The Appeal CommissionThe Workers Compensation Act of Manitoba

The issue before this panel is whether or not the employer's business activities meet the requirements for compulsory coverage under the Act.

The employer's position as set out in its written submission to the panel dated September 7, 2009, is that "… as a registered charity, in good standing, in Canada, we are excluded from mandatory Workers Compensation coverage."

In support of this position the employer relies on its interpretation of sections of Regulation 196/2005 (the "Regulation") to the Act, entitled Excluded Industries, Employers and Workers Regulation.

Section 2 of that Regulation provides as follows:

"Application

2 The industries, employers and workers listed in Schedule A are excluded from being within the scope of Part I of the Act."

Section 8 of the Regulation provides as follows:

"Charities

8 Operation of a charitable foundation, institution or organization."

Section 27 of the Regulation provides as follows:

"Religious organizations

27 Operation of a church, synagogue, mosque or other building used for religious purposes; administration of a religious organization or order; members of the clergy."

Regulation 169/2005 was amended and replaced by Regulation 169/2008 which came into force on January 1, 2009. Schedule A to Regulation 196/2005 was replaced with Schedule A to Regulation 169/2008. Sections 2, 8 and 27 are identical in both schedules in Section 2.

As set out in the background to this decision, this appeal came about because the employer disagreed with a recent classification of its activities by the WCB and with a subsequent determination by the Assessment Committee which required the employer to report retroactive workers' earnings and to pay premiums according to the recent industry classification.

The employer's challenge to this classification is not, at the employer's request, the subject of this appeal. Rather, the employer determined that the issue it wishes to deal with first, by way of appeal to this panel is whether it is completely excluded from compulsory coverage pursuant to the provisions of Regulation 196/2005. As indicated by the employer in its letter to the assistant registrar of the Appeal Commission on April 13, 2009, if the employer is not successful on the issue as to whether or not it is excluded from the compulsory coverage then it will proceed to deal with the classification issue and retroactive assessment. This seems a sensible approach.

Essentially the employer's argument is that it ought to be completely excluded from the application of the Act either because it is a "charitable foundation, institution or organization" within the meaning of Section 8 of the Regulation and/or because it is a "religious organization" within the meaning of Section 27 of the Regulation.

In determining this matter, the panel does not question the charitable status afforded to the employer by the Canada Revenue Agency.

Having acknowledged that, however, we find that neither Section 8 nor Section 27 of the Regulation provides a blanket immunity to the employer under the Act. This is based on a plain reading of the wording of those two sections.

Starting with Section 8, the wording indicates that what is excluded from the scope of Part I of the Act is the "operation of a charitable foundation, institution or organization" (emphasis added). We find that if it were the legislation's intention to provide a blanket immunity to charitable foundations, institutions or organizations for all their activities, the Section would simply have read "charitable foundations, institutions or organizations."

Similarly, with respect to Section 27, dealing with religious organizations the Section reads "operation of a church, synagogue, mosque or other building used for religious purposes; administration of a religious organization or order; members of the clergy" (emphasis added).

By inserting the words "operation of" or "administration of" in these two sections, the legislation has made it clear that it is not the entire charitable or religious foundation, institution or organization which is being excluded by the Regulation but rather that portion or those activities which constitute operation or administration of same.

Our interpretation and finding in this regard is further supported by other wording in Section 27 which identifies "members of the clergy" as being excluded without any qualification as to the nature of the activities they might perform. The same cannot be said for charitable foundations or religious organizations.

If the intention of the Regulation were to provide blanket immunity from coverage to charitable or religious institutions or organizations, the Regulation would simply have identified those foundations, institutions or organizations without any further qualification in the same way, for example, that it simply identifies "members of the clergy."

