Court decision
Laid off "temporarily"? Read your contract first
Your employer says the layoff is "only temporary" and your pay stops. Is that a dismissal? On September 3, 2026, Ontario's Court of Appeal answered for one employee, and it came down to one sentence in his contract.
What happened
In 2024, a company in financial trouble cut an employee's hours and pay by 20%, with his written agreement, then laid him off on April 1. For six months he received no income from it, though his benefits continued, until he was recalled to his old job and pay on September 30.
He had gone to court, arguing the layoff was a constructive dismissal (a change so serious it counts as being fired), and asked for 12 months' pay in lieu of notice.
Why one clause decided it
Without a layoff clause, the court noted, a layoff the employer imposes, temporary or not, is a constructive dismissal at common law.
This contract had one. It said a temporary layoff could be carried out "in accordance with the requirements of the Employment Standards Act, 2000." The employer admitted its for-cause clause was invalid, which voids all the contract's termination clauses. The employee argued the layoff clause fell with them, since it sat under the "Termination" heading.
The court disagreed: a temporary layoff clause isn't a termination clause, wherever it sits. He hadn't been dismissed, and the appeal was dismissed (Taylor v. Salytics Inc., 2026 ONCA 621).
How long is "temporary"?
Under section 56 of the Employment Standards Act, a layoff is temporary if it lasts no more than 13 weeks in any 20 consecutive weeks. It can last less than 35 weeks in any 52 only if a condition is met, such as the employer continuing payments to your benefit plan or making substantial payments to you. Since November 2025, a non-union layoff of 35 weeks or more (but under 52 in any 78) can count as temporary only with a recall agreement and the approval of the Director of Employment Standards.
A layoff that runs past these limits is a termination under the Act, with notice or termination pay owed.
If you've been laid off
- Find your contract or offer letter and look for the word "layoff".
- Count your weeks off, and note whether your benefits or any payments continued.
- See how courts decided other temporary layoff cases.
If your layoff has become a termination, the calculator shows the ESA minimum and what courts have awarded in cases like yours.
Ontario Severance is independent and isn't a law firm; this is general information. From a chat or a calculator result, you can ask us for help finding an employment lawyer, and we reply within one business day.
Sources
This article is general information about Ontario employment law, not legal advice. The law and its application change, and every case turns on its own facts: for advice about your situation, speak with an Ontario employment lawyer.
