Returning to Work While Receiving Disability Benefits in Canada

Individuals who receive benefits because of a long term illness often wonder whether it is possible to have some kind of earnings or return to work without losing financial support. Whether you’re on long-term disability benefits through an insurance company, CPP Disability benefits, or the Ontario Disability Support Program, returning to work will require careful planning. Insurers and government programs have strict rules around returning to work while on disability, reporting income, and showing that you remain medically unable to perform full-time employment.

Can You Work While on Disability Benefits in Canada?

Yes — in some circumstances, you can work part time, attempt modified duties, or try a graduated return to work while collecting benefits. But each of the disability programs treats income differently:

CPP Disability Benefits (Service Canada): Limited income earnings allowed; work attempts must be reported immediately

ODSP: Ontario Disability Support Program – encourages employment, benefits adjusted according to income.

Long Term Disability (LTD Benefits): Depends on your insurance policy; insurer may reduce payments or argue you are “regularly capable of employment.”

Even small work attempts INCLUDE freelancing, self-employment, and/or part-time work. Failure to report may cause denial of your LTD claim, repayment demands, or termination of benefits.

How Returning to Work Affects Disability Benefits

Attempting to re-enter the workforce impacts eligibility for disability insurance and may activate ongoing monitoring from the insurance company. Returning to work too soon may result in the insurer making a determination that you are fit to work, even if your medical condition has not improved.

Returning to work may result in:

A reduction in LTD benefits because of income offsets

Termination of benefits if the insurer believes you no longer meet the definition of disability

Increased monitoring of your physical activity and limitations

A new application process if your disability recurs after too much time has passed Many policies have a recurrence clause, which means that benefits may begin again if you experience a medical relapse within a certain period, usually six months. However, going back to work without the right documentation, including your doctor’s support and the advice of a disability lawyer, can definitely reduce your chances of receiving future benefits.

Termination of Benefits If Deemed “Fit to Work”

When you try going back to work while on disability, the insurance company may view that as proof that you are no longer disabled. In most LTD policies, the insurer has grounds to cancel benefits if it thinks you can regularly perform work duties, even when your doctor disagrees.

Common triggers for LTD termination:

You start a part-time job or accept modified duties

Your employer’s report indicates that you are doing well

Your doctor’s medical notes seem optimistic, which may complicate any potential legal action .

You perform daily activities that reflect work capacity

Once being labeled “fit to work,” your LTD benefits, CPP disability benefits, or ODSP disability benefits may stop, making you manage income earnings on your own.

Surveillance and Insurer Monitoring

Insurance companies often use surveillance as a method of gathering evidence to deny claims. When a person tries to go back to work or make extra money, the monitoring intensifies.

Surveillance may involve:

Social media tracking-photos, activities, and trips

In-person surveillance (following you or recording video)

Contacting your employer about hours worked and duties

Monitoring your self-employment activity

Even the small tasks — carrying groceries, attending fitness classes, or taking a dog for a walk — could be misconstrued as evidence you are capable of working full time.

Insurers do not care about context; they care about limiting or ending your disability benefits.

Potential Impact on Future Claims If Relapse Occurs

If your condition worsens and you must stop working again, your ability to restart benefits depends on the recurrence clause in your LTD policy.

Possible outcomes:

If disability recurs within the recurrence period (often six months), LTD benefits may restart without a new claim.

If it occurs after that period, then a new application will be required, complete with medical forms and proof of disability.

Key risk:

But if the insurer believes that resuming work proves you are no longer disabled, they may refuse to reinstate benefits — even if your symptoms return.

Can You Try a Graduated Return to Work?

A graduated return to work can enable you to return to work gradually while managing your health limitations.

Examples:

Working reduced hours-e.g., 2-3 hours a day

Performing different job responsibilities than prior

Working remotely as part of a modified plan

Graduated return programs may involve:

Skills Training

Workplace Accommodations

Adjusted workload or schedule

This method is safer, but your disability attorney should review the plan first to protect your LTD benefits and avoid you inadvertently showing full work capability.

Reporting Your Income and Work Attempts

Any attempt to gain income while on disability-even a small amount of money-must be reported.

Income which needs to be declared:

Part-time employment

Freelancing / Self-employment

Running your own business

Any wages, commissions, or bonuses

Failure to report income can lead to:

A demand to repay benefits

Reporting Your Income and Work Attempts

If you are receiving disability benefits, whether it is from LTD, CPP Disability, or ODSP, and you try to earn an income at any time, you must report your income earnings. This includes when:

You only work a few hours every week.

You perform modified duties

You freelance or do self-employment.

You have an own business that earns minimal income.

Insurance companies take this reporting requirement very seriously, and will consider just about any type of paid or unpaid work attempt as indicative of an ability to resume full-time employment.

You are required to report:

Hours worked

Type of duties

Your earnings or projected earnings

Whether the work is remote, part-time, or temporary

Failure to report income can lead to:

Termination of LTD benefits

Being required to pay back benefits received during your work attempt.

Misrepresentation or fraud allegations

Both Service Canada (CPP Disability) and ODSP require disclosure. In fact, even cash jobs, gig work (e.g., Uber, tutoring), or small business activity become reportable income.

Even if the work attempt is a failure, the insurance company may use that attempt to argue that you are “regularly capable” of working.

Always check with a disability lawyer before you submit reporting forms to the insurer.

