Gainful Employment in Canada: What It Means for Disability Benefits

Understanding gainful employment is essential when you’re dealing with a long-term disability (LTD) claim. Insurance companies often use this term when deciding whether you should continue receiving benefits — or if they believe you can return to work.

Below, you’ll find a simple breakdown of what gainful employment means, how insurers use it, and what to do if your benefits are denied or cut off because of it.

What Is Gainful Employment?

Gainful employment means work that provides a reasonable, regular income. It’s a job that pays enough to support yourself based on your training, education, and experience.

Insurers often use this phrase when determining if you’re still entitled to long-term disability benefits.

Gainfully Employed Meaning

Being gainfully employed means you’re earning an income at a level considered “gainful” under your policy — usually above a set earnings threshold, like a percentage of your pre-disability income.

Some policies consider you gainfully employed if you earn 60% to 70% of your previous income. Others use different standards. Always check your specific LTD policy wording.

Gainful Employment Meaning in Disability Claims

In disability law, gainful employment is tied to the idea of whether you can realistically return to work. Your insurer may claim you are fit for some type of work — even if it’s not your old job — if they think it meets the threshold.

But that doesn’t mean you’re required to accept work you can’t physically or mentally perform.

What Does Gainful Employment Mean for LTD Benefits?

During the first 24 months of most LTD policies, you only need to show that you can’t perform the essential duties of your own occupation.

After that, insurers switch to the tougher “any occupation” test. This is where gainful employment becomes critical.

To cut off your benefits, your insurer must show:

• You can perform another occupation, and
• That job meets the gainful employment definition under your policy.

This is where many long-term disability denials in Canada happen — often unfairly.

How Insurance Companies Decide What Counts

Insurers typically look at:

• Earnings: Does the job meet the income threshold (e.g., 60–70% of your old salary)?
• Your background: Does it match your training, education, and experience?
• Your medical limitations: Can you actually perform the tasks safely?
• Consistency: Can you maintain the work on a regular, reliable basis?

If the answer to any of these is “no,” then the job should not be considered gainful employment.

What Is Gainful Employment for Disability?

When dealing with LTD claims, gainful employment generally means:

• A job you are medically able to do, that aligns with your skills and background, and pays a reasonable wage as defined in your LTD policy.

Why Insurers Get It Wrong

Many people lose their benefits because the insurance company:

• Relies on outdated or incomplete medical information
• Uses vocational assessments that don’t reflect real-world job demands
• Assumes you can work full-time when you can only manage limited hours
• Picks jobs that exist “on paper” but not in your local job market
• Ignores fatigue, pain, cognitive issues, or mental-health challenges

Examples of Jobs That May Not Be Gainful Employment

Even if an insurer claims they are:

• Part-time roles that don’t meet your earnings threshold
• Jobs far below your skill level
• Physically demanding work you can’t safely perform
• High-stress roles that worsen your condition
• Jobs you’re not trained for and can’t reasonably transition into

A “possible” job isn’t the same as a sustainable, gainful job.

What To Do if Your LTD Benefits Were Cut Off Because of Gainful Employment

If your claim was denied or terminated because your insurer says you can return to work in a “gainful” role, take these steps:

1. Get the decision in writing
2. Ask your doctor for updated medical support
3. Request your full claim file
4. Do NOT appeal internally — it rarely works
5. Speak with a disability lawyer immediately

You may still be entitled to compensation, including back pay and reinstatement of benefits.

Speak to a Disability Lawyer

If your insurance company is pressuring you to return to work or has cut off your LTD benefits because they believe you’re capable of “gainful employment,” you should speak to our team.

At Samfiru Tumarkin LLP, our long-term disability lawyers have helped thousands across Canada secure the disability benefits they’re owed.

There are no upfront fees. You don’t pay unless we win.

📞 Call us at 1-855-821-5900, email help@disabilityrights.ca, or use our online form for a FREE consultation.