary under the Employment Standards Act. However, the absence of a recall date can create uncertainty for the employee and does not determine whether the employer had the contractual right to impose the layoff.

Can a Temporary Layoff Last Longer Than 35 Weeks?

As of November 27, 2025, Ontario law permits certain non-unionized employees and employers to enter into an agreement for an extended temporary layoff.

Under these rules, an approved extended temporary layoff may continue for:

35 weeks or more in a period of 52 consecutive weeks; but
fewer than 52 weeks in a period of 78 consecutive weeks.

The employee and employer must agree to the extended layoff in writing. Before the agreement is entered into, the employee must receive written information stating:

the latest date on which the employer intends to recall the employee; and
that the extended-layoff agreement cannot be withdrawn after it has been entered into.

The employer must also apply for and receive approval from the Director of Employment Standards. A written agreement between the employer and employee is not enough on its own.

An approval expires on the earlier of:

the employer’s stated recall date; or
the first day on which the employee has been laid off for 52 or more weeks in a period of 78 consecutive weeks.

Once the approval expires, the extended layoff is no longer considered temporary and the employer is generally considered to have terminated the employee.

Agreeing to an extended temporary layoff may delay the date on which an employee is treated as terminated under the Employment Standards Act. Employees should consider obtaining legal advice before signing an extended-layoff agreement.

When Does a Layoff Become a Termination?

A temporary layoff generally becomes a termination under Ontario’s Employment Standards Act when it continues beyond the applicable time limit.

Depending on the circumstances, a termination may occur when:

the layoff lasts longer than 13 weeks in a period of 20 consecutive weeks and none of the conditions for a longer layoff applies;
the layoff reaches 35 weeks in a period of 52 consecutive weeks without a valid extended temporary-layoff approval;
an approved extended layoff continues beyond the approved recall date;
the employee reaches 52 weeks of layoff in a period of 78 consecutive weeks; or
the employer informs the employee that they will not be recalled.

When a layoff exceeds the statutory limit, the employee’s termination date is generally treated as the first day of the layoff. The employee may then become entitled to termination pay and, where the statutory requirements are met, severance pay.

A layoff may also amount to constructive dismissal under common law before the statutory time limit expires. This may occur when the employer did not have the contractual right to impose the layoff.

What Happens If You Are Recalled to Work?

An employer may recall an employee before the applicable temporary-layoff period expires. Employees should review the terms of the recall carefully.

A recall to the same position, compensation, hours, duties, and working conditions will generally continue the employment relationship. However, a recall may raise legal concerns if the employer offers:

significantly lower pay;
substantially reduced hours;
a demotion or major reduction in responsibilities;
the loss of important benefits;
a significantly different work location;
an unreasonable change in working hours; or
other fundamental changes to the employment relationship.

A recall to substantially different employment may potentially amount to constructive dismissal.

Employees should not reject a recall without first obtaining advice. Refusing a reasonable offer to return to work may affect the employee’s entitlement to compensation and could lead the employer to argue that the employee resigned, abandoned the position, or failed to reduce their losses.

Are You Entitled to Termination Pay After a Layoff?

If a temporary layoff becomes a termination under the Employment Standards Act, the employee may become entitled to statutory termination notice or termination pay.

Employees who have been continuously employed for at least three months are generally entitled to a minimum amount of written notice or pay instead of notice when their employment is terminated without cause. The statutory notice period generally depends on the employee’s length of service.

However, the minimum standards under the Employment Standards Act may not represent the employee’s full entitlement.

Many non-unionized employees may be entitled to common law reasonable notice or compensation unless an enforceable employment agreement validly limits that entitlement. Common law notice can be greater than the statutory minimum and may depend on factors such as:

the employee’s age;
length of service;
position and responsibilities;
compensation;
the availability of comparable employment; and
other circumstances affecting the employee’s ability to find suitable work.

An employee should not assume that the amount offered by the employer represents their full legal entitlement.

Are Laid-Off Employees Entitled to Severance Pay?

“Severance pay” is often used informally to describe all compensation offered when employment ends. Under Ontario’s Employment Standards Act, however, severance pay has a specific meaning and is separate from termination pay.

An employee generally qualifies for statutory severance pay when:

their employment has been severed;
they have been employed by the employer for five years or more; and
the employer has a global payroll of at least $2.5 million or the severance occurred because all or part of the business permanently closed and 50 or more employees lost their employment within a six-month period.

Employment may be considered severed when an employee is laid off for 35 or more weeks in a period of 52 consecutive weeks. Where an extended temporary layoff has been approved, employment may be severed when the employee remains laid off after the approval expires.

