Your employer can fire you while you’re on long-term disability, but only under specific legal conditions, and with significant obligations on their part first.
Firing an employee on LTD is a legally complicated and sensitive matter. Most employers don’t want to let a disabled employee go, but the financial pressure of carrying someone on benefits, often hundreds or thousands of dollars per month in insurance premiums, can create real tension. What the law requires is that before any termination can happen, your employer must clear a significant legal bar.
- Your employer can terminate you on LTD only if your employment contract has been “frustrated”, meaning it is more unreasonable for them to keep you employed than to let you go. They must first prove they have exhausted every accommodation option.
- Most group disability policies end coverage on the date of termination. If your disability began before you were fired, your claim can still proceed, but you will need documentation to prove it.
- After two years on LTD, most policies shift from “own occupation” to “any occupation” coverage. This does not give your employer an automatic right to fire you. They must still prove frustration of contract and that accommodations are not possible.
What Happens to Your Work Benefits When You're Fired on LTD?
What happens to your work benefits if you’re fired depends on the type of benefit and the timing of your termination.
Most group disability insurance policies define the date of employment termination as the end of eligibility for LTD coverage. If your date of disability falls after your date of termination, your claim will almost certainly be denied.
If you are fired while already receiving LTD payments, whether those payments continue depends on your specific policy language. Some policies allow benefits to continue for the duration of an approved claim even after employment ends; others do not. You should always review your policy carefully and speak with a disability lawyer before assuming your payments are safe.
If You Haven't Applied For Benefits Yet and Then Get Fired
If you are terminated before filing a claim, you can still apply, but you must be able to prove that your date of disability occurred before your date of termination. If you cannot establish this timeline with medical documentation, your claim is highly unlikely to succeed under your former employer’s group policy.
Other Group Benefits
Termination typically ends your access to your employer’s group health, dental, and vision plan as well. If you are mid-treatment or managing a chronic condition, this gap can create real hardship. Check whether your policy includes a conversion privilege (the right to convert to an individual plan without medical underwriting) and whether your severance package (if any) includes a period of continued benefits coverage.
Is There a Time Limit After Which Your Employer Can Fire You on LTD?
A common misconception is that after two years on LTD, your employer can automatically let you go. This is not accurate.
What does change at the two-year mark for most LTD policies is the definition of disability. Policies typically begin under an own-occupation definition, meaning you are considered disabled if you cannot perform the duties of your specific job. After two years, most policies shift to an any-occupation definition, meaning you must be unable to work in any role reasonably suited to your education, experience, and training. Under any-occupation contracts, most policies also require the policyholder to apply for CPP Disability Benefits.
This policy change does not sever the employment relationship. You remain an employee. Whether the employment contract is “frustrated”, and whether termination is legally justified, is a separate question that your employer must independently establish.
“Nobody should have to fight for their job while they’re fighting for their health. But when employers cut corners on their legal duties, that’s exactly what happens. We’ve seen it too many times — and we know how to push back.”
Understanding The Role Of Frustration of Contract
The legal doctrine of frustration of contract is the primary basis on which an employer can terminate a disabled employee. At its most basic, a contract is frustrated when an employee can no longer fulfill their contractual duties, and it would be more unfair to require the employer to wait indefinitely than to end the employment relationship.
Frustration is not a low bar. To justify termination on this basis, an employer will typically need to consider and document:
- The nature and severity of the disability
- The expected length of the absence and likelihood of recovery
- How soon a return to work, even in a modified capacity, is realistically possible
- The employee’s length of service
- Whether the employee’s role can be modified or filled in the interim
Frustration cannot be declared prematurely or on the basis of speculation about prognosis. Courts have consistently required clear medical evidence that the employee cannot return to work for the foreseeable future before accepting frustration as a defence.
The Duty to Accommodate
Before an employment contract can be considered frustrated, the employer must first fulfil their legal duty to accommodate the disabled employee to the point of undue hardship. This is a positive obligation, not a courtesy.
Reasonable accommodations an employer is expected to explore include:
- Providing assistive devices, modified infrastructure, additional training, or support
- Revising policies, shifts, or job duties to fit the employee’s functional capacity
- Permitting a phased or gradual return to work
- Keeping the position vacant long enough for a reasonable recovery period
- Offering a comparable alternative role suited to the employee’s limitations
If an employer has not meaningfully explored these options, they have not fulfilled the duty to accommodate, and termination on frustration grounds may be legally vulnerable.
Undue Hardship
An employer’s duty to accommodate has a limit: undue hardship. If accommodation would impose an unreasonable cost, create significant health or safety risks, or make it genuinely impossible for the business to function, the employer can invoke undue hardship to justify its limits.
Undue hardship is not simply inconvenience or preference. The employer bears the burden of proving it. Common grounds include:
- Financial cost that is unreasonable relative to the size of the business
- Health or safety risks that cannot be mitigated
- Core business functions genuinely cannot be performed without the employee’s role being filled on a permanent basis
Undue hardship is harder to establish in larger organisations with flexible or interchangeable workforces and easier to establish in small businesses with specialised, hard-to-replace roles.
