Are Layoffs the New Reality for Today’s Workforce? 

Layoffs have become an increasingly common feature of the modern workforce. In 2026, major employers across numerous industries have announced restructurings, downsizing initiatives, and workforce reductions in response to economic uncertainty, technological change, and shifting business priorities. 

For employees, the experience of being laid off can feel sudden and deeply unsettling, particularly after years of loyal service. However, while layoffs may be increasingly common, employers in Ontario cannot simply terminate employment without meeting important legal obligations. 

Understanding your rights following a layoff is critical, particularly where severance, temporary layoffs, or termination packages are involved. 

What Does a Layoff Mean in Ontario? 

Although the term “layoff” is often used broadly, not every layoff has the same legal meaning. 

Some layoffs are temporary and involve a pause in active employment with the possibility of recall. Others ultimately result in permanent termination if the employee is not recalled within the legally permitted period. 

Importantly, unless an employment agreement specifically permits temporary layoffs, even a purported temporary layoff may give rise to a constructive dismissal claim in some circumstances. 

Employees should not assume that the label “layoff” automatically limits their legal rights. 

Severance Is a Legal Entitlement, Not a Discretionary Benefit 

When an employer terminates employment without cause, employees in Ontario may be entitled to notice of termination, pay in lieu of notice, severance pay where applicable, or a combination of these protections. 

At minimum, employers must comply with the requirements of the Employment Standards Act, 2000. However, absent enforceable contractual limitations, many employees may also be entitled to significantly greater compensation under common law. 

This means that an employer’s initial severance offer may not necessarily reflect the employee’s full legal entitlement. 

How Courts Assess Severance in Ontario 

Under Ontario common law, severance is not determined using a fixed formula. Instead, courts assess reasonable notice by considering several factors, commonly referred to as the Bardal factors, including: 

• The employee’s age 
• Length of service 
• Character of employment 
• Availability of similar employment having regard to the employee’s experience, training, and qualifications 

These factors help determine how difficult it may be for the employee to secure comparable replacement employment. 

Why Senior and Long Service Employees Often Receive More 

Older employees and long service professionals are often entitled to greater severance because courts recognize that certain individuals may face increased difficulty obtaining comparable employment following termination. 

For example, employees nearing the later stages of their careers may require longer notice periods due to narrower job opportunities, greater compensation expectations, or industry specific limitations. 

In some circumstances, senior, specialized, or long service employees may be entitled to notice periods approaching 18 to 24 months depending on their individual circumstances. 

Why Employees Should Be Cautious Before Signing 

Employers frequently ask terminated employees to sign releases or severance agreements within relatively short timeframes. 

While this may create pressure to act quickly, employees should understand that initial offers are not always comprehensive and may not account for the employee’s full compensation package, including: 

• Bonuses 
• Commissions 
• Pension contributions 
• Stock options or equity incentives 
• Car allowances or other employment benefits 

Accepting an offer too quickly may result in an employee receiving less than their potential legal entitlement. 

Because signing a release may waive further legal claims, employees should consider obtaining legal advice before accepting any termination package. 

How Lecker & Associates Can Help 

At Lecker & Associates, we assist employees across Ontario in reviewing severance offers, assessing wrongful dismissal claims, and negotiating termination packages to help ensure employees receive fair compensation following dismissal. We can be reached at 416-223-5391 or intake@leckerslaw.com for a confidential consultation. 

Being laid off can be stressful and uncertain. Obtaining legal advice early can help employees better understand their rights and make informed decisions during a difficult transition. 

Layoff and Severance FAQs for Ontario Employees

Am I entitled to severance in Ontario if my layoff is described as temporary?

Potentially. In Ontario, temporary layoffs are only permitted in limited circumstances and for prescribed time periods. If your employer does not recall you within the legally permitted timeframe, the layoff may become a termination. Additionally, where temporary layoffs are not authorized by contract, a layoff may in some circumstances constitute constructive dismissal. 

Why does age matter when severance is calculated in Ontario?

Age may affect severance because courts recognize that older employees can sometimes face greater difficulty securing comparable replacement employment following termination. 

Are bonuses and stock options included in severance calculations in Ontario?

In some cases, yes. Depending on the terms of the compensation plan and employment agreement, bonuses, equity incentives, and other forms of compensation may form part of an employee’s termination entitlements. 

Should I sign an enhanced severance offer immediately?

Not necessarily. Employers may present offers as enhanced or generous, but the offer may still fall below what the employee could potentially recover through negotiation or legal action. Employees should consider having offers reviewed before signing. 

When should I speak with an employment lawyer after a layoff in Ontario?

Employees should consider speaking with an employment lawyer if they are laid off, terminated, presented with a severance package, or asked to sign a release or revised employment terms.