Yes — and once the conversion happens, the Act backdates the termination to the first day of the lay-off, so there is no chance to run it as working notice.
Short answer
Ontario’s ESA treats a lay-off with no recall date as a running clock rather than a termination, but only up to a point. Benefit-plan contributions can extend the default 13-week limit to just under 35 weeks; once a lay-off reaches 35 weeks in a 52-week period with no qualifying union or Director-approved extension in place, s.56(1)(c) deems the employment terminated, and s.56(5) provides that the termination “shall be deemed to be terminated on the first day of the lay-off” — not the day the 35 weeks runs out.
Section 56 counts weeks against a threshold of half a regular week’s earnings to decide whether a given week counts as laid off at all; a separate severance test in s.63(2.1) uses a quarter of a regular week for the same purpose. The two look identical and are not — a short recall week can count toward breaking the clock under one test and not the other, moving the actual conversion date by weeks.
Once a lay-off converts, severance eligibility runs on ESA s.64(1), which has two independent limbs and only one mentions payroll. Limb (a) is satisfied by a permanent discontinuance plus 50 or more employees severed within six months — with no payroll threshold at all — so a target with a small total payroll can still generate real severance exposure the moment the buyer’s own post-closing restructuring crosses fifty people, regardless of what the target’s balance sheet showed at closing.
The full mechanic, with the deemed backdating, decided a plant mothballed thirty-six weeks after closing. The headcount-not-payroll trap on severance is worked through in fifty-one severed in six months at a small payroll.
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