Currently, the unemployment rate is 4.9% in Canada. While the unemployment rate has recouped to pre-pandemic levels, many Canadians are still at risk of losing their job. In fact, Statistics Canada reported that 31,000 jobs were lost in July 2022. If you’re one of the thousands of Canadians who have lost their job in recent months, you may be feeling uncertain about your future – and you’re not alone! If you are worried about a layoff, or have already faced a layoff, we explore what to do when you get laid off in Canada below. This includes managing your finances, searching for a new job and seeking support from friends and family. Read on for details.
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What does laid off mean in Canada?
In Canada, a layoff generally refers to the temporary suspension or reduction of an employee’s work hours. Although, sometimes a layoff means the employee is out of work permanently for no fault of their own. A layoff may be initiated by an employer in response to poor economic conditions or a reduction in the demand for the company’s goods or services. Layoffs are typically used as a last resort after other measures, such as operational changes, wage freezes or voluntary leaves of absence, have failed to adequately reduce costs. In Canada, layoffs typically involve a temporary suspension of employment, with the hope that the employees will be able to return to work when business improves.
Other common types of termination include dismissal, let go during probation, and resigning. These types of termination are not to be confused with a layoff. A dismissal means the employer has ended the employee’s relationship with the company for a specific reason, such as misconduct or poor performance. Letting an employee go during probation, usually a duration of three months or less, is often due to a lack of fit. Finally, resigning occurs when the employee quits and terminates their relationship with the company. If you are dismissed, let go during probation or resign, you usually do not get severance or other benefits, but it depends on the employer and circumstances.
There are a bunch of other reasons why Canadians step away from work. For example, retirement, maternity, going back to school, leave of absence, strike, illness, or other reasons. However, the main reasons for an employee-employer relationship to break down are covered above.
Being laid off in Canada: What to do
If you have been laid off in Canada, it is important to know your rights and the steps to take next. We cover what you should do over the next few months below.
What to do immediately after being laid off?
Being laid off can be a difficult and emotionally charged experience. It is important to take a moment to absorb the situation and understand all of the implications. Even though it’s important to take action, be sure to respect that you’re human and it’s okay to take a moment to process the loss of your job. After all, we tend to have an important connection to our work and colleagues. It can be difficult to suddenly lose this significant component of your life. Not to mention, our jobs are what allow us to pay our bills! It is important to seek support from friends and family during this time.
It can also help to assess the reasonability of your layoff. Was it due to restructuring? Downsizing? Lack of work? Whatever the reason is, it was unlikely due to you specifically. Be sure to remember that it’s an unfortunate situation, not because you did something to warrant losing your job.
After processing the initial shock, you will need to obtain certain paperwork from your employer, including your Record of Employment (ROE), details on how long your benefits will last past your layoff, and when your last pay cheque will be issued. You should also enquire about severance including how much they are planning to pay and when you can expect to receive the package. Sometimes employers offer additional compensation, such as an educational allowance.
Once you have a clear understanding of the situation, you can start to assess your next steps. This includes reviewing your finances, savings, and budget to see what kind of cushion you have. There are many resources available to help you navigate this difficult time. The most important thing is to take things one step at a time – try not to get overwhelmed!
Laid off compensation in Canada
If you’ve been laid off in Canada, you may be eligible for Employment Insurance (EI) benefits. To receive EI, you must have lost your job through no fault of your own. This means you can’t receive EI if you were fired or quit.
To apply for EI, you’ll need to register online or by phone. Usually, your employer must submit your ROE for you to begin collecting EI. This is why it’s important to get a copy of your own, just in case. Once you’re registered, you’ll need to submit a claim every two weeks. When you submit your claim, you’ll need to provide information about your employment situation and earnings.
You can expect to receive EI payments for a maximum of 26 bi-weekly periods, or one year. The amount you receive will depend on how much you earned before being laid off. In general, you can expect to receive about 55% of your previous earnings, up to a maximum of $573 per week.
