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.
Read our broader FAQ about employment issues while receiving long-term disability benefits.
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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Allowing a gradual return to work
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Temporarily reducing hours
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Changing non-essential duties
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Providing equipment or physical workplace adjustments
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Allowing remote or hybrid work where appropriate
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Considering another suitable and available position
An employer does not necessarily have to keep one exact position vacant forever. However, filling the position while an employee is away does not automatically eliminate the employee’s rights.
The employer should consider whether the employee could return to their original role, a modified role or another suitable position.
What Medical Information Can an Employer Request?
An employee must participate in the accommodation process and provide reasonable medical information.
An employer may generally request information about:
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Whether the employee is currently unable to work
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The employee’s functional restrictions and limitations
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Whether modified duties or hours are possible
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The employee’s expected recovery or reassessment date
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The employee’s general prognosis for returning to work
The employer does not normally need unrestricted access to the employee’s complete medical history.
Read our guide to communicating with your employer while on LTD.
Does an LTD Denial Mean You Must Return to Work?
No. An LTD denial does not automatically mean that you are medically able to return to work.
The insurance company decides whether you qualify for benefits under the terms of the LTD policy.
Your doctor or treatment provider assesses whether you are medically capable of working.
If your doctor continues to support your absence, your employer should not assume that you are healthy simply because the insurer denied or ended your benefits.
Your employer may request updated medical information about your restrictions, prognosis and ability to participate in a return-to-work plan.
Returning too soon may worsen your health and complicate both your employment and disability claims.
Learn more about returning to work while on long-term disability.
If the insurer has denied or ended your payments, read our guide to long-term disability claim denials in Canada.
Do LTD Benefits Stop if Your Employment Is Terminated?
Termination does not automatically end an existing LTD claim.
If your disability began while you were covered and you continue to satisfy the policy’s definition of disability, your LTD benefits may continue after your employment ends.
Your insurer may still review:
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Your medical condition and treatment
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Your functional restrictions and limitations
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Your ability to perform your own or another occupation
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Whether you are receiving other income
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Whether you continue to meet all policy requirements
The fact that your employer ended the employment relationship does not necessarily eliminate the insurer’s existing obligations.
What Should You Confirm After Termination?
Review your LTD policy and confirm:
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When your disability began
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When your LTD coverage started and ended
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Whether your claim was approved before termination
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Whether the insurer has requested additional medical information
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Whether severance or salary continuation may affect your payments
If your disability began shortly before or after you lost your job, read our guide to applying for LTD after termination.
Are You Owed Severance if You Are Fired While on LTD?
You may be owed severance pay if your employer terminates you while you are receiving LTD benefits.
The amount may be considerably more than the initial offer made by your employer, and can be as much as 24 months’ pay.
For non-unionized employees, relevant factors may include:
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Age
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Length of service
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Position and responsibilities
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Salary and other compensation
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Availability of similar employment
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The wording of the employment contract
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The reason the employment ended
If the employee’s disability influenced the termination, the employee may also have a human-rights claim or be entitled to additional compensation.
Can Severance Affect LTD Benefits?
Possibly. Some LTD policies allow the insurer to reduce benefits based on severance pay, salary continuation or other employment income.
The wording and structure of the severance agreement may affect how the insurer treats the payment.
Read more about severance pay and long-term disability benefits.
Samfiru Tumarkin LLP provides employment-law advice to non-unionized employees in Ontario, Alberta and British Columbia.
Our disability lawyers assist with denied or terminated LTD claims across Canada.
What Should You Do if You Are Terminated While on LTD?
1. Do Not Sign the Severance Offer
Do not sign a release before the offer has been reviewed.
The deadline given by your employer is not necessarily final and can often be extended.
2. Keep Your LTD Claim Active
Continue attending medical appointments, following reasonable treatment recommendations and providing required updates to the insurer.
Termination does not remove your obligation to continue supporting the LTD claim.
3. Request Your LTD Policy
Obtain a complete copy of the insurance policy, not only the short benefits booklet.
The policy should explain benefit eligibility, offsets, exclusions, appeal deadlines and what happens after employment ends.
4. Save All Relevant Documents
Keep copies of:
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Your termination letter
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The severance offer and release
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Your employment contract
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Your benefits booklet and LTD policy
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Letters and emails from the insurer
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Medical notes and reports
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Communications with your employer
5. Do Not Resign
Do not resign because you feel pressured, believe you will never return or think your employer no longer wants you.
Resigning may create serious problems for your employment and disability claims.
6. Get Advice About Both Claims
Your severance and LTD claims should be reviewed together before you accept any settlement.
A decision made in one claim may affect the other.
Frequently Asked Questions About Termination While on LTD
How long does an employer have to hold your job while you are on LTD?
There is no universal deadline. The employer must consider your individual medical prognosis, ability to return to work and possible accommodations instead of relying only on the length of your absence.
Can an employer fire you after two years on long-term disability?
There is no automatic two-year termination rule. Two years is commonly when an LTD policy changes its definition of disability. Your employer must still consider its employment and human-rights obligations.
Can you be terminated while your LTD claim is active?
Potentially. An employer may terminate you for a legitimate reason unrelated to your disability. It may also argue that there is no reasonable prospect of your return, but it should have current medical evidence and must properly consider accommodation.
Do you lose LTD benefits when you are fired?
Not automatically. An existing LTD claim may continue if your disability began while you were covered and you continue to meet the policy’s requirements.
Can your employer terminate you if the insurer denies LTD?
An insurer’s denial does not prove that you are medically able to work. Your employer should consider medical information from your treatment providers and continue the accommodation process where appropriate.
Can you receive severance and LTD at the same time?
Potentially. However, some policies allow the insurer to reduce LTD benefits based on severance, salary continuation or other income. Get advice before signing a settlement.
Does your employer need to know your diagnosis?
Not always. The employer generally needs information about your restrictions, limitations, prognosis and accommodation needs. It does not normally require unrestricted access to your full medical history.
Can an employer permanently replace someone who is on LTD?
An employer may arrange coverage while an employee is away. However, replacing the person does not automatically end the employment relationship or eliminate the duty to accommodate.
Can an employer ask for medical updates while you receive LTD?
Yes. The insurer and employer have different roles. Your employer may request reasonable updates about your restrictions, prognosis and ability to return even if the insurer is already receiving medical information.
What if you are unionized?
Unionized employees should contact their union immediately. Termination and accommodation disputes may need to proceed through the collective agreement and grievance process.
Get Help if You Are Fired or Your LTD Benefits Are Denied
Termination while receiving LTD can create two connected legal problems:
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A dispute with your employer over termination, accommodation and severance pay
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A dispute with the insurance company over continued LTD benefits
These issues should be reviewed together. A severance agreement that appears reasonable could reduce your disability benefits or release legal claims you did not realize you had.
Samfiru Tumarkin LLP helps people across Canada whose long-term disability claims have been denied, delayed or cut off.
Our employment lawyers also advise non-unionized employees in Ontario, Alberta and British Columbia who have been terminated while on disability leave.
Contact us before signing a severance offer or accepting an LTD denial.