An employee whose employment ends may potentially be entitled to:

termination notice or termination pay under the Employment Standards Act;
statutory severance pay if the eligibility requirements are met;
common law reasonable notice or compensation;
outstanding wages and vacation pay;
bonuses or commissions that would have been earned during the notice period;
the continuation or value of employment benefits; and
other compensation required by the employment agreement.

Learn more about severance pay in Ontario.

Can You Receive Employment Insurance After Being Laid Off or Terminated?

Employees who lose their jobs because of a shortage of work, restructuring, a temporary layoff, or a termination without cause may qualify for Employment Insurance benefits if they meet the federal eligibility requirements.

Employees should apply for Employment Insurance as soon as they stop working. They do not have to wait until they receive their Record of Employment before applying.

An employee who is dismissed for misconduct may be denied regular Employment Insurance benefits. However, an employer’s allegation that an employee was terminated for cause does not automatically establish misconduct for Employment Insurance purposes.

Service Canada assesses eligibility based on the facts. Poor performance, lack of ability, inexperience, or an employer’s dissatisfaction with an employee does not necessarily amount to misconduct unless the conduct was wilful or resulted from unwillingness.

Employees should:

request and review their Record of Employment;
check the reason for separation entered by the employer;
apply for benefits promptly;
provide an accurate account of what happened; and
consider requesting reconsideration if they believe benefits were wrongly denied.

Receiving Employment Insurance does not necessarily prevent an employee from pursuing termination pay, severance pay, or wrongful dismissal compensation. However, how Employment Insurance benefits interact with amounts later recovered from the employer may depend on the applicable federal rules at the time.

What Should You Do If You Are Laid Off or Terminated?

If you have been laid off or terminated, take the following steps:

Ask for written confirmation. Ask your employer to confirm whether the job loss is temporary or permanent and whether there is an expected recall date.
Review your employment agreement. Look for temporary-layoff and termination provisions, but do not assume they are enforceable.
Keep all relevant records. Save your layoff or termination letter, employment contract, pay records, benefit information, bonus or commission plans, and Record of Employment.
Apply for Employment Insurance promptly. Do not wait for your Record of Employment before starting the application.
Do not sign immediately. A termination package may include a release preventing you from pursuing additional compensation.
Be careful when responding to a recall. Rejecting an offer to return to work may affect your rights, even if the proposed position is different.
Get legal advice. An employment lawyer can assess whether the layoff was permitted and whether the compensation offered is fair.

Employees should also avoid resigning solely because they have been placed on layoff without first receiving advice. Whether and when an employee should treat a layoff as constructive dismissal can depend on deadlines, contractual wording, and the employee’s response to the employer.

Frequently Asked Questions About Layoffs and Terminations

Is a layoff the same as a termination?

Not always. A temporary layoff pauses employment with the possibility of recall, while a termination permanently ends employment. A permanent layoff is generally a termination, and a temporary layoff can become a termination if it lasts beyond the permitted time.

Is being laid off the same as being fired?

Not necessarily. Being fired generally means the employer has ended the employment relationship. A temporary layoff does not initially end employment. However, employers sometimes use “laid off” to describe a permanent termination caused by restructuring or a shortage of work.

Does terminated mean fired?

The terms are often used to describe the same event: the employer ending someone’s employment. However, being terminated does not necessarily mean the employee engaged in misconduct or was terminated for cause.

Can I be laid off without notice?

The Employment Standards Act does not generally require an employer to provide advance notice of a temporary layoff. However, the employer may still need a contractual right to impose the layoff. Without that right, the employee may have a constructive dismissal claim.

Can my employer keep extending my layoff?

A layoff must remain within the time limits established by the Employment Standards Act. An extended layoff for a non-unionized employee requires a written agreement, specified information provided in advance, and approval from the Director of Employment Standards.

Can I work somewhere else while temporarily laid off?

An employee may generally look for and accept other work while laid off. However, the employee should review their employment agreement and be prepared to respond if the original employer recalls them. Working elsewhere may also affect supplementary unemployment benefits or other payments.

Do I have to return if my employer recalls me?

Employees should obtain advice before refusing a recall. Refusing a reasonable offer to return may affect the employee’s legal rights. A recall involving substantially lower pay, fewer hours, a demotion, or other major changes may require further legal assessment.

Can I receive Employment Insurance if I was fired?

You may qualify if you were terminated without cause and otherwise meet the federal requirements. Employees dismissed for misconduct may be denied regular benefits, but the employer’s allegation does not automatically determine eligibility.

Speak With an Ontario Employment Lawyer

Whether a layoff is lawful and how much compensation an employee may be owed depend on the employment agreement and the specific circumstances.

If you have been temporarily laid off, permanently let go, recalled to a different position, or offered a severance package, an employment lawyer at Monkhouse Law can review your situation and explain your options.

Contact Monkhouse Law today to arrange a free 30-minute phone consultation.

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