Decision #45/09 - Type: Workers Compensation

Preamble

This appeal deals with a decision that was made by the Review Office of the Workers Compensation Board (“WCB”) which confirmed that the worker’s average earnings should be $418.86 per week. The worker disagreed with the decision and an appeal was filed with the Appeal Commission. A file review was held on January 27, 2009 and February 3, 2009 to consider the matter.

Prior to rendering its final decision, the appeal panel requested additional information from the WCB as to how the worker’s average earnings rate was calculated. A response from the WCB was later received and was forwarded to the interested parties for comment. On March 12, 2009, the panel met further to discuss the case and render its final decision.

Issue

Whether nor not the worker’s average earnings should be $418.86 per week.

Decision

That the worker’s average earnings should be $418.86 per week.

Decision: Unanimous

Background

On July 22, 1998, the WCB received an Employer’s Injury Report stating that the worker complained of sore wrists while performing his work duties. EMG studies had been performed on June 10, 1998 and the diagnosis rendered was bilateral medial carpal tunnel syndrome (“CTS”).

On July 24, 1998, the WCB provided the worker with a CTS questionnaire to complete. As the worker did not submit the questionnaire to the WCB, no further action was taken on his claim.

In correspondence to the WCB dated August 28, 1998, the employer indicated that the worker did not miss any time from work due to his condition.

There was no activity on the file for the next 7.5 years.

On March 7, 2006, the worker re-opened his claim and advised the WCB that he was missing time from work due to carpal tunnel symptoms. The worker indicated that he started work with a new employer in January 2004 and that he received a buy-out package from the accident employer in 1999. On April 5, 2006, the WCB accepted the worker’s claim as a recurrence of his bilateral CTS.

In a letter dated July 4, 2006, a WCB case manager advised the worker that his average earnings rate would be adjusted to $418.86/week gross and that the new benefit rate to the date of his recurrence of March 7, 2006 would be $285.08 per week. The gross amount was calculated by using $9.25 per hour or the regular rate paid by the accident employer to employees after the buy-out in 1999. As a rationale for her decision, the case manager stated:

“Average earnings are based on loss of earning capacity. While it is clear the claimant’s current loss of earnings are the wages from [his present employer] of $344.56/week we must look at the earnings from [accident employer] on a comparison basis using the higher net earnings. This claimant did not have any time loss at the time of the accident and on April 1, 1999 all employees received a lay off and rehire at a lower rate of pay from [accident employer] the claimant’s prior year’s earnings are not a fair reflection of his loss of earning capacity.

Had the claimant chosen to continue employment with [accident employer] his rate of pay would have been adjusted to $9.25/hour effective April 1. Consistent with past practice, benefit rates established for [accident employer] claims subsequent to April 1, 1999 were based on regular earnings (hourly rate of pay x 40 hours/week) as prior calendar year and prior 12 months earnings were no longer a fair reflection of the loss of earnings capacity.”

On April 3, 2007, the worker appealed the above decision stating that the WCB should establish his rate of pay at $17.69 which is the actual wage he was earning while employed with the accident employer in 1998.

On September 20, 2007, Review Office confirmed that the worker’s average earnings should be $418.86 per week. Review Office stated that the purpose of wage loss benefits was to replace a worker’s loss of earning capacity resulting from an accident. In this case, the worker’s loss of earning capacity began in March 2006. Therefore his average earnings must be based on his earnings at that time. Review Office noted that file documentation detailing the worker’s work history showed a consistent pattern of comparatively low earnings after May, 1999. Review Office considered that the worker’s average earnings were appropriately established and must remain at $418.86 per week. On November 20, 2008, the worker appealed Review Office’s decision to the Appeal Commission and a file review was arranged.

Reasons

Applicable legislation

This appeal deals with the calculation of the worker’s average earnings in the context of a recurring injury. Section 45 of The Workers Compensation Act (the “Act”) deals with the calculation of average earnings. Subsection 45(1) of the Act provides:

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 “Average Earnings Policy”) sets out the method by which the WCB initially establishes average earnings. The wage loss benefits which are paid to injured workers are based on the average earnings figure. The Average Earnings Policy sets out a number of different methods which may be used to calculate a worker’s average earnings, depending on the circumstances and states that: “The method used will always be the one that best reflects the worker’s actual loss of earnings.”

When a worker suffers a recurrence of an injury, the average earnings at the time of the recurrence will be calculated in accordance with WCB Policy 44.10.20.50.10 Recurring Effects of Injuries and Illness (the “Recurrences Policy”). Clause 5 of the Recurrences Policy deals with the calculation of average earnings and provides:

5. Where the WCB determines that the worker has established a real and substantial attachment to the labour force at the time of the recurrence, the worker is entitled to have his or her compensation benefits based on whichever net average earnings are higher – at the time of the recurrence or at the accident date. Where applicable, the WCB will consider maximum annual earnings levels.

Worker’s position

The worker was self represented and submitted that he ought to receive the wage rate which he was earning at the time when he was first injured. He disputed the average earnings calculation based on the adjusted wage rate after the April 1999 buyout and stated that he never worked for that employer after the buyout.

