Chapter 3 - Workers' Compensation

when and where was workers’ compensation originated?

1884 in Germany

when was workers’ compensation established in Canada?

1914 - Ontario Workmen’s Compensation Act was passed by provincial parliament

what are the basis of workers’ compensation in Canada?

* Collective liability for employers; with some recognition of risk in the amount of contribution paid by individual employers  
* Compensation for workers regardless of employers financial condition
* Compensation based on loss of earnings
* “No-fault” system: can get workplace insurance benefits without proving whose fault
* Non-adversarial process: little or no recourse in the courts

what is collective liability for employers?

where all employers in a class or other rate group are liable for the costs of any or all accidents and occupational disease that occur in the operations of those employers

what is workers’ compensation?

Form of insurance governed by an act of Parliament to help workers injured on the job to return to work

worker’s compensation ensures an injured worker receives:

* First aid treatment
* Benefits while at home recuperating
* Proper treatment for any injuries
* Rehabilitation

who administers workers’ compensation in Canada?

administered by the worker’s compensation board

according to the WCB, an injured worker will receive:

* Payment while off work and all medical bills paid if injury happened at work and because of work
* Pension if disability is or becomes permanent
* Benefits if he or she cannot earn same amount of money earned before incident
* Immediate family and dependants will be entitled to benefits if the worker is killed or dies because of an injury on the job

what are the regulations and responsibilities of WCB?

* Classify employers to ensure consistency
* Decide whether an individual is classified as a worker, a subcontractor, or an employer, as each class has different conditions
* system can pay benefits if worker is affected by an industrial disease that has resulted from his or her occupation

what are the 2 systems of compensation?

compulsory and collective liability

what is collective liability?

* Various industries are classified according to their size and end product, and each employer is assessed at a rate that is a % of payroll
* % is determined by the injury cost of its classification
* From the incident fund thus collected, payments are made for compensation, medical aid, rehabilitation, incident prevention, and administrative expenses
* each employer is liable for assessment, whatever the cost of injuries sustained by its workers
* Each is relieved of individual liability
* In most jurisdictions, liability is further distributed by a disaster reserve fund

what are some of the recent legislative updates to workers’ compensation?

* Act in Manitoba amended to include presumptive provision for PTSD
* Assumes a disability from a job that has the risk for that disability (ex. firefighter getting lung cancer)
* Legislation modified to NB to provide compensation to first responders suffering from PTSD
* Yukon Workers’ Compensation Health and Safety Board amended the WCB act to include cardiac arrests to heart disease on presumptive provisions list

what are the 2 methods of compensation?

* 5 jurisdictions based on a percentage (generally 90%) of net earnings (salary after mandatory deductions (income tax,, CPP, and employment insurance)
* The remaining jurisdictions are based on a percentage of avg earnings (75-85%)

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* Jurisdictions like NS have used both methods depending on the date of the incident (75% for the first 26 weeks, after it increases to 85%)


* A worker’s avg earnings are generally calculated based on their earnings during the last 12 months

what is economic loss?

Wage or earning loss when workers can no longer earn the same amount of money that they were earning before the incident

what is non-economic loss

aka functional impairment

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Injured worker could receive a non-economic loss if unable to perform some of the things that they had been able to do before the incident

what are the different methods of compensation given to employees?

Wage loss benefits

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Permanent disability benefits

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Dependency benefits

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Rehabilitation services & programs

what are wage loss benefits?

an injured employee receives a specific % of their typical wages (depends by province)

what are permanent disability benefits?

if determined to have a permanent disability because of the work injury – may receive additional or varied compensation depending on the province

what are dependency benefits?

if die on the job, dependents (such as spouse or children) are eligible to receive benefits

what are rehabilitation services & programs?

provided to help workers to get back to their pre-injury health and to get injured workers back to work

what is medical aid?

Accompanying compensation in all cases in the provision of medical aid

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Includes medical and surgical care, hospitalization, nursing care, drugs and supplies, physical and occupational therapy, and the provision and maintenance of protheses

what is medical aid and injury prevention?

Employees who sustain a work-related injury are compensated for the loss of earnings and loss of functional capacity

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Limit of ability or dexterity depending on the seriousness of an injury

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Workers are no longer able to perform some of their job duties, such as lifting, twisting, or bending, and are considered to have suffered the loss of functional capacity for which benefits are payable

what are the 2 main points of social goals of workers’ compensation?

* Provide services to prevent injuries or reduce the psychological impact of injuries when they occur
* Provide training and development to prepare an injured worker to return to work

what are the standard provisions of social goals?

* Unlimited medical aid
* artificial prostheses
* fund to encourage re-employment (second injury and enhancement fund)
* liberal compensation
* rehabilitation maintenance income

what is the provision for second injuries?

second Injury Fund

* Facilitates the re-employment of disabled workers
* Without a provision for multiple injuries, employers might be tempted to discriminate against workers with disabilities
* Additional injury could make an employer responsible for a far more serious disability

what are the 3 types of rehabiliation?

* vocational
* physical
* social

what is vocational rehabilitation?

helps injured workers return to their place of employment or find similar work elsewhere

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Placement services, vocational testing, and retraining or training may be apart of this process

what is physical rehabilitation?

restores worker’s physical function (fully or partially)

what is social rehabilitation?

psychological and practical services to help workers with severe disabilities cope with daily life (ex. cooking, bathing, chores)

occupational diseases include:

* various cancers
* skin disease
* allergic reactions to materials and components in the workplace

what is a latency period?

time between exposure to a cause and development of a disease

what are the 3 groups of stress-related disabilities?

* physical injury or occupational disease leading to mental disability

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* Mental stress resulting in a physical disability, traumatic occurrence, or series of occurrences
* Considered for compensation if the disability is acute (ex. heart attack)
* Likely not considered for compensation if chronic (ex. ulcer)

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* Mental stress resulting in mental condition
* Unusual incident that provokes a mental reaction and results in a disability will likely be considered for compensation
* Chronic stress resulting in mental disability is seldom compensated

what are assessments?

Employers are grouped together according to type of operation or industry in which they are engaged, and they are assessed on that basis

employers are divided into which 3 categories for assessments?

* Contribute to an incident fund and benefit from collective liability
* Individually liable for their own employees’ incidents
* Certain low-risk industries, excluded under various acts

what are injury frequency rates?

* Some organizations calculate injury frequency rates to benchmark and track their own safety performance
* In some cases WCBs can also provide this information to companies

how do you calculate injury frequency?

* To determine the frequency injury ratio, consider that the term frequency is the number of medical aid injuries relative to the number of hours worked expressed in a ratio of 200,000 (100 people working 2000 hours per year)
* Some firms and jurisdictions use a factor of 1,000,000 rather than 200,000. Using the 200,000 figure, the relationship becomes:
* frequency = # of injuries/total hrs worked x 200,000

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what is experience rating?

* Incident insurance premium pricing scheme
* Takes into account clear cost experience of employer
* Firms with lower-than-average incident costs per worker pay lower premiums than firms with above-average incident costs
* Safer employer will face lower workers’ compensation costs given two similar firms
* Primary effect is financial incentive for relatively unsafe firms

what are reporting requirements?

employers must report all workplace injuries to WCB within a certain time

what does an employer collect information about regarding a report?

* Nature of employer relationship
* Employee’s salary and hours of work
* Nature of incident and injury
* Extent of time loss and medical treatment

what is noncompliance?

* When employers and employees fail to comply with the act in their jurisdiction, then penalties and fines can be applied
* Penalties and fines vary, as penalties do not require court proceedings
* Employers could pay upwards of $50,000