The Trap of Temporary Layoffs: How One Employee Lost Over Half a Year of Income by Ignoring Legal Advice

I recently spoke with an employee who had just been placed on a temporary layoff. During his free consultation I explained very clearly that unless his employment contract specifically allowed for layoffs, he should object in writing immediately. A layoff imposed without contractual authority is usually a constructive dismissal. I told him not to accept it, not to be a “team player”, and not to trust that it would be short.

He disagreed. He told me he trusted his employer, that it was only temporary, and that he believed he would be recalled within a few weeks. Against advice, he accepted the layoff.

What he did not seem realize (despite my warning) was that by accepting the temporary layoff, and because the employer continued his benefits, the employer was now legally permitted to extend that layoff for up to 35 weeks under the Employment Standards Act. I had warned him that I never recommend employees accept a layoff voluntarily unless they are contractually obligated to. He insisted everything would be fine and that he trusted his employer.

A month has now passed. It is clear the employer has no intention of recalling him anytime soon. In fact, the plan appears to be to keep him laid off for another 6 months (if not more). And because the benefits are ongoing and this individual had accepted the layoff at the outset, the employer is legally entitled to do so.

This employee is now losing over half a year of income. He told me his savings are draining and he does not think he can wait that long. My suspicion is that the employer is waiting him out, hoping he finds a new job in the meantime. If he does, the employer will rely on mitigation to reduce the severance payable at the end of the layoff (or hope he resigns to keep that new employment and avoid paying even ESA minimum notice and severance). Even if the employee sues later for wrongful termination, the damages will be significantly reduced because he will accepted the layoff and any income earned from a new job if he has one will offset his claim.

This issue is not new. During COVID, we dealt with the same situation repeatedly. Emergency orders allowed employers to keep employees on layoff for extended periods. Some employees accepted layoffs against our advice, believing they would be recalled quickly. They ended up out of work for over a year, with their claims severely damaged by mitigation and delay.

By ignoring the advice to object immediately, this employee has placed himself in the worst possible position. What could have been a strong constructive dismissal claim worth many months of severance is now a situation where the employer holds all the leverage, the employee absorbs months of lost income, and any future claim is weakened.

The lesson is straightforward: a temporary layoff is rarely harmless. Accepting it without objection can cost you months or even years of income.