Analysis

The issue before the panel is whether or not the worker’s average earnings should be $418.86 per week. Following its initial review of the file material, the panel requested from the WCB an explanation of how it arrived at that average earnings calculation. The panel also asked the WCB to explain the general practice it adopted with respect to the workers of this Part, and or accident employer (“E1”) after a buyout in April 1999. The panel notes that the “buyout” was negotiated between the employer and the worker’s union, to deal with reclassification of workers and elimination of certain job categories, which included certain wage concessions and offers of redeployments. The WCB’s response provided as follows:

  • Past practice – is referring to a decision made in regards to the [E1] buyout of April 1999. The decision at that time was that for [E1] workers for average earnings occurring after April 1999 buyout regular earnings of 40 hrs x the new hourly rate would be used rather than the prior 12 months earnings and prior calendar years earnings as these were not an accurate reflection of the worker’s actual loss of earnings.

  • In this situation the worker did not suffer a loss of earnings at the time of the accident, loss of earning capacity did not occur until March 7, 2006 and this was when an average earnings review was conducted. As per WCB policy 44.10.20.50.10 “net average earnings are higher – at the time of the recurrence or at the accident date” an average earnings review was required for both current wages at [the worker’s current employer (“E2”)] as well as [E1]. As this average earnings review was conducted in June 2006 the new information from [E1] was used for comparative purposes. These new [E1] earnings were considered an accurate reflection of the loss of earnings had the worker continued to work for [E1] given the documentation received in regards to the wage reduction and buyout of April 1999, which the worker accepted and received an $8,558.52 severance in 1998.

The reduced rate of $9.25 x 40 = $370.00/wk was indexed forward to 2006 resulting in a rate of $418.86/week and compared to workers current weekly wages from [E2] of $344.56 week. As [E1] wages were higher than those of [E2], they were used to satisfy Policy 44.10.20.50.10 Recurring Effects of Injuries and Illness (Recurrences).

It appears to the panel that there are three possible wage rates which could be used to establish the worker’s average earnings following his recurrence:

  1. Wage rate earned at the time when the CTS symptoms were first reported by the worker to the WCB. At that time, the worker was employed by E1, and he was earning $17.09 per hour, which is equivalent to $683.60 per week (not indexed);

  1. Wage rate paid to E1 employees after the April 1999 buyout. This would be the wage rate the worker would have earned if he continued to work for E1 after the buyout offer. The wage rate was $9.25 per hour, which, when indexed, converts to a weekly wage rate of $418.86 per week. This was the wage rate used by the WCB to calculate average earnings;

  1. Wage rate being earned by the worker at the time of the recurrence. At that time, the worker was employed by E2, and he was earning $344.56 per week.

A strict application of the Recurrences Policy would have us look at options 1 and 3, and apply whichever rate was the highest. This would mean that the worker’s average earnings would be based on approximately $683.60 per week. The panel has difficulty with this result for the following reasons:

  • The panel does not feel that this wage rate “best reflects the worker’s actual loss of earnings”. Since the buyout of April 1999, the worker had not demonstrated an earning capacity in that range;
  • The worker accepted a buyout package of $8,558.52. He was offered re-employment at an hourly rate which was reduced from $17.09 to $9.25 per hour, but he purposely declined to accept this position. He was entitled to the buyout regardless of whether or not he accepted the position. The employment relationship with E1 was at that point severed;
  • The worker was not medically precluded in any way from continuing his employment with E1 at the time of the buyout, and was not competitively disadvantaged in any way at that point in time.
  • A job position which paid $17.09 per hour was no longer available after April 1999.

Policies are intended to provide guidance and ensure consistency in the administration of claims, but they cannot cover all conceivable situations. It is apparent to the panel that the Recurrences Policy did not contemplate the situation at hand. The panel finds it was reasonable for the WCB to develop a practice which addressed the unique circumstances applicable to the April 1999 buyout. It was a general practice which was equally and consistently applied to a broad group of employees from a large company. The panel finds that application of the practice to the calculation of average earnings was reasonable and fair, and did not result in prejudice to the worker, as the worker had already been compensated for the reduced wage rate by virtue of the $8,558.52 buyout he received.

In the panel’s opinion, if strict application of a policy leads to a result which is not consistent with the stated purpose of the policy, we feel that we must make adjustments which would result in a fair and just calculation, as contemplated by subsection 45(1). Subsection 45(1) of the Act requires that average earnings be calculated on such income as the board considers fair and just, and in this case, we feel it is fair and just to utilize option 2 to calculate the worker’s average earnings. As the Recurrences Policy is subordinate to the provisions of the Act, we are of the view that subsection 45(1) gives us the authority to accept the WCB’s calculation of average earnings of $418.86 per week, as per option 2. The worker’s appeal is therefore denied.

Panel Members

L. Choy, Presiding Officer
A. Finkel, Commissioner
M. Kernaghan, Commissioner

Recording Secretary, B. Kosc

L. Choy - Presiding Officer

Signed at Winnipeg this 27th day of March, 2009

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