Updated on January 31, 2026

In short: yes, in 2026, your employer can place you on a temporary layoff in Ontario, provided certain conditions are met, including respecting your rights under an employment contract, the common law and the Employment Standards Act, 2000.

In simple terms, an employer cannot place a non-unionized employee on an unpaid temporary layoff without the employee’s consent or a contract clause permitting it. Doing so is typically considered a constructive dismissal, giving the employee rights to common law severance pay, damages, and continued benefits. Complying with the ESA alone does not remove these rights.

In these situations, it is absolutely crucial for employees to always speak with an Ontario temporary layoff lawyer.

What Ontario Employment Law Actually Requires

In Ontario, an employer generally cannot place a non-unionized employee on an unpaid temporary layoff without the employee’s consent (which is generally found in an express term in an employment contract). Absent clear authority, a temporary layoff will typically amount to constructive dismissal, entitling the employee to financial compensation in the form of a severance package.

Key Takeaways

Employers do not have an automatic right under employment law to impose unpaid temporary layoffs in Ontario
A temporary layoff requires employee consent or clear contractual authority
Without clear, express authority (usually in an employment contract), a layoff is usually a constructive dismissal – even if the layoff is called “temporary”
The ESA sets minimum standards only (particularly how long an employee can be placed on a temporary layoff). Crucially, however, the courts have been clear it does not provide employer’s with an unfettered right to place employees on layoffs anytime they want, nor does it replace an employee’s common law rights
Employees may be entitled to receive financial compensation for the unauthorized temporary layoff (usually provided in the form a “severance package“)

The Governing Legal Principle in Ontario

Ontario employment law is grounded in a straightforward rule. As Sezar Bune, employment lawyer and founder of Bune Law, explains:

“An employer cannot unilaterally stop providing work and pay unless the employment contract allows it.”

A temporary layoff (especially an unpaid one) represents a fundamental change to the employment relationship. Unless that change is contractually permitted or accepted by the employee, it is treated in law as a termination through constructive dismissal.

This principle has existed for decades and continues to guide Ontario courts today. In fact, this rule was tested heavily during the COVID-19 pandemic, and the courts consistently upheld this rule.

What Is a Temporary Layoff in Legal Terms?

A temporary layoff occurs when an employer, for example:

Instructs the employee to “stay home as we have no work for you”
Stops providing work to the employee
Stops paying wages
Intends (or claims) the interruption is temporary

What matters legally is not why the employer claims they laid of an employee, or whether they call it “temporary.” What matters most is whether the employer actually has the legal right to do it. If they do not, Ontario employment law treats the layoff as permanent – and a permanent layoff is effectively a termination.

When Is a Temporary Layoff Permitted?

An unpaid temporary layoff is generally lawful only if one of the following applies:

1) Express Contractual Term

The employment contract clearly allows temporary layoffs without pay. When I review employment contracts for employees, I will usually point out and discuss the legal implications of a “temporary layoff” provision).

2) Implied Agreement or Industry Practice

The employee understood that layoffs were a regular part of the job, especially in certain industries. I see this often in my work as an employment lawyer, particularly in the construction industry, where employers frequently argue that they have a general right to place employees on temporary layoff.

In these cases, the real question is whether the employee had experienced temporary layoffs before, or whether it was reasonable for them to expect layoffs based on the nature of the employer’s business. In seasonal industries, for example, temporary layoffs may be lawful.

3) Clear Employee Consent

The employee knowingly agreed to the layoff at the time it was imposed.

Absent one of these authorizations, the employer is exposed to a constructive dismissal claim.

As an employment lawyer, I routinely guide employees by reviewing the terms and conditions of employment contracts where employers try to quietly include the right to impose temporary layoffs. In these situations, employees are usually well advised to think carefully about what this could mean for their future.

A constructive dismissal occurs when an employer makes a unilateral change that substantially alters a fundamental term of employment. In that context, few terms are more fundamental than:

not being paid salary or wages
not being provided with work
future income security

Removing those elements (even temporarily) without an employee’s permission is treated as a repudiation of the employment contract.

In Ontario, unless permitted in an employment contract, employment law does not require employees to wait and see whether the employer eventually recalls them.

What Does the ESA Say About Temporary Layoffs?

With express contractual permission, the ESA allows an employer to place an employee on an unpaid temporary layoff in Ontario. In these cases, the employee’s job may not be deemed to have been terminated until and unless the employer fails to recall them back to work if the temporary layoff exceeds the timelines allowed under the employment legislation.

