If there is one thing an employee fears more than termination, it may be the development of a disability that prevents them from being able to do their job.
But for the unfortunate minority of workers who are left to deal with both events, it can be a stressful and lonely journey.
Although every case is unique, your rights and entitlements will generally differ depending on the precise timing of your departure from work and when you applied for long-term disability (LTD) benefits. Our long-term disability lawyers in Oakville can support you in your claim.
Here are the four key scenarios most claimants fall into to give you an idea of where you may stand.
Scenario 1: Terminated while receiving LTD benefits
For many individuals terminated by their employer while off work on LTD, the loss of their job will not affect their benefits payments — whether their employer went out of business, they were terminated without cause or laid off for some other reason.
That’s because your relationship with your LTD insurer is not directly tied to your employment. Instead, it’s governed by your individual LTD policy and the text of that contract. As long as you continue to meet the test for disability, you should continue to receive benefits.
Another reason to examine your LTD policy closely is that some insurers include a clause that allows them to treat severance or other payments arising from your termination as offsetting income, which could result in a reduction to your benefits.
Any claim you may have against your employer for discrimination, unpaid severance or other wrongful treatment would proceed separately, depending on the circumstances of your termination and whether it was related to your disability.
Scenario 2: Frustration of contract
An employment relationship that ends due to “frustration of contract” is not technically a termination, but the practical effect is the same for LTD benefit recipients.
These are rare cases, which makes it a bit of a legal grey area, and there are no hard and fast rules about how long an employer must wait or what accommodation efforts they must make before concluding that a contract has been frustrated.
The key to frustration cases is whether the situation has reached the point where there is no “reasonable likelihood” that the employee will return to work within a foreseeable time, for reasons outside either parties’ control. Generally, employees whose contracts have been frustrated will still be owed minimum severance payments under Ontario’s Employment Standards Act.
Again, entitlement to LTD benefits is a separate issue, so the change in employment status should not affect the insurer’s eligibility determination under your policy.
Scenario 3: Becoming disabled after termination
Although it may feel a little counter-intuitive, the date of your termination does not necessarily mark the end of your employer-provided LTD coverage. Still, the more time that passes between the loss of your job and the onset of your disability, the more difficult it will be to make a successful claim for benefits.
The ESA prescribes minimum periods for which employers must keep benefits active after termination — between two and eight weeks, depending on the length of their employment.
Some workers might be able to argue that the period should run even longer if they were entitled to common-law notice, which is what happened in one notable case involving a man who developed cancer more than a year after his firing from the job where he was covered by an LTD policy. Although the worker had found new employment without LTD coverage just a few weeks after his termination, a judge found that his diagnosis fell within the 22-month notice period owed by his old employer and awarded damages equivalent to the amount he would have received under its LTD policy.
The message from this and other cases is that you have little to lose from applying under an old LTD policy, and we generally encourage disabled individuals to submit an application to their previous insurer even if they have been terminated.
Again, the wording of your contract will be key, and some insurers include provisions limiting coverage to those who were “actively at work” at the time they became disabled.
Scenario 4: Disabled during employment, but claim LTD after termination
It’s generally more straightforward for this group of employees to make a claim since LTD coverage decisions typically focus more on the date of the disability than the application.
There are many reasons why an individual may not apply immediately for LTD benefits: some may simply not have gotten around to it before their termination, while others may be abiding by the waiting period built into many LTD policies.
Ontario case law reveals some extreme cases, including a decision in favour of a man who made his LTD claim almost two years after leaving his employer — and five years after the accident that caused his traumatic brain injury — when the Court of Appeal was convinced that he could not have appreciated the seriousness of his disability any earlier than he did and had made his application in a timely fashion after that discovery.
Still, there’s no reason to delay your application. Every LTD policy will set out its own rules and deadlines for benefit applications by claimants and the longer you wait, the bigger the chance you will run into trouble.
If you’ve been terminated and think you may have a claim for LTD benefits, feel free to contact me or another member of the team at Edwards Pollard LLP to speak with a long-term disability lawyer in Oakville.
