Can a temporary layoff count as constructive dismissal in Ontario?
Often, yes. Unless your employment contract specifically allows for temporary layoffs, most Ontario employees do not have an implied right built into their employment relationship permitting an employer to simply stop paying them and expect them to return later, so an unauthorized layoff can be treated as a constructive dismissal, even though the Employment Standards Act separately defines what counts as a temporary layoff for its own statutory purposes.
The ESA's layoff provisions govern certain statutory entitlement questions, but they do not override the separate common law question of whether the employer breached the actual employment contract by imposing a layoff it had no contractual right to impose in the first place. Whether a specific layoff amounts to constructive dismissal often depends on whether the employment contract, or a clear and established policy, expressly permitted layoffs, and if not, whether the employee treated the layoff as effectively ending the relationship or continued waiting it out, which can affect how a later claim over the same layoff is assessed.
Key takeaways
- An unauthorized layoff can amount to constructive dismissal unless the contract permits layoffs.
- The Employment Standards Act's own layoff definitions do not automatically override the common law question.
- Whether the contract or a clear policy allowed for layoffs is central to the analysis.
- How the employee responds to the layoff can affect whether a later claim succeeds.