Dealing with a long-term disability can be overwhelming. We’re here to fight for your rights and help you get the compensation you need to support your future.
What Your Employer Must Document Before Firing You on LTD
Nova Scotia courts and human rights tribunals expect employers to demonstrate they have exhausted accommodation options before proceeding with termination. Our long-term disability lawyers commonly see employers required to prove:
- The position was held vacant to allow the employee to return
- Duties were modified to facilitate a return, including a gradual return
- Workplace alterations were explored to accommodate the disability
- After two years, medical evidence establishes the employee cannot perform any work they are reasonably suited for
If your employer cannot demonstrate these steps, the termination may constitute wrongful dismissal, a violation of human rights legislation, or both.
Human Rights Protections
In Nova Scotia, disability is a protected ground under the Nova Scotia Human Rights Act. An employer who terminates an employee because of their disability, or before fulfilling the duty to accommodate, may face a human rights complaint in addition to a wrongful dismissal claim.
The Nova Scotia Human Rights Commission accepts complaints from employees who believe they were discriminated against on the basis of disability. The limitation period for filing is 12 months from the last discriminatory act.
A human rights complaint and a civil wrongful dismissal claim are not mutually exclusive, but the remedies, processes, and strategic considerations differ. A lawyer can help you assess which route or combination makes sense for your situation.
Constructive Dismissal: When You Aren't Technically Fired
Not every job loss comes in the form of a formal termination letter. Some employers, instead of letting a disabled employee go outright, make the employment relationship untenable, reducing responsibilities, altering compensation, eliminating the role, or pressuring the employee to resign. This is called constructive dismissal, and Canadian courts treat it as if the employer terminated the employee.
In an LTD context, watch for situations where:
- Your role or title is downgraded before you can return
- Your position is eliminated with no comparable alternative offered
- You face pressure to resign or accept reduced terms during your leave
- Reasonable return-to-work accommodations are refused without justification
If any of these apply, you may have a claim even if you technically resigned or your employment ended through other means.
What to Do If Your Employer Fires You While You're on LTD
If your employer fires you while you’re on LTD, limitation periods apply. Here are the steps that protect both your financial position and any future claim:
- Do not sign anything without legal advice. Severance agreements and releases presented at termination can waive your right to pursue further claims. A lawyer should review these before you sign.
- Keep all documents. Preserve your LTD policy, group benefits booklet, employment contract, all correspondence about your termination, and all medical records related to your condition.
- Request written reasons for termination. You are entitled to understand why you are being let go.
- Review your LTD policy for post-termination language. Confirm whether benefits continue after termination and under what conditions.
- Speak with a lawyer promptly. Wrongful dismissal claims and human rights complaints both have limitation periods. Waiting too long can cost you the right to pursue them.
Frequently Asked Questions
Can my employer fire me while I'm on LTD?
Yes, but only if the employment contract is legally frustrated, meaning your disability has made it genuinely impossible for you to fulfil your role for the foreseeable future, and only after the employer has exhausted its duty to accommodate. Termination without meeting these requirements may constitute wrongful dismissal or discrimination.
Will I lose my LTD payments if I'm fired?
Possibly. Most group policies tie eligibility to active employment. Whether your approved benefits continue post-termination depends on your specific policy language. Review your policy and speak with a lawyer before assuming payments are safe.
What if my disability began before I was fired, but I hadn't applied yet?
You can still apply, but you will need medical documentation establishing that your disability pre-dates your termination. Without that evidence, a claim filed after termination will almost certainly be denied.
Does the two-year mark give my employer the right to let me go?
No. The two-year mark triggers a change in how most LTD policies define disability, from own-occupation to any-occupation, but it does not automatically justify termination. Your employer must still prove frustration of the contract independently.
What is the difference between wrongful dismissal and a human rights complaint?
A wrongful dismissal claim addresses whether you received adequate notice or severance. A human rights complaint addresses whether the termination was discriminatory, motivated by your disability or made without fulfilling the duty to accommodate. Both can be pursued, but they follow different processes and offer different remedies.
How long do I have to make a claim?
Human rights complaints in Nova Scotia must be filed within 12 months of the discriminatory act. Wrongful dismissal claims are governed by the Nova Scotia Limitation of Actions Act, which sets a general two-year limitation period from the date you discovered the claim.
How Our Long-Term Disability Lawyers Can Help
The legality of terminating a disabled employee is complicated, and every situation turns on its own facts: the nature of the disability, the policy language, the employer’s accommodation efforts, and more. If you believe you were wrongfully dismissed while on LTD, or that your employer failed to accommodate you as required, the team at Valent Legal can help you understand your options.
Our long-term disability lawyers have extensive experience representing people across Atlantic Canada who have been denied benefits or dismissed while ill or injured. We work on a contingency fee basis — no fees unless we recover money for you.
If you or a loved one has been fired while on disability leave, contact Valent Legal today for a free, no-obligation case review. Call (902) 443-4488 or reach out online. You have rights, and we work hard to protect them.