The Appeal CommissionThe Workers Compensation Act of Manitoba

Applicable legislation

This appeal concerns the calculation of a worker’s average earnings which is then used to determine the amount of wage loss benefits. Section 45 of The Workers Compensation Act (the “Act”) deals with the calculation of average earnings and provides as follows:

Calculation of average earnings

45(1) The board shall calculate a worker’s average earnings before the accident on such income from employment and employment insurance benefits, and over such period of time, as the board considers fair and just, but the amount of average earnings shall not exceed the maximum annual earnings established under section 46.

WCB Policy 44.80.10.10 Average Earnings (the “Policy”) specifically addresses the calculation of wage loss benefits and states as follows:

Formulas

The establishment of a worker’s average earnings under either section 45 of the WCA as it pertains to workers injured prior to January 1, 1992 or sections 45(1) and 45(2) of the WCA as it pertains to workers injured on or after January 1, 1992, will be governed by the same formulas. These formulas incorporate either regular earnings at the time of the accident, or average yearly earnings or probable yearly earning capacity. The formula that best represents the worker’s loss of earnings will be chosen.

Thus the Policy identifies three different formulas - regular, average and probable - which may be used to calculate a worker's wage loss benefits. Definitions for the three formulas are provided in the Policy as follows:

Regular Earnings:

Regular earnings are the amount of earnings a worker normally receives as remuneration in the occupation(s) in which he or she was employed at the time of injury. Regular earnings are based on the normal payment schedule (daily, weekly, monthly, annually, etc.) converted to a weekly amount. Earnings from concurrent employment (whether in a covered or non-covered industry) which are reduced or eliminated due to an accident in a covered industry are included in regular earnings.

Regular earnings do not normally include overtime, special reimbursements for employment expenses or bonuses that are not regularly paid.

Average Yearly Earnings:

Average yearly earnings include any remuneration that the worker received as a result of employment or employment-insurance benefits. To determine a worker’s true loss of earnings, the WCB will generally use documentable employment data from any consecutive 12-month period during the one or two years before the compensable accident. If the WCB determines that this calculation does not produce an accurate reflection of the worker’s loss of earnings, it will generally use documentable employment data from a 12-month period during, or an average of, a longer period of up to five years.

Probable Yearly Earning Capacity:

Probable yearly earning capacity is the worker’s projected earnings for the next twelve months. It is based on the worker’s regular earnings at the time of accident as applied to the worker’s established work pattern. Consistent with Section 45 of the WCA (1992), the probable yearly earning capacity must be based on the worker’s earnings before the accident, but may be based on “income from employment and employment insurance benefits, and over such period of time, as the board considers fair and just.”

Worker’s position

The Appeal of Claims Decision form submitted by the worker outlines two reasons why the Review Office decision should be overturned. First, it submits that the wages calculated did not reflect consistently occurring incentives. Second, it states that the decision did not acknowledge wage increments the worker would have received had he been able to continue working.

Analysis

As noted earlier, the Policy deals with the calculation of wage loss benefits. Three different formulas - regular earnings, average yearly and probable yearly - may be used to calculate a worker’s wage loss benefits. The key is to use the method that best represents the worker’s loss of earnings, in a manner which is “fair and just”, as required by subsection 45(1).

In the panel’s opinion, the formula for “regular earnings” contained in the Policy was not properly applied by the WCB. As noted above, the regular earnings formula contained in the Policy provides that a worker’s wage loss benefits may be based on the earnings a worker normally received at the time of injury. At the time of the accident, the worker was paid a base wage of $9.10 per hour, and this was the figure used by the WCB in determining the worker’s regular earnings. The WCB declined, however, to incorporate an additional amount to represent the production incentives which the worker was eligible to earn.

The Policy states that: “Regular earnings do not normally include overtime, special reimbursements for employment expenses or bonuses that are not regularly paid.” The question for the panel is whether or not the worker’s production incentive was a bonus which was regularly paid, such that it should be included in the worker’s regular earnings. It is the panel’s finding that the production incentive was regularly paid and should be included in the calculation of the worker’s regular earnings.

After its initial review of this appeal, the panel requested additional information from the WCB consisting of a break down of the worker’s gross bi-weekly earnings which would reflect the amount of production incentive payments and the hours worked by him. A summary was received from the WCB and the worker was given an opportunity to respond to the information. No further submission was provided by the worker in response to the additional information, and the panel therefore proceeded based on the information contained in the summary. The summary showed that in virtually every pay period since he commenced work in September 2005, the worker was paid an additional production incentive, although the amount of incentive paid varied considerably. It was, nevertheless, a recurring amount which was regularly being paid to the worker at the time of his injury.

The summary also showed that the number of hours worked by the worker fluctuated, and he did not consistently work a 40 hour week.

At the time of the accident, the worker’s hourly rate was $9.10 per hour. In the panel’s opinion, it would be appropriate to also include in the worker’s regular earnings an amount which represents the production incentive he was earning. Although the incentive was not guaranteed, he consistently earned the incentive for each of the pay periods in the 12 months preceding the accident. For the purpose of determining the worker’s regular earnings, we would utilize the actual number of hours worked and the amount of production incentive actually paid to the worker during the 12 month period preceding the accident, as outlined in the summary provided to the panel. Accordingly, we would calculate the worker’s regular earnings as follows:

• Total number of hours worked for pay periods ending March 3, 2006 to February 16, 2007 = 1,995 hours
• Total incentive earned for pay periods ending March 3, 2006 to February 16, 2007 = $2,644.92
• Calculation of regular earnings:

1,995 hours x $9.10 hourly rate + $2,644.92 incentive earned = $20,799.42
Divided by 52 weeks = $399.99 per week

When the production incentive is taken into account, the amount which represents the worker’s regular earnings increases from $364.00 (40 hours x $9.10) to $399.99 per week. As this weekly amount is greater than the amount which results from application of the average yearly earnings formula, the panel finds that it would be fair and just to use this amount to establish the worker’s average earnings under subsection 45(1) of the Act.

While deliberating this appeal, it was brought to the panel’s attention that the WCB’s initial calculation of the worker’s average yearly earnings based on the 12 months (March 2006 to February 2007) prior to the injury was incorrect and instead of resulting in a weekly rate of $320.50, it should have resulted in a weekly rate of $394.82. As this amount is less than the amount which results from the panel’s recalculation of the worker’s regular earnings, the correction does not affect our decision.

The panel also considered the worker’s arguments that the wage loss calculations did not reflect the future wage increments which the worker would have received had he been able to continue working. The panel notes that the Act and policies provide for very circumscribed situations in which future earning potential may be used to calculate the average earnings. The circumstances are largely limited to where a worker is an apprentice or a youthful worker. As there is no allegation that the worker qualified as either an apprentice or a youthful worker, the panel is unable to increase the average earnings based on future wage increments the worker hoped to receive had he continued working.

For the reasons outlined above, we find that that the worker is entitled to have his average earnings calculated based regular earnings of $399.99 per week. Accordingly, we find that the worker’s pre-accident wage rate has not been correctly calculated and the worker’s appeal is therefore allowed.