Is Terminated the Same as Laid Off? (Updated Sept 16, 2021)

While the terms are often used interchangeably, being terminated is not legally the same as being laid off. The legal concepts are related but the distinction between them is important. The differences between terminated and laid off are particularly important in the context of COVID-19, when Ontario regulations have allowed layoffs to continue until January 2, 2022, well beyond the regular time limits.

Layoff vs. Termination

Layoffs and terminations are not the same. Termination ends the employment relationship whereas a layoff is intended to be a temporary measure. Under Ontario’s Employment Standards Act, a layoff which continues beyond a certain length becomes a termination. 

Termination means a permanent ending of the employment relationship. It can happen with cause or without cause. Workers terminated without cause are entitled to a minimum amount of notice that they will be terminated under the Employment Standards Act. This can be in the form of working notice, payment instead of such a notice, or a combination of the two. Failure to do so can amount to a wrongful dismissal. A layoff that extends beyond a certain time limit is a constructive dismissal and a without cause termination. 

A person can be terminated with cause if they have committed willful misconduct. In such circumstances, they are not entitled to termination pay or payment in lieu of notice. However, this is a very high standard. If you are terminated “with cause”, it is important to speak to an employment lawyer to determine if your behaviour really met this high threshold. 

The bottom line is that an employee who is laid off should expect to be returned to work while a terminated employee should not. So long as other criteria set out by the Government of Canada are met, individuals laid off or terminated without cause are generally eligible for Employment Insurance. Those terminated with cause, however, are generally not. 

Layoffs under the Employment Standards Act

Normally, when a non-unionized employee is laid off, the employer has decided that they will not work and will not be paid for some time with the intention of returning the employee to work. It is common during times of economic downturn. 

Ontario’s layoffs are governed by the Employment Standards Act and are normally restricted to 13 weeks in any period of 20 consecutive weeks. 

A layoff can continue up to 35 weeks in a period of 52 consecutive weeks if any one of the following applies:

  • The employer continues to make substantial payments to the employee
  • The employee continues to receive payments under a retirement, pension, or employee insurance plan
  • The employee received supplementary unemployment benefits
  • The employee is working elsewhere during the layoff and would be entitled to receive supplementary unemployment benefits if that were not the case
  • The employee is recalled within the time approved by the Director of Employment Standards
  • The employee is recalled within a time frame agreed upon between the parties, at the time of the layoff, in the employment contract, or subsequently. 

When Does a Layoff Become a Termination?

Under normal conditions, the Employment Standards Act sets out that a layoff becomes a termination when the employer does not recall the worker within the 13- or 35-week periods set out above. This is a constructive dismissal and entitles the worker to termination pay. However, this has not been the case since May 29, 2020. 

Ontario’s Covid-19 Temporary Layoff Rules

In May of 2020, Ontario passed regulations called Infectious Disease Emergency Leave which temporarily changed how Ontario treats layoffs. Rather than being laid off, which has specific limits, employees are deemed to be on “infectious diseases emergency leave”. Under these regulations, there’s no point at which a temporary layoff becomes a termination. 

The regulation also prohibits employees from launching ESA complaints to the Ministry of Labour on the matter and deemed cancelled all previously filed complaints on the matter.  

What About the Common Law?

The common law is the law which is developed by judges and courts by building off previous cases where the government has not passed specific legislation on a matter. In the employment law context, the Employment Standards Act sets out the very minimum obligations of employers while the common law entitlement depends on comparable cases decided previously. Employment lawyers will often recommend pursuing cases based on the common law, rather than the Employment Standards Act, because the damages that can be recovered are often much larger

As we have previously published, the regulation passed by the Ontario government only impacts statutory rights. Workers may still have access to common law damages by going to court. Some workers have been successful in doing so.

In Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076, Justice Broad found that Ontario’s Infectious Disease Emergency Leave Regulation does not take away a laid-off employee’s common-law right to sue for constructive dismissal.

In Ristanovic v Corma, 2021 ONSC 3351, Justice Dunphy of the Ontario Superior Court found that two employees, aged over 60 with nearly three decades seniority, were entitled to 22 months’ notice following their temporary layoff in February 2020, at the beginning of the pandemic.

Justice Ferguson in Taylor v. Hanley Hospitality, 2021 ONSC 3135 ruled that Coutinho v. Ocular Health Centre Ltd. was wrongly decided and ruled that Taylor’s layoff did not constitute constructive dismissal. 

In the most recent decision, Justice Vella’s decision in Fogelman v. IFG 2021 ONSC 4042 went in the opposite direction and said that the Employment Standards Act and its regulations, including the Infectious Disease Emergency Leave, do not apply to civil (common law) remedies. 

Overall, the cases tend more towards the employee’s favour. While Taylor v. Hanley Hospitality stands out, it is not decisive because it is at the same level of court as the other three decisions. When judges issue decisions going in opposite directions, they could be appealed to the Ontario Court of Appeal. When the law is unsettled in this way, it is especially important to speak to an employment lawyer before accepting any severance package. An employment lawyer can set out your options and work with you to come up with the best course of action for the possible outcomes of appeals. 

Looking Forward

These regulations are set to expire on January 2, 2022. After that point, the regular rules regarding layoffs should apply. While the regulations have been extended several times, Ontario’s high vaccination rate may finally buck the trend. If the regulations expire, employers will have to recall their workers to their pre-COVID-19 position or a comparable position on the same terms and rate of pay by January 2, 2022. 

If you are not recalled or only allowed to return to a different job than you left, you may have a claim for constructive dismissal. It is prudent to speak to an employment lawyer before accepting offers or signing agreements. The employment lawyers at Monkhouse Law have been working tirelessly on these matters throughout the pandemic and can assist with your next steps. 

Employment Lawyers at Monkhouse Law specialize in Employment Law, Human Rights Law, and Disability Insurance Law. We serve employees, independent contractors and employers, and strive to get optimal results for every client through skilled advocacy and research on each matter. We have successfully represented clients before all levels of court in Ontario, including the Superior Court, the Divisional Appeals Court, and the Court of Appeal and have also appeared before the Supreme Court of Canada.

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