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Small Business Term: What Is a Temporary Layoff?

When an employer halts or reduces an employee’s working hours without terminating his or her employment, the employee is considered to be on a temporary layoff. Just because an employer fails to specify a date of recall when laying off the employee does not necessarily indicate the employee has been terminated. It is important to review the employee’s contract to see if a temporary layoff is allowed. If not allowed under contract, then the layoff may lead to a constructive dismissal.

The Employment Standards Act defines a “week of layoff” as a week where the employee took home less than 50% of what he or she would normally average. Besides for a few special cases, a temporary layoff is not allowed to be more than 13 weeks within a period of 20 consecutive weeks. If the layoff is longer than this, the employee becomes entitled to termination pay.

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