If you become disabled shortly after losing your job, you may still have access to long-term disability (LTD) benefits — even if the insurer or employer points to an “active employment” requirement.
This page explains, in plain English:
- what an “active employment” clause means,
- why LTD coverage can still continue during a notice period, and
- what to do if your LTD claim is denied after termination.
Need help now? If your LTD claim was denied, delayed, or cut off, request a free 30-minute phone consultation or call (416) 907-9249.
Start Here: Long-Term Disability Resources
- Long-Term Disability in Ontario – Your Complete Guide
- LTD Denied – Common Reasons and What To Do
- Appealing an LTD Denial – Internal Appeal vs Lawsuit
- Limitation Periods & Deadlines – Don’t Miss Your Right to Sue
- CPP Disability + LTD – How They Work Together
- Long Term Disability Lawyer Toronto – Services
What Is an “Active Employment” Clause?
Many benefits plans and insurance policies say LTD coverage applies only while you are in “active employment.”
Insurers sometimes use this wording to argue:
- you were not covered because you were terminated, or
- you were not actively working when you became disabled.
In real life, this often comes up when:
- you are terminated without cause,
- you receive pay in lieu of notice (or a severance package), and
- you become ill or injured during the notice period.
Why LTD Coverage Can Still Apply During a Notice Period
When someone is terminated without cause, the law can require compensation for the notice period (sometimes called damages in lieu of notice). That compensation often includes not only base pay, but also the value of benefits that would have continued if employment had not been ended improperly.
That matters for LTD because if your benefits should have continued through the notice period, LTD coverage may still be available if you become disabled during that time.
How Ontario Courts Have Approached “Active Employment” Arguments
Ontario courts have repeatedly said that if an employer or insurer wants to take away compensation or benefits during the notice period, the contract language must be clear and enforceable.
In P. v. TeraGo Networks Inc., the Ontario Court of Appeal dealt with “active employment” language in the context of compensation during the notice period. The key takeaway is that an “active employment” requirement does not automatically defeat an employee’s entitlement during the notice period.
Related decisions have also emphasized the purpose of wrongful dismissal damages: to put the employee in the position they would have been in if proper notice had been given.
Common Scenarios Where This Becomes an LTD Issue
You may want legal advice quickly if:
- you were terminated and became disabled during the notice period,
- your insurer says you are not eligible because you were not “actively employed,”
- your employer says benefits ended immediately at termination, or
- your LTD claim is denied because coverage is disputed rather than your medical evidence.
What To Do If Your LTD Claim Is Denied After Termination
If you receive a denial, do not assume it is final.
Helpful next steps:
- Ask for the denial decision in writing and keep all correspondence.
- Request a copy of the full benefits booklet/policy and any plan documents.
- Confirm the date the insurer says coverage ended and why.
- Get legal advice early so you do not miss deadlines.
See also:
- LTD Denied – Common Reasons and What To Do
- Appealing an LTD Denial – Internal Appeal vs Lawsuit
- Limitation Periods & Deadlines – Don’t Miss Your Right to Sue
Important: Deadlines Still Apply
Even if your insurer is “reviewing” your file or offering an internal appeal, limitation periods can still apply. Waiting too long can reduce your options.
For a plain-English explanation: Ontario LTD Limitation Periods & Deadlines
FAQ
Can I get LTD if I was terminated?
Sometimes, yes. If you became disabled during a period when your benefits should have continued (such as a notice period), LTD coverage may still apply depending on your policy and the circumstances.
What does “active employment” mean in an LTD policy?
It usually means the policy is intended to cover employees while they are working. However, it does not always end the analysis — especially where benefits should have continued through a notice period.
Should I appeal internally first?
Not always. Internal appeals can have short deadlines and can also create risk if they distract from legal limitation periods. Get legal advice early so you protect your options.
Talk to a Long-Term Disability Lawyer
Monkhouse Law Employment Lawyers helps non-union employees across Ontario with denied, delayed, and terminated LTD benefits. Request a free 30-minute phone consultation or call (416) 907-9249.