Generally speaking, the ESA permits a temporary layoff to last up to defined number of weeks only in certain circumstances, particularly if the employee continues to receive substantial payments or benefits.

However, if the layoff exceeds these specific time limits, it is considered a termination of employment. In that case, the employer is required to provide the employee with at least the following basic employment standards:

written notice of termination (termination pay)
benefits continuation
severance pay (if employer’s annual payroll exceeds $2.5 million and the employee has worked for the employer for at least 5 years)

ESA vs. Common Law: The Difference That Matters Most

The ESA establishes minimum employment standards. It does not replace or override common law rights unless it clearly says so. In fact, many cases have made this clear, including:

When it comes to temporary layoff, this distinction is extremely important:

ESA compliance is relevant if the employer is permitted to place the employee on a temporary layoff with express permission, including an employment contract
Without clear authorization, an unpaid temporary layoff (even a “temporary” layoff or one which otherwise complies with the ESA requirements) is generally considered a constructive dismissal under common law

As an employment lawyer who assists employers with employment disputes – including employment disputes arising from unpaid temporary layoffs – I often see employers get this last point wrong.

As the Ministry of Labour itself explains, if an employee has greater rights under contract or common law, those rights prevail over ESA minimums.

What This Means for Employees

If your an employee who was recently placed on an unpaid temporary layoff:

You should immediately speak with an experienced Ontario employment lawyer to discuss whether you have a valid constructive dismissal claim and an entitlement to a severance package
Being timely with obtaining legal advice is crucial, as delaying action can undermine your legal position

In my practice, I regularly see employees lose leverage simply because they were told to “wait it out.” While Ontario employment law does not require that, a recurrent practice of accepting temporary layoffs only helps an employer (not an employee).

What This Means for Employers

Employers should not assume that:

Temporary layoffs in Ontario are automatically allowed
ESA compliance equals legal protection
A future recall eliminates past liability

Without proper contractual language or consent, temporary layoffs can expose employers to:

Constructive dismissal claims
liability, including severance packages, legal costs and uncertainty

Proactive preparation and legal review of employment contracts is one of the most effective risk-management tools available for small and medium-sized businesses alike.

Likewise, given employment law is consistently changed through “small tweaks” to the ESA or court decisions, employers should regularly review and update their employment contracts, when necessary.

Frequently Asked Questions (FAQ) about Temporary Layoffs in Ontario

1. Can an employer temporarily lay off an employee without pay in Ontario?

Only if the employment contract allows it or the employee consents. Otherwise, it is typically a constructive dismissal.

2. Does calling a layoff “temporary” make it legal?

No. Courts look at whether an employer has the employee’s written consent, not how the employer describes the layoff.

3. What if the employee is later recalled?

Usually, a recall to work does not automatically undo a constructive dismissal that has already occurred, although it is relevant to an employee’s duty to mitigate. To read more about constructive dismissal, please see our service page.

4. Is ESA compliance enough to avoid liability?

No. The ESA sets minimum standards and does not eliminate an employee’s common law severance rights, and equally important, supersede an employer’s requirement to have legal authorization from an employee for the temporary layoff.

5. Should employees consult with an employment lawyer regarding a temporary layoff?

Yes. Silence or delay can be interpreted as acceptance, and speaking to an employment lawyer will provide guidance to take appropriate steps to protect your rights.

Call Today for Clear, Practical Advice

Whether you are an employee facing an unpaid layoff or an employer navigating workforce decisions, getting advice early can protect your position and reduce risk.

Bune Law – Toronto Employment Lawyers
📞 647-822-5492
📅 Confidential consultations available

Our employment lawyer will his experience to clearly explain the law to you, assess your options, and help you move forward with confidence.

Depending on your specific situation, you should speak with an experienced wrongful dismissal lawyer in Toronto regarding your options, including to negotiate a severance package to obtain the severance compensation you deserve, as well as constructive dismissal claim.

Written by: Sezar Bune, J.D. | Toronto Employment Lawyer

With over 12 years of experience advising employees and employers, Sezar practices in all workplace disputes, including wrongful dismissal, constructive dismissal, temporary layoffs, severance packages, and employment contracts.

Disclaimer: The content on this website and blog is not legal advice or legal opinion of any kind, and is only to provide general information. It is in no way particular to your individual case and should not be relied upon in any way. The outcome of a legal matter depends on its unique circumstances, and prior successes are not indicative of future results. No portion or use of this website or blog will establish a lawyer-client relationship with the author, this law firm or any related party. Should you require legal advice for your particular situation, please fill out the form below, or call 647-822-5492, to request an initial consultation.

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