Being laid off and being fired are not necessarily the same thing in Ontario. A temporary layoff generally means an employee’s work and pay have been temporarily reduced or stopped, with the possibility of returning to work. Being fired generally means the employer has permanently ended the employment relationship.
However, the distinction is not always straightforward. Employers sometimes use the word “layoff” when permanently eliminating a position. An employee may also be fired without having done anything wrong.
Whether you have been laid off, fired or terminated can affect your entitlement to termination pay, severance pay and other compensation. Understanding what these terms mean under Ontario employment law can help you determine your rights.
What Is the Difference Between Being Laid Off and Fired?
The main difference between being laid off and fired is whether the employment relationship is intended to continue and why the employer has ended or interrupted the employee’s work.
A temporary layoff generally means the employer has temporarily stopped providing work, often because of financial difficulties, restructuring or a shortage of work. The employee may be recalled when work becomes available.
Being fired generally means the employer has permanently ended the employment relationship. However, being fired does not necessarily mean the employee engaged in misconduct or that the employer had legal cause to dismiss them without compensation.
A permanent layoff is also generally a termination of employment, even when the employer describes it as a layoff.
Laid Off vs. Fired: Key Differences in Ontario
The following table explains the general differences for non-unionized employees in Ontario.
| Employment Issue | Temporary Layoff | Fired or Terminated |
|---|---|---|
| Employment relationship | Generally continues during the temporary layoff. | Permanently ends. |
| Reason | Often involves a shortage of work, restructuring or financial difficulties. | May involve restructuring, performance concerns, misconduct or other business reasons. |
| Return to work | The employee may be recalled. | The employee is generally not expected to return. |
| Termination pay | May become payable if the layoff results in a termination or constructive dismissal. | Generally payable when the applicable legal requirements are met, unless an exception applies. |
| Severance pay | May become payable if employment is legally severed and the employee qualifies. | May be payable if the statutory eligibility requirements are met. |
| Constructive dismissal | May arise if the employer does not have the legal right to impose the layoff. | The employer has already ended the employment relationship. |
The employer’s description of the situation does not necessarily determine the employee’s legal rights. What matters is whether employment has ended, the circumstances of the dismissal and the applicable employment laws.
What Does Being Laid Off Mean in Ontario?
Being laid off generally means an employer has reduced or stopped an employee’s work because of a shortage of work, restructuring, financial difficulties or changing business needs.
In Ontario, a layoff may be temporary or permanent.
- Temporary layoff: The employer intends that the employee may return to work. The employment relationship generally continues, although the employee may not receive regular wages during the layoff.
- Permanent layoff: The employer has eliminated the employee’s position or otherwise ended their employment without an expectation of recall. This is generally a termination of employment.
An important consideration is that Ontario employers do not necessarily have an automatic right to temporarily lay off non-unionized employees.
Even when a temporary layoff falls within the limits established by Ontario’s Employment Standards Act, 2000, it may still amount to constructive dismissal if the employer did not have the contractual right to impose it.
For more information about the legal rules and time limits, read our guide to temporary layoffs in Ontario.
Does Being Fired Mean You Were Terminated for Cause?
No. Being fired does not automatically mean an employee was terminated for cause.
In everyday conversation, the terms “fired,” “terminated,” “dismissed” and “let go” are often used interchangeably. However, Ontario employment law distinguishes between termination with cause and termination without cause.
Termination Without Cause
A termination without cause occurs when an employer ends an employee’s employment without establishing legal cause to dismiss them without notice.
An employer may terminate an employee without cause for reasons such as:
- Restructuring or downsizing.
- Elimination of a position.
- Financial difficulties.
- Changes in business operations.
- Performance concerns that do not establish legal cause for dismissal without notice.
Employees terminated without cause are generally entitled to appropriate notice of termination, pay instead of notice or a combination of the two, unless a legal exception applies.
Depending on the circumstances, employees may also be entitled to statutory severance pay or additional compensation under common law.
Termination for Cause
A termination for cause occurs when an employer alleges that an employee engaged in misconduct serious enough to justify dismissal without common law notice.
Examples of conduct that may raise concerns about cause include serious dishonesty, theft, workplace violence or repeated misconduct after appropriate warnings. However, whether the employer has legal cause depends on the circumstances.
The legal standards for denying an employee common law reasonable notice and withholding minimum entitlements under Ontario’s Employment Standards Act are not identical.
An employer cannot automatically avoid paying termination compensation simply by describing a dismissal as “for cause.”
Employees who have been fired for alleged misconduct should consider obtaining legal advice before assuming they are not entitled to compensation.
Is It Better to Be Laid Off or Fired?
From an employee’s perspective, neither situation is necessarily better. The legal and financial consequences depend on whether the layoff is temporary or permanent, whether the employee was terminated with or without cause, and what compensation is owed.
An employee who is permanently laid off because their position has been eliminated may have similar legal entitlements to an employee who has been fired without cause.
Both employees may qualify for termination pay, statutory severance pay or common law compensation, depending on their circumstances.
A temporary layoff can create additional uncertainty because the employee may not know when they will return to work or whether the employer intends to recall them.
Employees should not assume that being described as “laid off” provides greater protection or that being described as “fired” means they have fewer legal rights.
Can You Be Laid Off and Still Be Entitled to Severance Pay?
Yes. An employee who has been permanently laid off or whose temporary layoff becomes a termination may be entitled to compensation.
Under Ontario’s Employment Standards Act, 2000, termination pay and statutory severance pay are separate entitlements.
