A sudden illness or injury can leave you unable to work for weeks or months. Without income replacement, even a few weeks off can create serious financial stress. Short-term disability (STD) insurance — also called salary continuance — is one of the most valuable protections in a Canadian workplace benefits package. This guide explains how it works, what it pays, and how it fits with EI sickness benefits.
STD insurance replaces a portion of your income when you are temporarily unable to work due to a non-occupational illness, injury, or mental health condition. It is a bridge between your last day of work and your return to work (or the start of long-term disability benefits).
Not all employers provide STD insurance. Some provide salary continuance instead — a simpler arrangement where the employer continues paying your full or partial salary for a defined period without a formal insurance policy behind it. The practical effect is the same: you receive income while you recover.
Canada's Employment Insurance (EI) program provides sickness benefits of 55% of insurable earnings (up to a maximum of approximately $695/week in 2026) for up to 26 weeks. If your employer provides STD coverage, the employer plan typically pays first and coordinates with EI:
| Feature | Employer STD | EI Sickness Benefits |
|---|---|---|
| Benefit rate | 55–100% of salary | 55% of insurable earnings |
| Weekly maximum (2026) | No fixed maximum (% of your salary) | ~$695/week |
| Maximum duration | 17–26 weeks | 26 weeks |
| Waiting period | 0–14 days | 1-week waiting period |
| Funded by | Employer / employee premiums | EI premiums |
| Taxable? | Depends on who pays premium | Yes, taxable income |
If your employer's STD plan coordinates with EI, you may receive STD top-up above EI — so you get EI first, and your employer pays the difference between EI and your plan's benefit level. This reduces what the employer pays while you still get close to your full benefit.
This is one of the most misunderstood aspects of disability benefits in Canada:
From a tax planning perspective, it may be worth asking your employer to allow you to pay the STD premium yourself through payroll deduction — making benefits tax-free. The premium cost is usually modest ($10–$30/month), and the tax-free benefit far outweighs it if you ever need to claim.
Most STD plans use an "own occupation" definition of disability — meaning you cannot perform the material duties of your own job. This is more employee-friendly than the "any occupation" definition used in some LTD plans. Common covered conditions include:
STD covers non-occupational disabilities — injuries or illnesses that occur outside of work. If you are injured at work, your claim goes through your provincial workers' compensation board (WSIB in Ontario, WCB in BC/Alberta, CNESST in Quebec). You cannot double-claim for the same disability.
When STD benefits are exhausted (typically after 17–26 weeks), you may be eligible for Long-Term Disability (LTD) if you remain unable to work. LTD typically pays 60–70% of pre-disability income to age 65. The definition of disability often shifts at the 2-year mark from "own occupation" to "any occupation." Understanding this transition is critical — it's the point where many LTD claims are challenged by insurers. See our LTD guide for full details.
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