Written by: Sezar Bune, J.D. | Toronto Employment Lawyer
Revised on February 15, 2026
Summary
Unauthorized temporary layoffs during the COVID-19 pandemic raised important legal questions in Ontario that continue to have profound implications in 2026 and beyond. The courts repeatedly clarified that placing employees on unpaid leave without consent was (and remains) a constructive dismissal under common law. These decisions reaffirmed long-standing common law principles that protect employee rights. This guide explains what happened, why it matters today, and how it continues to shape workplace protections in 2026.
Introduction
In 2021, several Ontario court decisions addressed temporary layoffs during the COVID-19 pandemic. The key question: can an employer place an employee on unpaid leave without consent? The courts confirmed that doing so constitutes constructive dismissal.
These cases were not just about the pandemic. They were critical tests of long-standing common law rules. The principles are clear: an employer cannot unilaterally lay off an employee, and employees remain entitled to severance.
As an Ontario employment lawyer, I represented many clients whose employers argued they had no choice but to impose unpaid temporary layoffs. While this position was understandable during the economic lockdowns, assertively pursuing severance negotiations (and, in some cases, constructive dismissal claims) often led to outcomes that were fair and mutually beneficial.
In a few cases, employees were able to return to their positions. In most, we secured severance packages that reflected their years of service and protected their rights.
Many clients challenged layoffs imposed without consent, asserting their rights under Ontario employment law. Even when employers cited extraordinary economic pressures, we negotiated compensation that recognized the employee’s tenure and contributions.
These cases not only provided justice for individual clients, but also reinforced workplace protections across Ontario, ensuring employees have a clear path to enforce their rights.
In short: COVID-19 temporary layoffs challenged as constructive dismissals strengthened employee protections in Ontario.
This post revisits these landmark decisions, explores their implications, and explains how they continue to guide employer and employee rights in 2026 and beyond.
Background: Temporary Layoffs and Constructive Dismissal
A temporary layoff occurs when an employer suspends an employee’s job for a limited period without terminating the employment relationship. This often involves a reduction in hours or pay, with the expectation of returning the employee to work once circumstances improve.
What is a temporary Layoff in Ontario?
Importantly, employers do not have an automatic right to impose a temporary layoff. For it to be lawful, the employee must explicitly agree, either in their employment contract or at the time the layoff is implemented.
Some Key Cases that Helped Preserve Employee Rights in Constructive Dismissal Claims
The Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 and Ristanovic v. Corma Inc., 2021 ONSC 3351 cases confirmed that even government regulations enacted during COVID-19, such as the Infectious Disease Emergency Leave (IDEL), did not give employers permission to bypass consent requirements. Employees still retained the right under common law to claim constructive dismissal and pursue severance compensation.
Key Cases
1. Coutinho v. Ocular Health Centre
Facts:
An office manager with six years of service was placed on an unpaid temporary layoff on May 1, 2020. The employer argued the COVID-19 pandemic and IDEL regulations allowed the layoff without it being constructive dismissal.
Court Ruling:
The court rejected the employer’s argument, confirming:
“At common law, an employer has no right to lay off an employee. Absent an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment, and would be a constructive dismissal.”
Even though the IDEL prevented a claim under the Ontario Employment Standards Act, 2000 (“ESA“), the employee retained full common law rights to pursue severance, demonstrating the continued strength of employee protections.
2. Ristanovic v. Corma Inc.
Facts:
The employer placed approximately 17% of its workforce on unpaid temporary layoffs, citing supply chain disruptions and reduced revenue prior to the pandemic. Employees challenged this as constructive dismissal.
Court Ruling:
The court reaffirmed that absent employee consent, temporary layoffs constitute a material change to employment and are a constructive dismissal.
The employer argued there should be a “global pandemic” exception. The court declined to establish such a precedent, emphasizing that extraordinary circumstances do not override the employee’s rights under common law.
“Whether it may be reasonable to imply some kind of force majeure clause in cases of severe operational limitations remains dependent on the specific facts of the case.”
Implications for Employers and Employees
What Employers Need to Know
For employers, it is important to always ensure employment contracts clearly define the circumstances under which temporary layoffs may occur. Consent is crucial, even during economic or operational crises. When reviewing employment contracts for employees and employers, I generally focus heavily on this aspect, as it is often a point of contention that both sides should decide on from the outset of employment.
What Employees Should Do
For employees, it is important to review employment contracts to understand your rights. This will help you, among other things, pursue your right to negotiate a severance package if you were placed on a temporary layoff without consent.
FAQs
Q1: Can an employer impose a temporary layoff during a pandemic without consent?
A: No. Even during extraordinary circumstances, employees are typically required to obtain an employee’s consent to layoffs unless previously agreed in an employment contract. COVID-19 court cases confirmed this principle and ensure employee rights when it comes to temporary layoffs fully enforceable today.
Q2: What is the difference between Ontario ESA protections and common law rights when it comes to temporary layoffs?
A: In extraordinary circumstances, such as a once-in-a-life time event like a pandemic, some ESA rules (like IDEL) may provide temporary relief or prevent claims under employment standards legislation, but common law rights to constructive dismissal and severance remain intact.
Q3: How long can a temporary layoff last?
A: The duration of a temporary layoff is often limited by the ESA or an employment contract. Exceeding it without consent can trigger constructive dismissal claim under common law, where an employee may be able to pursue a severance package.
For a broader list of employment law FAQs, see our visit our Employment Law FAQ
Conclusion
The COVID-19 pandemic challenged the long-standing rules around temporary layoffs and constructive dismissal, but Ontario courts decisively reaffirmed employee protections. These decisions remain critical guidance for employers and employees in 2026, ensuring fairness and legal clarity in all workplace suspensions.
When I present at workplace webinars or educational seminars, I often emphasize the importance of these COVID-19 related court decision. My main point is that these cases essentially serve as important legal precedents, and were so crucial to preserving employee rights at an inflection point for employee rights in Ontario.
If you were placed on a temporary layoff without your employment contract, or are an employer navigating employee claims, contact our Toronto employment law firm to understand your rights and obligations.
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