Termination Pay
Employees who have been continuously employed for at least three months are generally entitled to a minimum amount of notice of termination or pay instead of notice when their employment ends, unless a statutory exception applies.
Notice may involve an employee continuing to work during the notice period, known as working notice, or receiving compensation instead of notice.
The amount of statutory termination notice generally depends on the employee’s length of service.
Statutory Severance Pay
Under Ontario’s Employment Standards Act, employees generally qualify for statutory severance pay when their employment has been severed, they have worked for the employer for at least five years, and one of the following applies:
- The employer has a global payroll of at least $2.5 million.
- 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.
Employees may also have additional rights to common law reasonable notice or compensation, unless an enforceable employment agreement validly limits those rights.
Common law compensation may depend on factors such as the employee’s age, length of service, position, compensation and availability of comparable employment.
An employee should not assume that the employer’s first severance offer represents their full legal entitlement.
Learn more about severance pay in Ontario.
Can a Temporary Layoff Become a Termination?
Yes. A temporary layoff can become a termination when it exceeds the applicable limits under Ontario’s Employment Standards Act.
Generally, a temporary layoff may last:
- Up to 13 weeks in a period of 20 consecutive weeks.
- More than 13 weeks but fewer than 35 weeks in a period of 52 consecutive weeks, if at least one of the statutory conditions applies.
Ontario also permits certain extended temporary layoffs for non-unionized employees where the employee and employer enter into a qualifying written agreement and the Director of Employment Standards provides the required approval.
Even before the statutory time limits expire, an employee may have a constructive dismissal claim if the employer did not have the right to impose the temporary layoff.
For a detailed explanation of temporary layoffs, terminations and the applicable statutory limits, read Layoff vs. Termination: What Is the Difference?.
Can You Collect Employment Insurance If You Are Laid Off or Fired?
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 (EI) benefits if they meet the federal eligibility requirements.
Employees should apply for EI as soon as they stop working. They do not need to wait until they receive their Record of Employment before applying.
Employees dismissed for misconduct may be denied regular EI benefits. However, an employer’s allegation that an employee was terminated for cause does not automatically determine EI eligibility.
Service Canada assesses the circumstances. Poor performance, lack of ability or an employer’s dissatisfaction with an employee does not necessarily amount to misconduct for EI purposes.
Employees should review their Record of Employment, apply promptly and provide an accurate explanation of the circumstances surrounding their dismissal.
Receiving EI benefits does not necessarily prevent an employee from pursuing termination pay, severance pay or wrongful dismissal compensation. However, the interaction between EI benefits and compensation recovered from an employer may depend on the applicable federal rules.
What Should You Do If You Have Been Laid Off or Fired?
If you have been laid off or fired in Ontario, taking the following steps can help you understand and protect your employment rights:
- Ask for written confirmation. Request a letter explaining whether your employment has ended or whether the employer considers the layoff temporary.
- Review your employment agreement. Check for temporary layoff and termination provisions, but do not assume they are enforceable.
- Keep relevant documents. Save your employment contract, layoff or termination letter, pay records, benefit information and Record of Employment.
- Apply for Employment Insurance. If you have stopped working, apply promptly rather than waiting for your Record of Employment.
- Review any severance offer carefully. Do not assume the employer’s initial offer represents everything you may be owed.
- Be cautious about signing a release. A termination package may contain provisions that prevent you from pursuing additional compensation.
- Get legal advice before resigning or refusing a recall. Your response to a temporary layoff or recall may affect your legal rights.
If your employer has terminated your employment without providing the notice or compensation legally required, you may have a claim for wrongful dismissal.
Frequently Asked Questions About Being Laid Off vs. Fired
Is being laid off the same as being fired?
Not necessarily. A temporary layoff generally means work has been suspended with the possibility of recall, while being fired means the employer has permanently ended the employment relationship. A permanent layoff is generally a termination.
Does being laid off mean you were terminated without cause?
Not always. A temporary layoff does not necessarily mean employment has ended. However, an employee permanently laid off because of restructuring, downsizing or a shortage of work has generally been terminated without cause.
Can you be fired without doing anything wrong?
Yes. Ontario employers can generally terminate non-unionized employees without cause, provided they comply with applicable legal requirements. Employees may be entitled to notice, termination pay, statutory severance pay or additional compensation.
Do you get severance pay if you are fired?
You may be entitled to compensation when fired, depending on the circumstances. Employees terminated without cause are generally entitled to notice or termination pay, and some qualify for statutory severance pay. Additional common law compensation may also be available.
Can an employer call a termination a layoff?
Yes. Employers sometimes describe permanent job losses as layoffs, particularly when positions are eliminated because of restructuring or financial difficulties. However, the employer’s choice of words does not determine the employee’s legal rights.
Can you be fired while temporarily laid off?
Yes. An employer may decide to permanently terminate an employee during a temporary layoff. If employment ends, the employee may become entitled to termination pay, statutory severance pay or additional compensation, depending on the circumstances.
Does being fired automatically disqualify you from Employment Insurance?
No. Being fired does not automatically disqualify an employee from EI. Service Canada considers whether the employee meets the eligibility requirements, including whether the dismissal involved misconduct.
Speak With an Ontario Employment Lawyer
Whether you have been laid off, fired or terminated without cause, understanding your legal rights is important before accepting a severance offer or signing a release.
Monkhouse Law Employment Lawyers represents non-unionized employees in Ontario and can assess whether your employer has met its legal obligations, whether a temporary layoff amounts to constructive dismissal and whether you may be entitled to additional compensation.
Contact Monkhouse Law today to arrange a free 30-minute phone consultation.