Before I address your specific question, please bear in mind that, even if you have made a mistake in completing the online application, you can have it corrected by calling Service Canada. Also, if you have incorrectly stated the reason i.e. layoff vs. dismissal, please note that Service Canada will verify this information by looking at your ROE. Your ROE contains specific codes relating to the reason for the issuance of the ROE. For instance, if you were dismissed from your employment without cause e.g. due to company restructuring, the employer will specify this in the ROE, which will allow Service Canada to confirm whether you are entitled to receive E.I. The key item to note in this regard is that you will not be entitled to receive E.I. if you had resigned from your employment (voluntarily left your employment without just cause) or were terminated for cause.
Now coming to your question, the E.I. application on this issue is indeed somewhat confusing. This arises primarily because people often confuse "layoff" with "termination" or "dismissal". When terminated or dismissed from their employment, people often refer to it as "layoff", which is legally incorrect. Legally speaking, layoff refers to a temporary interruption in an employee's employment where he/she is expected to return back to work within a certain time period. Of course, adding to this confusion is the fact that online application form for E.I. does not show any options for a "dismissal" without cause.
We will reach out to Service Canada on this issue for further guidance and will post any replies we receive.