On top of EI, you may be entitled to severance pay if you worked for your employer for 12 consecutive months or longer. In Canada, the legal requirement is 2 days of regular wages for every full year the employee worked for the employer. Ask your employer for more information if you believe you’re entitled to severance pay.
Assess your finances
At this stage, you can assess your finances and how critical it is to find a new job. You now have inputs such as your final pay, severance pay and EI benefits. This should be factored into a new budget where you should also look for opportunities to cut costs. You should also consider your emergency fund and other savings to determine your current financial health. This is an important step of the process because your financial situation becomes fragile with the loss of a job. Once you have an understanding of your finances, you can put a timeline on finding a new job.
Related Reading: Tips On How To Save Money
Moving forward from a layoff
It can be difficult to deal with the emotions that come with a layoff. You may feel like you failed or you are not good enough. In addition, it can be challenging to navigate the months that follow your layoff, particularly financially. It is important to give yourself time to grieve and recover from the experience. Once you have had time to process your emotions, you can begin to take steps towards finding a new job. This may involve revamping your resume, going back to school, or exploring new careers.
Moving forward from a layoff can be an opportunity to try something new. Maybe this is the time to start a business or freelance. There are programs for people that have been laid off in Canada that can help you figure out your next move. Take the time to explore your options after a layoff. Who knows, maybe the entire experience was a blessing in disguise!
Related Reading: What to Know About Being Self Employed
Frequently asked questions
Below are some commonly asked questions about layoffs in Canada, with corresponding answers.
Do you get severance pay when laid off in Canada?
If you are laid off from your job in Canada, you may be entitled to severance pay. However, employees who quit or are fired do not usually qualify for severance benefits. In addition, probationary employees are not entitled to severance pay but may be entitled to other forms of compensation such as vacation pay.
Severance pay is governed by the Employment Standards Act (ESA), and is calculated based on a number of factors including length of service and position. In some cases, employers may also choose to provide additional severance beyond what is required by the ESA.
If you have been laid off from your job and believe you are entitled to severance, consult a labour lawyer to better understand how to approach an employer who may not be compliant with the law.
Can you be laid off while on disability in Canada?
In Canada, employment laws are governed by provincial and territorial legislation. As a result, the answer to this question can vary depending on the province or territory in which you live.
Although, under the Canadian Human Rights Act, employers are prohibited from discriminating against employees based on disability. This means that an employer cannot layoff an employee simply because they are on disability or have a disability. If an employer has a legitimate reason for wanting to layoff an employee who is on disability, they must first attempt to accommodate the employee’s needs. Only after making a reasonable effort to accommodate the employee can the employer proceed with a layoff. If you have been laid off while on disability, you may have grounds for a human rights complaint and related compensation. If this is the case, it’s wise to consult a labour lawyer.
How long can you be laid off for in Canada?
The length of time you can be laid off for depends on a few factors. If you are receiving employment insurance (EI) benefits, you can be laid off for a maximum of one year. However, if you are not receiving EI benefits, there is no limit to how long you can be laid off for.
Once your employment contract is terminated, your employer is no longer obligated to provide you with work. While some employers may choose to rehire laid-off employees after a period of time, others may not. This could be due to factors out of their control, such as poor economic conditions or downsizing. In other words, there is no maximum amount of time a layoff lasts and being rehired does not always happen, unfortunately.
Can you be rehired after being laid off?
It depends on the circumstances. Sometimes, layoffs are temporary and businesses will rehire employees once conditions improve. But in other cases, layoffs may be permanent and it may not be possible to get your old job back. In other words, you can be rehired after a layoff, but that doesn’t mean you always will be.
Is a layoff a termination in Canada?
In Canada, a layoff is not considered a termination. Termination occurs when someone is fired for poor behaviour or bad performance, also commonly referred to as a dismissal. Layoffs usually occur when there is a shortage of work or money. While layoffs are not pleasant or desired, they are sometimes necessary in order to keep a company afloat.
If you have been laid off, it is important to remember that it is not personal and you are not alone. There are often many factors that contribute to a layoff, and it is not necessarily a reflection on your worth as an employee.