Again, as another example in support of our interpretation, we note that in Section 13 of the Regulation, "elected officials" are provided complete immunity from the scope of Part I of the Act. The wording of that section simply reads:

"Elected Officials

13 Elected provincial and municipal officials."

No qualification as to any aspect of those officials' activities is listed and they are, clearly, provided complete exclusion from coverage in all aspects. Because the legislation did not choose to word Section 8 or Section 27 to simply indicate "charitable foundation, institution or organization" or "religious organization", it is clear that the intention was not to provide complete exclusion from coverage to those employers.

Therefore, based on a plain reading of the Regulation in question, we find that the employer is not completely excluded from compulsory coverage under the Act and that some of its activities will meet the requirements for coverage under the Act. According to the Regulation, it is the "operation" of the employer that falls within the exclusionary provisions of the Regulation.

Prior to making a determination on this issue, the appeal panel asked the WCB to provide it with information as to how the WCB interprets and applies Sections 8 and 27 of Regulation 169/2008. We asked to be provided with any guidelines, policy, case law, administrative practices or other evidence to support the WCB's interpretation. We also asked to be provided with any history, legislative or otherwise as to why the exclusions were made.

In response, the WCB provided a detailed history of exclusions dating back to 1918. It advised that from 1918 to 2005, industries in Manitoba were not required to have compulsory Workers Compensation coverage unless they were specifically listed in the schedule included in the Act (“the Old Schedule”). This schedule was originally drafted in the early 1900's when the workers compensation first system came into effect. In 1959 the Old Schedule underwent significant amendments. In the mid-1980's, the Assessment Services Department of the WCB created a Comprehensive Classification Manual based on its interpretation of the Old Schedule, Board Orders and past practice. The purpose of creating this Manual was to ensure consistent interpretation and application of the Old Schedule.

As of January 1, 2006, as a result of The Workers Compensation Amendment Act ("Bill 25"), the system was reversed so that all industries in Manitoba are required to have compulsory compensation coverage unless they are excluded by Regulation. The Government of Manitoba's intention was that the Regulation listing exclusions was to reflect the status quo. That is, industries covered and excluded on January 1, 2006, were to be exactly the same as those covered and excluded as of December 31, 2005.

Counsel for the WCB submitted that organizations that raise money for charitable purposes and/or provide services in non-compulsory industries, houses of worship and religious orders were not required to have compulsory coverage as of December 31, 2005, because there was no section of the Old Schedule which had been interpreted to include those industries. Counsel submitted that those organizations could, if they chose, purchase voluntary coverage. Those who purchased voluntary coverage, the submission advised, were classified in sub-group 903-06 (Social Services) or sub-group 903-13 (Business Offices).

The WCB in its submission argued that exclusions under the Regulation are based on what the employer does, not who the employer is. For example, it submits that many religious organizations engage in the provision of social services which, until January 1, 2009, was not a compulsory industry. Accordingly, prior to January 1, 2009, to the extent that the organization engaged in social services, those services did not fall within the requirement for compulsory coverage.

We find that the WCB's interpretation of the Regulation is correct to a certain extent. That is, we find that it is not accurate to say that the exclusion is not based on who the employer is. Clearly, for example, what is excluded in Section 8 of the Regulation is the "operation" of an employer who is a charitable foundation, institution or organization. We agree, however, with the WCB's submission that the Regulation does not provide a blanket immunity from coverage to employers merely by virtue of the fact that they may be characterized as charitable or religious organizations. Rather, in each case, the specific activities of the employers described in the Regulations will be assessed and classified and only those activities which are identified in the Regulation will, in fact, be excluded from compulsory coverage.

To summarize, the panel does not disagree with the characterization of the employer as a charitable foundation, institution or organization or with its stated mandate to carry out activities for religious or charitable purposes. However, if the legislation intended the exclusions in Sections 8 and 27 of the Regulation to apply to all functions and aspects of charitable or religious foundations, institutions or organizations, it would have worded the Regulation differently. It would not, for example, have used the words "operation of" or "administration of" to modify or qualify charitable foundation, institution or organization or religious organization. It would simply have listed such foundations, institutions or organizations without any further qualification.