A temporary layoff is not necessarily a termination, but it can become one under employment standards legislation or amount to constructive dismissal under the common law. That tension matters when employers try to write layoff authority into employment contracts.
In Taylor v. Salytics Inc., 2026 ONCA 621, the Ontario Court of Appeal considered how a temporary layoff provision should be interpreted alongside the Employment Standards Act, 2000. The employee challenged the effect of the wording and argued that the relevant clause should be treated as unenforceable in light of statutory termination protections.
The Court dismissed the appeal. Its analysis distinguished a clause authorizing a temporary layoff from one that governs dismissal itself. A layoff provision doesn't automatically become a defective termination clause simply because a sufficiently long or otherwise unlawful layoff may eventually trigger statutory termination consequences. The legal effect still depends on the language actually used and the interaction with the statutory scheme.
That distinction is important, but not a blank cheque for temporary layoffs. Employers must still consider whether they have a contractual right to impose a layoff, whether the statutory duration and other rules are satisfied and whether a worker may have a separate constructive dismissal claim. Contractual terms cannot eliminate minimum protections under the Act.
For HR teams preparing employment agreements, the practical lesson is to treat different forms of interruption or termination distinctly and write with the actual statutory requirements in mind. A provision labelled temporary layoff may operate differently from a termination clause, but the label alone won't decide its validity.
This commentary addresses the narrow contractual interpretation issue confirmed in the reported appeal and shouldn't be read as approval of every layoff provision or factual employment arrangement.
Source: Ontario Court of Appeal, Taylor v. Salytics Inc., 2026 ONCA 621, https://www.canlii.org/en/on/onca/doc/2026/2026onca621/2026onca621.html