There is no fixed amount of time an employee can be on long-term disability before their employment can be terminated.
An employer does not automatically gain the right to end your job after six months, one year or two years on long-term disability (LTD).
The key questions are whether you may be able to return to work in the reasonably foreseeable future, whether your employer has properly considered accommodation and whether ending your employment would be connected to your disability.
Your employment and LTD claim are also separate. Losing your job does not automatically end your disability benefits. An insurance company denying your LTD claim also does not automatically mean that you are medically able to return to work.
On This Page:
- Is There a Time Limit?
- Can You Be Fired After Two Years?
- When Can an Employer Terminate You?
- Duty to Accommodate
- What if LTD Is Denied?
- LTD Benefits After Termination
- Severance While on LTD
- What to Do After Termination
- Frequently Asked Questions
Is There a Time Limit Before an Employee on LTD Can Be Terminated?
There is no universal deadline after which an employer can automatically terminate an employee who is receiving LTD benefits.
An employer should not rely on an automatic rule requiring termination after:
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Six months of disability leave
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One year away from work
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Two years of LTD benefits
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The employee’s position has been filled
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The insurer changes or ends LTD benefits
Instead, the employer must consider the employee’s individual medical circumstances.
Relevant factors may include:
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How long the employee has been unable to work
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The employee’s current medical restrictions
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The employee’s prognosis
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Whether a return to work is reasonably possible
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Whether modified duties or hours could assist
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Whether another suitable position is available
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Whether the employee and employer have participated in the accommodation process
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Whether further accommodation would create undue hardship
A lengthy absence may eventually become relevant. However, time away from work alone does not determine whether termination is legal.
Learn more with our guide Still Employed While on Long Term Disability.
Can an Employer Terminate You After Two Years on LTD?
An employer does not automatically gain the right to terminate you after two years on long-term disability.
The two-year mark is important in many LTD claims because the insurance policy may change its definition of disability.
During the initial period, you may qualify for LTD if your condition prevents you from performing the essential duties of your own occupation.
After approximately two years, many policies require you to show that you can’t perform another suitable occupation based on your education, training and experience.
This is commonly called the change from “own occupation” to “any occupation”.
It is an insurance-policy change. It is not an automatic employment termination deadline.
Your employer also should not assume that an insurer’s decision to end benefits means you are medically able to return to work.
When Can an Employer Terminate an Employee Who Is on LTD?
An employee can be terminated while receiving LTD benefits in certain situations.
However, an employer can’t legally terminate an employee because they have a disability, require accommodation or are taking a legitimate disability-related leave.
Termination for a Reason Unrelated to the Disability
An employer may be able to end the employment relationship for a legitimate reason that has nothing to do with the employee’s medical condition.
Examples may include:
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A genuine company closure
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A legitimate restructuring
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The elimination of an entire department
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A broader reduction in the employer’s workforce
The employer must be able to show that the disability or medical leave did not influence the decision.
The employee may also be owed substantial severance pay.
No Reasonable Prospect of Returning to Work
An employer may eventually argue that the employment relationship has become impossible to continue because the employee has no reasonable prospect of returning to work in the foreseeable future.
This is often called frustration of contract.
A long absence does not automatically prove that the employment contract has been frustrated.
The employer should have reliable and current medical information addressing:
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The employee’s prognosis
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Whether the employee may return in the foreseeable future
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Whether a gradual return is possible
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Whether modified duties or hours could assist
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Whether another available position could be suitable
Depending on the province and circumstances, an employee may still be owed minimum termination or severance entitlements even if the employment contract has been frustrated.
Learn more about frustration of contract in Ontario, Alberta and British Columbia.
Serious Misconduct Unrelated to the Disability
Receiving LTD benefits does not protect an employee from the consequences of serious misconduct that is unrelated to their medical condition.
However, termination for cause is a severe response. An employer must have strong evidence, and disability-related behaviour may need to be considered as part of the accommodation process.
What Must an Employer Do Before Terminating an Employee on LTD?
Employers have a duty to accommodate employees with disabilities to the point of undue hardship.
The appropriate accommodation will depend on the employee’s medical restrictions, job duties and workplace.
Possible accommodations may include:
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Continuing an unpaid medical leave
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