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HR glossary · Leave, health and benefits

Long-term disability (LTD)

Long-term disability is insurance that replaces part of an employee's income when a lasting illness or injury stops them working for months or more.

Also called: LTD, long-term disability insurance, LTD benefits

What long-term disability (LTD) means

Long-term disability (LTD) is an insurance benefit, usually part of a group benefits plan, that pays an employee part of their income when an illness or injury keeps them from working for a long time. It starts after a waiting period set in the policy, often once short-term disability or EI sickness benefits have run out.

No employment standards law requires LTD. It is one of the more expensive parts of a benefits plan, but for an employee with a serious, lasting condition it can be the main source of income for years.

LTD is between the insurer and the employee. The insurer decides who qualifies and for how long. The employer's role is to provide information, keep the employment relationship in good order and be ready to support a return to work.

How it works

LTD policies define disability in their own terms. Many start by asking whether the employee can do their own job, and later whether they can do any job they are reasonably suited for. The waiting period, the percentage of income replaced, the maximum benefit and the end date are all in your policy contract. Give employees a plain summary and tell them where to find the full booklet. Tax matters too: if you pay any part of the plan's cost, LTD benefits are taxable income for the employee; if employees pay the entire cost themselves, the benefits they receive are not taxable. Decide who pays the premiums when you set the plan up, and tell employees.

When an employee may need LTD, help them apply early, because insurers often want the claim started well before the waiting period ends. Complete the employer statement promptly and accurately. Do not ask for or keep the diagnosis; the insurer manages the medical side.

Being on LTD does not by itself end someone's employment. The employee is still your employee unless the job ends in some other way. Human rights law protects people from being treated differently because of a disability, so ending the job of someone on LTD is legally risky. Get advice first.

Keep in touch. Agree with the employee how often you will check in and who will do it. When the insurer or the doctor says a return is possible, work on a return-to-work plan together, which may include modified duties or reduced hours at first.

Common mistakes: letting the claim deadline pass, cancelling benefits without checking the policy, and assuming a long absence means the employee has quit.

Is it the same in every province?

LTD is a private insurance benefit, so the concept is the same across Canada. The legal protections around it, such as human rights protection for disability and job-protected sick leave, come from provincial and territorial law (or federal law for federally regulated employers) and differ in their details.

Example: A long recovery at a Saint John engineering firm

Rob runs an 18-person engineering firm in Saint John with a group plan that includes STD and LTD. His project engineer Hélène has been on STD for several months after a serious illness, and her doctor says she will not be able to return for a long time.

Rob calls the insurer's claim line, sends Hélène the LTD forms so her claim starts before her STD ends, and completes the employer statement the same week. He keeps her benefits in place as the policy requires, agrees to call her once a month, and makes a note to talk about a gradual return when her doctor says it is possible.

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Questions about long-term disability (LTD)

Do I have to offer long-term disability?

No. LTD is an optional insurance benefit. No employment standards law requires it.

Can I terminate an employee who is on long-term disability?

Being on LTD does not end employment, and human rights law protects employees with a disability. Ending the job of someone on LTD is legally risky, so get legal advice first.

What is the difference between STD and LTD?

STD covers shorter absences, usually weeks or a few months. LTD starts after a longer waiting period set in the policy and can last much longer.

Related terms

Short-term disability (STD)Short-term disability is an optional employer plan that replaces part of an employee's.Group benefitsGroup benefits are an employer-sponsored plan of health, dental, life and disability.Disability managementDisability management is how an employer handles illness, injury and disability at work.Return-to-work planA return-to-work plan is a written plan for bringing an employee back after an illness.Duty to accommodateThe duty to accommodate is an employer's duty under human rights law to adjust work for.Frustration of contractFrustration of contract is when an unforeseen event makes the job impossible to perform.Modified dutiesTemporary changes to a job so an injured or ill worker can safely return to work before.All HR terms165 plain-language definitions

Official sources

General information for Canadian employers, not legal advice. Rules differ by province and territory and change over time, so check with your provincial employment standards office (or the federal Labour Program if you are federally regulated) before you rely on it. See employment standards by province.

Checked against official sources on 5 November 2026.