Yes, you are still employed while on long-term disability (LTD) in Canada. You continue to enjoy the same employment rights while on long-term disability as when you are in the workplace. And while employers can generally terminate an employee at any time, it is against the law for you to lose your job or be discriminated against because of your disability – or face any reprisals (retaliation) for asking about or going on LTD. Also, your employer has a duty to accommodate your disability (up to the point of undue hardship) which can mean providing you with modified hours and/or duties, special equipment or tools to help you complete your work and/or allowing you the time off if you and your healthcare provider(s) feel that your health is at risk should you continue to work.

If you are dismissed after applying for LTD benefits or after going on long-term disability, or feel that you are being discriminated against because you are on disability, seek the advice of Ontario employment and disability lawyers. Employers who discriminate against and/or wrongfully terminate an employee because of a disability can face severe consequences and you may be entitled to significant monetary compensation (known as damages). In fact, you should always speak to an employment lawyer if you’ve been terminated, regardless of the reason, as employees are often short-changed on the amount of severance pay they are legally entitled to.

In this post, you will learn about your employment rights while on long-term disability in Ontario, your rights if you are dismissed while on LTD and what happens to your benefits if your employment is terminated while you are on disability.

Disclaimer: The information in this guide and everywhere else on this website is for general information only and is not intended to provide legal advice of any kind. No lawyer-client relationship is created by accessing or otherwise using Ertl Lawyers’ website or by communicating with a lawyer or staff member. If you need legal advice, contact one of the top employment lawyers in Toronto at Ertl Lawyers. We’re more than happy to speak with you.

Employment Rights and Long-Term Disability in Ontario

Aside from the right against discrimination because of your disability (or race, sexual orientation, creed or any other protected ground), you also have the right to return to the same position, or a comparable role on the same level, if/when you return to work. In other words, you do not have to worry about being demoted should you need to go on long-term disability leave.

While you are on long-term disability, your employer may call you to ask about your health and when you expect to return to work. An employer is allowed to ask about your prognosis, a timeline for your return and limitations in your ability to perform work tasks for the purposes of finding ways to accommodate them.

They are not permitted to ask about the cause of the disability, your treatments or the diagnosis. They are also not allowed to constantly call, harass, intimidate or threaten you into returning to work. If they do, speak to an employment and disability lawyer in Toronto who can advise you on the best way to handle this situation based on your circumstances and your level of desire to continue working with this employer.

Also, because you are still an employee, despite being on long-term disability leave, you are entitled to a continuation of your length of service; in other words, the clock is still ticking on your time in with your employer. This is a crucial employment right as the amount of time you are with an employer has a direct impact on your vacation time and pay entitlements, as well as the amount of severance you may be entitled to if/when your employment ends. If you are ever curious about what a severance package might look like for you, check out our Ontario severance pay calculator.

Should you choose to, and depending on the policy, you are also entitled to a continuation of benefits like a pension plan, medical insurance, dental coverage, etc.

While you may be fortunate enough to have an understanding employer who respects your space as you navigate your disability, the same may not be true of your insurance company. With most LTD policies, if it’s coming up on two years since you’ve been receiving long-term disability benefits, chances are the insurance company is about to determine that you no longer qualify for long-term disability benefits.

A Change in Definition and How it Affects LTD Benefits, and Possibly Your Employment

Most long-term disability plans require that an insured employee meets the definition of being “totally disabled” to qualify for long-term disability benefits. In insurance terms, a ‘total disability’ simply means that a medical condition disables an employee from the ability to perform the necessary functions of their work, or, as it’s categorized in insurance terms, their “own occupation.”

After two years, however, many LTD insurance policies change the criteria for eligibility of LTD benefits from a disability that prevents you from performing your “own occupation” to one that prevents you from performing “any occupation.”

The standard for an “any occupation” disability is a chronic medical condition, debilitating injury or a mental health disability that prevents you from performing the duties of any occupation you may reasonably be suited for, even if it requires training.

Often just before the two-year mark, the insurance company will ask that you participate in one or more Independent Medical Examination(s) (IME) to be evaluated by one of their assessment agents. The goal of the IME, from the insurance company’s perspective, is to generate a report that claims that you are healthy enough now to return to work, possibly with accommodation, but that, at the very least, you are able to perform in a job that would reasonably suit your previous training, education or current abilities.

You can not refuse to attend the IME as this would give them legitimate grounds to terminate your benefits. Instead, call your LTD lawyer, and go to the IME.

Of course, if the report from the IME is used to justify a termination of your LTD benefits, you will receive a letter notifying you of said termination. Call your LTD lawyer as soon as you receive it, as they have to get the ball rolling on a lawsuit. Preparing a formidable lawsuit takes several months to prepare, and you only have two years from the date on the letter to file it with the court.

The Effect of a Change in the Definition of Your Disability Status on Your Employment

It is possible that around this time, you are contacted by your employer with questions about when you are returning to work since you are no longer disabled. Again, you are not obligated to discuss the particulars of your case. Speak with your employment/LTD lawyer and advise them of what happened. The two of you will discuss the appropriate response.

What Happens if I’m Terminated While on Long-Term Disability?

Employers are allowed to terminate an employee at any time without cause, including an employee on long-term disability. However, if you were receiving LTD benefits before the termination, you are still entitled to them as long as you continue to be eligible for the LTD program in accordance with the insurance policy.

If you are terminated without cause, you are also entitled to reasonable notice, pay in lieu of notice or an amount agreed upon in your employment contract. Always consult an employment lawyer before accepting a severance package. You may be entitled to more than what you are being offered, and regardless of what your employer might tell you, you do not have to decide immediately whether to accept it or not.

Your disability may actually entitle you to a larger severance package. However, your benefits will likely be reduced by the severance package amount. You will need to run the numbers with your lawyer before deciding on the best financial decision.

Can I Still Apply for LTD After I’ve Been Terminated?

If your disability began while you were still employed and actively working, you might be eligible for LTD benefits after termination. You are still entitled to benefits during the notice period after your termination, but if you are not “actively working,” you may not be entitled to long-term disability benefits. You have to consult the insurance policy’s rules on LTD eligibility in that circumstance.

Termination of an Employee on LTD Due to Frustration of Contract

If an employee has been on long-term disability for a long time and their physician doesn’t expect the employee to return to work in the foreseeable future, an employer can seek to terminate the employee on the grounds that the employment contract has been “frustrated,” i.e., unable to be completed through no fault of either party.

But the employer must demonstrate that they tried everything short of placing an undue hardship on themselves to accommodate the employee’s return in order to have the contract legally declared “frustrated.”

Termination for Cause of an Employee on Long-term Disability

Termination for cause is only used for the most extreme situations because the consequences of it are so severe and can cause the employee to:

• Not be eligible for Employment Insurance (EI)
• Lose out on their severance.
• Experience difficulty finding another job.

The law creates a very high standard for proving that a termination for cause was justified. The employer must demonstrate that the employee’s behaviour had happened on several occasions and they had been warned; or that the employee’s behaviour was so outrageous that it irreparably damaged the employment relationship.

Examples of behaviour that can justify an employee’s dismissal for cause include lying about their skills or qualifications at their interview, assaulting or harassing a coworker, theft or fraud.

Given the difficulty of proving a just cause termination, an employer would likely need overwhelming evidence that the employee’s behaviour clearly rose to the level of a just cause termination before considering that move.