Recent layoffs have hit Ontario hard, leaving many affected employees unsure about their rights, their income, and their future. If you were recently let go, you may be entitled to notice, severance, and Employment Insurance, even if your company announced the layoff as “temporary” or “business‑related.”

Ontario workers are facing layoffs from public service cuts to private‑sector restructuring. In this climate, affected employees need clear information about what counts as a layoff, when it turns into a termination, and how to protect their rights under Ontario’s Employment Standards Act and common law.

Key points for Ontario workers:

• A “temporary” layoff can become a termination if legal limits are passed or your employment contract does not allow for layoffs.

• Many affected employees are owed severance pay, even when their company announced job cuts as unavoidable.

A Quick Glimpse Into Recent Layoffs in Canada

The Canadian job market has seen intense pressure over the last few years. Layoffs across Canada are affecting public and private employers, including major institutions and global brands.

Some key trends and numbers:

• Statistics Canada is planning to cut about 850 jobs, roughly 12% of its workforce, over two years.

• The federal government plans to reduce about 40,000 positions between its 2024 peak and 2029 as part of a cost‑cutting plan.

• As of October 2025, more than 4,286 companies had announced mass layoffs in Canada, with many citing inflation, interest rates, and global instability.

• Canada Post is expected to undergo restructuring that could result in layoffs for 10,000–20,000 employees.

These pressures fall heavily on Ontario, where job losses have been especially sharp in sectors like manufacturing, education, and tech.

What Is a Layoff in Canada?

In Canada, a layoff happens when an employer suspends or ends employment because of lack of work, restructuring, or financial problems, rather than personal misconduct. It may be called “temporary” or “permanent,” but either way, affected employees still have legal rights.

For Ontario workers:

• A layoff can be a short break (with recall) or a full termination with no intention to bring you back.

• If the conditions of a temporary layoff are not met, or your employment contract does not clearly allow layoffs, the law may treat it as a termination and constructive dismissal.

Types of Layoffs

Different types of layoffs have different legal consequences, especially for notice and severance. Understanding the distinctions helps affected employees in Ontario decide on next steps.

Temporary Layoffs

A temporary layoff is meant to be short term, with the possibility that you will be recalled to work.

In Ontario:

• The Employment Standards Act allows temporary layoffs only within strict time limits (for example, up to 13 weeks in a 20‑week period, or up to 35 weeks in 52 weeks if certain conditions are met).

• Temporary layoffs are generally only legal if your employment contract or past practice clearly allows for them, or if you have accepted such terms earlier.

If your employer keeps extending the layoff, hires someone else into your role, or never recalls you, that temporary layoff can become a termination or constructive dismissal, giving you the right to full severance.

Permanent Layoffs

A permanent layoff is a termination without cause—your job ends and there is no plan to bring you back.

In these cases, Ontario law usually requires:

• Written notice of termination or pay in lieu of notice.

• Possible severance pay if you meet the service and employer‑size thresholds.

• Continued benefits during any notice period under the Employment Standards Act.

For many Ontario workers, permanent layoffs lead to severance pay that can be worth up to 24 months’ pay under common law, depending on age, position, and years of service.

Termination for Just Cause

“Just cause” means your employer claims you engaged in serious misconduct, such as major dishonesty or serious policy breaches.

Important points:

• If your employer truly has just cause, they may try to terminate you without notice or severance.

• However, Canadian courts set a very high bar for just cause, and employers often overstate it to avoid paying full entitlements.

• Many affected employees who are told they were terminated for cause still have strong claims for severance pay and can challenge the decision as a wrongful dismissal.

Reasons for Layoffs

Layoffs in Canada are often linked to broader economic and business pressures. Recent trends affecting Ontario include:

• Rising inflation and interest rates, making borrowing and operating more expensive.

• Global events, such as the war in Ukraine and international trade disputes, which hurt demand and confidence.

• Automation and AI adoption, especially in tech and white‑collar roles, as each tech giant and large software company seeks to cut costs.

Mass layoffs by large employers, from auto manufacturers to banks and telecoms, show how vulnerable the corporate workforce can be when a parent company or head office shifts strategy.

Employer Obligations

Ontario employers have clear employer obligations when they reduce staff, whether through individual terminations or mass layoffs.

Key obligations include:

• Providing written notice of termination or pay instead of notice when laying off employees.

• Providing severance pay if an employee has completed at least 12 consecutive months of continuous employment and other severance conditions are met.

• Providing a statement of benefits to any employee whose employment is terminated, including final wages, vacation pay, notice or pay in lieu, and severance pay.

• For mass terminations (50+ employees at one Ontario location), giving group termination notice and allowing affected employees up to 3 unpaid, job‑protected days off for job hunting or training during the notice period.

From 2026 onward, employers must also provide a final statement that clearly lists all amounts paid, which helps employees check if their package is complete.

Employee Rights During Layoffs in Canada

Even in tough times, affected employees still have important rights. For Ontario workers:

• Notice and severance

  • Employers must provide notice of termination, severance pay, or a proper combination of both when layoffs turn into terminations.

  • If you have at least 12 months of continuous employment, you may be entitled to severance pay on termination, and under common law you may be owed much more than the minimums.

• Employment Insurance (EI)

  • Most laid‑off employees qualify for EI, although payments usually begin after any severance period ends.

  • As of January 1, 2026, the maximum yearly insurable earnings for EI are $68,900, leading to a maximum weekly benefit of $729.​

• Temporary layoff limits

  • Temporary layoffs in Canada are only legal if allowed in your employment contract or clearly accepted in the past, and they must stay within statutory time limits.

  • If those limits are exceeded or the employer behaves as if your job is gone (for example, they replace you), the law may treat it as a termination and constructive dismissal.

• Human rights and fairness

  • Employers must avoid discriminatory layoffs and cannot target employees for reasons linked to protected grounds like disability, age, or family status.

Steps to Take in Case of a Layoff

Here is a simple checklist Ontario affected employees can follow if they are laid off or fear they might be:

Layoff Response Checklist

1. Stay calm and get everything in writing

   • Ask for a written termination or layoff letter that explains the reason for the change, your notice, pay in lieu, and benefits.

2. Review your documents

   • Carefully read your employment contract, any layoff or termination clauses, and any policy documents that mention layoffs or recall.

3. Do not sign right away

   • Avoid signing a release or accepting a severance offer on the spot, even if your company announced a strict deadline.

   • Once signed, it can be very hard to claim more, even if the offer is below what common law would award.

4. Track your benefits and EI

   • Confirm how long health, dental, and other benefits will continue and when they end.

   • Apply for EI as soon as you stop working, knowing that payments usually begin after your severance period.

5. Document your job search

   • Keep a record of job applications, interviews, and networking—this can matter for wrongful dismissal claims and severance negotiations.

6. Seek legal advice before deciding

   • Talk with an employment law firm like Share Lawyers to find out whether your package meets both ESA and common law standards.

Seek Legal Advice From an Employment Lawyer

Layoffs can make any Ontario worker feel powerless, but you do not have to navigate this alone. Many affected employees discover that their first offer is far below what they are truly entitled to under Ontario’s Employment Standards Act and common law.

Share Lawyers helps employees across Canada challenge unfair severance offers, employment contract terms, and employer obligations that were not met.

Speaking with an employment lawyer before you sign any severance or layoff documents can help you understand whether your situation amounts to constructive dismissal, whether more severance is available, and how to move forward with confidence.

Contact our employment lawyers today. There are no fees unless you win your case.