LTD benefits no protection against termination

Author: Rohan Haté |


Receiving long-term disability (LTD) benefits does not provide disabled workers with a shield against termination, says Toronto personal injury lawyer Rohan Haté.

“Depending on the wording of the employment contract, certain conditions would allow an employer to terminate an employee’s contract, without cause, even if they are on LTD. A disabled employee, however, cannot be terminated on account of his or her disability,” he says.

“But if that does happen, I would highly recommend that the injured worker contact a lawyer immediately,” Haté adds, explaining that it’s a risky move for employers to make.

Employees have protection from discrimination

Even when contracts allow employers to terminate workers on a without-cause basis, Haté says they must be able to show that it was not related at all to the worker’s medical issues. Otherwise, the employer could face liability for breaches of Ontario’s Human Rights Code, which protects employees from discrimination on the basis of disability. It mandates that an employer must accommodate a disabled employee to the point of undue hardship. 

Terminations that survive a human rights claim — such as for a restructuring of the business — would still be subject to severance requirements under Ontario’s Employment Standards Act (ESA) or the common law, entitling workers to damages in lieu of their notice period.

Employers can avoid paying severance if they have “just cause” to fire an employee, but such claims are notoriously difficult to prove, according to Haté, who says that businesses may also have trouble proving that the firing was unconnected to the worker’s injury if it occurred while they were already receiving LTD benefits.

While many employees are surprised to find out that they can be fired while in receipt of LTD benefits, Haté says it’s not uncommon for workers to feel pressure from their employers in the period after they are injured in an accident or otherwise disabled from work.

“The employer or even the LTD insurer may be in touch to try to get them to return to some form of modified duties,” he says.

Pushback from LTD insurers

On the upside for employees, LTD benefits do not automatically end when a person is terminated from their job, Haté says. In most cases, insurers make their determination based on whether claimants are disabled from carrying out the duties of their “own occupation,” regardless of whether their actual job is still open to them.

Still, he says injured workers can expect more pushback from LTD insurance providers after the two-year anniversary of their departure from work. Although the wording of policies may differ, that’s when the test for continued coverage typically switches to a tougher standard, requiring policyholders to show that they are disabled from performing suitable work in “any occupation” open to them.

In addition, termination is not necessarily a bar against an LTD claim, thanks to requirements in the ESA forcing employers to maintain disability coverage until the end of the statutory notice period.

“That means you could still be covered after your termination, subject to the terms of your policy and employment contract,” Haté says.

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