Strategies Before Returning to Work

You should take strategic steps before going back to work while on disability, so as not to give the insurance company an excuse to terminate your claim and protect your disability benefits.

First, you need written medical clearance from your treating physician. Your doctor needs to outline your limitations, including how many hours you can work and whether you will need modified duties. This is very important in terms of medical documentation; if the insurer believes that you returned to work without medical support, they may well argue that you are “fit to work” and no longer eligible for long term disability benefits.

It is equally important to speak with an experienced disability lawyer before notifying the insurer or your employer. A lawyer will review your policy, explain how income earnings could affect your benefits, and ensure that your return to work is treated as a trial attempt and not proof of full employment capacity. Many LTD claims are terminated simply because the insurer misinterprets a work attempt.

You will also want to review and understand your policy limitations. Not every disability insurance policy is the same-some have a reduction of benefits based on part-time income and others have a recurrence clause, which allows benefits to reinstate if your condition worsens within a certain time period. Knowing these rules ahead of time helps protect your eligibility.

Get Medical Clearance

Always seek written medical clearance from your physician before attempting to return to work while receiving disability benefits. Your doctor should clearly detail all work restrictions, including the number of hours that you can work, any modified duties that you will need, and what activities may exacerbate your condition.

Your doctor’s support is very important, because:

Medical notes affect how the insurance company assesses your claim.

Your employer should respect any documented limitations.

It may be argued by an insurer without medical backing that you are “fit to work.”

Never return to work simply because the insurer pressures you. Your medical condition, not the insurer, is what must determine when you are ready.

Consult With Your Disability Lawyer

Before you report any income or sign any application forms, consult with an experienced disability insurance lawyer because returning to work while on disability may trigger an evaluation of your long-term disability benefits, and one mistake can severely impact your claim.

Your attorney will:

Review your insurance policy

Advise how income earnings will affect LTD benefits

Communicate with the insurance company so that you do not jeopardize your claim.

Assist you in structuring a safe, documented return-to-work plan

A disability lawyer protects your rights, your income, and your benefits.

Understand Policy Limitations

Most LTD insurance policies contain restrictions applicable when trying to return to work.

Important policy elements include

Income offsets (benefits reduced if you earn money)

Recurrence clause – benefits may restart if disability recurs within a certain period

Eligibility definitions: own-occupation versus any-occupation test

You must understand:

How much you can earn

Whether working part-time affects the eligibility

The insurer’s rules concerning going back to work

Failure to comply with policy requirements can result in benefit termination or even force you into a new LTD claim upon return of symptoms.

Talk to our disability lawyer to protect your benefits.

Before going back to work, or before contacting your employer or insurance company, contact our firm for assistance. We will ensure that you do not inadvertently damage your:

Long term disability benefits

Eligibility for CPP disability benefits

Access to future benefits in case of relapse

At Grillo Law, we help you:

Navigate communication with the insurer

Protect your benefits from ending too soon

Speak to Our Disability Lawyer to Protect Your Benefits

Before notifying your employer or the insurance company that you are returning to work while you are on disability, consult with an experienced disability attorney. Returning to work-particularly if your condition is unstable-can impact not only your current LTD, but also your future eligibility for LTD benefits should your condition deteriorate.

A disability lawyer will help you assess your skills to ensure an effective return to work plan.

Review your LTD insurance policy and the recurrence clause

Advise you how earnings from income or part-time work may affect your payments

Communicate directly with the insurance adjuster on your behalf

Make sure your work attempt is documented as a trial and not proof that you are fully employable.

The insurance companies may expedite your return to work prematurely, misinterpret your physical capabilities, or attempt to demonstrate that you are “regularly capable” of employment. We protect you and ensure decisions are based on medical evidence, not pressure by insurers.

Free Consultation — No Upfront Fees

You don’t pay unless we win your case.

Your benefits are valuable. Let us help you protect them before returning to work.

FAQ

Can You Work Part-Time on LTD in Canada?

Sometimes – but it depends on your insurance policy.

Many LTD policies do permit modified duties or part-time work, especially in the context of a graduated return-to-work program. However, insurers can:

Reduce your benefits based on income earnings

Use your part-time work as proof that you are capable of full-time work.

Stop benefits if they think you are “fit to work”

Before initiating work, even a few hours a week, seek written medical clearance and consult with a disability attorney to help protect your LTD claim.

If you go back to work without clearance, the insurer may consider it proof that you are no longer entitled to disability benefits.

How Much Income Can You Earn on CPP Disability?

CPP Disability provides benefits that allow limited earnings while receiving disability support.

Service Canada requires that you:

Report any return-to-work attempt or self-employment income

Stay under the annual earnings limit (adjusted annually)

If your income earnings exceed the allowable threshold, Service Canada can determine that you are no longer eligible as you are “regularly capable of employment.”

CPP Disability is not solely an income issue; it’s an issue of your ability to work consistently.

What Happens If You Try to Return to Work but Can’t Continue?

If your symptoms worsen and you cannot continue working:

Your LTD benefits may resume under the recurrence clause if your relapse occurs within, commonly six months, the timeframe stated in the insurance policy.

If your relapse occurs after that time, you’ll have to submit a new LTD claim and go through the application process again.

CPP Disability or ODSP might continue if the work attempt is deemed failed or unsuccessful, but documentation from your doctor is crucial.

If your disability returns:

Stop work immediately

Get medical documentation from your doctor Contact your disability attorney to ensure benefits are appropriately reinstated. Do not wait. Delays may affect eligibility.