The Appeal CommissionThe Workers Compensation Act of Manitoba

Introduction

This appeal concerns the calculation of a worker’s average earnings which is then used to determine the amount of wage loss benefits, and the appropriateness of various deductions that were applied to the worker’s calculated benefits. In this case, the worker disagrees with the manner in which his net annual earnings were calculated and the deductions that were taken. After careful consideration of the points submitted by the worker, the panel is unable to accept his arguments and the appeal must therefore be denied.

Worker’s position

The worker appeared on his own behalf at the hearing. The worker identified four areas of dispute with the manner in which his wage loss benefits were calculated, as follows:

1. The worker believed his hourly wage to be $12.50 per hour, not $11.00 per hour, which was the figure used in the net average earnings calculation performed by the WCB.

2. The worker’s average earnings were below the minimum annual earnings for 2009 of $18,370 and therefore under the Act, his wage loss benefits should not have been reduced to 90% of his loss of earning capacity.

3. There should not have been a deduction of $11.55/week taken in respect of a sheltering adjustment.

4. There should not have been a deduction of $50/week taken in respect of a garnishment relating to an overpayment by an outside agency.

We will address each argument separately.

Analysis

Hourly Wage

At the hearing, the worker’s evidence was that when he was hired by the employer, he was supposed to be paid $12.50 per hour. Unfortunately, there was no written contract of employment documenting this.

The worker provided the panel with a copy of his record of employment which showed total insurable earnings of $5,717.13 based on 497 hours of work, plus vacation pay of $215.93. This reflects an hourly rate of approximately $11.50 per hour. The worker acknowledged that there may have been some statutory holidays and/or overtime worked by him, which would be reflected in this income and may explain the hourly rate of $11.50 rather than $11.00. The panel notes that if the vacation pay is removed from the calculation, the hourly rate works out to be $11.07 per hour.

The worker also provided the panel with a copy of his final pay slip from the accident employer which indicated an hourly rate of $11.00 per hour.

Both the employer injury report and the worker incident report filed at the outset of the claim (which were completed based on information received from the employer and the worker respectively) indicate that the hourly rate being paid to the worker at the time of the accident was $11.00. At the hearing, the worker could not recall specifics regarding the information he provided to the WCB when filing his claim.

The panel must make its findings based on the best evidence before it. In this case, the written documentation would suggest that the hourly wage was $11.00. Most notably, the two reports filed with the WCB shortly after the accident both reflect the $11.00 rate. In the circumstances, the panel finds on a balance of probabilities that the wage being paid to the worker at the time of the accident was $11.00 per hour, and that this rate was properly used in calculating the worker’s net average earnings.

Calculation at 90% of loss of earning capacity

As a general rule, subsection 39(1) of the Act provides that wage loss benefits paid to injured workers are to be equal to 90% of the worker’s loss of earning capacity. Subsection 39(6) of the Act creates an exception to this general rule and provides that if a worker’s average earnings fall below a minimum annual amount, the wage loss benefits are to be payable at 100%. The specific wording of subsection 39(6) is as follows:

Earnings at or below the minimum

39(6) Where the worker’s average earnings before the accident, as determined by the board under section 45, are less than or equal to the minimum annual earnings, the wage loss benefits payable to the worker calculated in accordance with section 40 must be 100% of the loss of earning capacity.

It was submitted by the worker that the minimum annual earnings established by the WCB for 2009 of $18,370 should be used in calculating his wage loss benefits. The panel disagrees with the year proposed by the worker. We find that since the accident occurred in October, 2008, the proper earnings figure should be based on the 2008 rate.

The minimum annual earnings established by the WCB for 2008 is $17,220. The question then becomes whether the worker’s average earnings for 2008 were equal to or less than $17,220.

Given the panel’s above determination that $11.00 was the correct hourly rate, the worker’s average earnings for 2008 would be $22,880.00. This figure is arrived at by multiplying $11.00 per hour x 40 hours per week x 52 weeks. At the hearing, the worker acknowledged that if the $11.00 rate is assumed to be correct, then he did not dispute the average earnings total of $22,880.00 per year. The worker also indicated that he did not dispute the WCB’s probable deduction totaling $88.73 per week which were taken off to reflect Federal income tax, Provincial income tax, Canada Pension Plan contributions and Employment Insurance premiums. The deduction of $88.73 from the average earnings of $22,880.00 resulted in net average earnings of $18,266.27.

Clearly, the worker’s net average earnings do not fall below the 2008 minimum annual earnings of $17,200, and therefore, the panel finds that the exception does not apply.

The panel notes that even if we accepted the 2009 minimum annual earnings rate of $18,370, we would still find that the worker would not qualify for the exception. The reason is that although $18,266.27 is less than the minimum annual earnings amount for 2009 ($18,370), this amount is the worker’s net average earnings. Subsection 39(6) specifically states “average earnings” which is referable to gross average earnings, not net. Thus, in order for the worker to be eligible for the exception created by subsection 39(6), his (gross) average earnings of $22,880 would have to be less than the minimal annual earnings amount established by the WCB. As $22,880 is not less than $18,370, subsection 39(6) would not apply to the worker.

Therefore, regardless of whether the 2008 or 2009 minimum annual earnings rate is used, the worker does not qualify for the exception created by subsection 39(6).

Subsection 39(7) of the Act also creates a similar exception to the 90% rule. It provides as follows:

Exception

39(7) Where

(a) the worker’s average earnings before the accident, as determined by the board under section 45, are greater than the minimum annual earnings; and

(b) wage loss benefits payable to the worker calculated at 90% of the loss of earning capacity are less than the amount payable to a worker earning the minimum annual earnings;

the wage loss benefits payable to the worker must be the amount that would be payable to a worker earning the minimum annual earnings.

Thus if a worker’s average earnings (ie gross earnings) are greater than the minimal annual earnings, but the wage loss benefits calculated at 90% fall below what a worker earning the minimal annual earnings would receive, then the worker is entitled to have his/her wage loss benefits increased to be the same level as what a minimal annual earnings worker would receive.

The panel reviewed the Wageloss Calculation Report prepared by the WCB dated 27/11/2008 and we noted that two weekly wage calculations were performed, one based on the minimum benefit, and one based on the worker’s average earnings of $440 per week. After making adjustment for a weekly shelter benefit amount, the weekly minimum wage loss benefit was $264.24. The worker’s weekly wage loss benefit was $304.59. As the worker’s weekly wage loss benefit calculated at 90% (i.e. $304.59) did not fall below the minimum benefit (i.e. $264.24), subsection 39(7) does not apply to the worker.

In view of the foregoing, the panel finds that neither subsection 39(6) nor 39(7) applies to the worker, and therefore his wage loss benefits were properly calculated at 90% of his loss of earning capacity.

Sheltered Benefit Calculation

At the hearing, in response to a question by the panel, the worker indicated that the sheltered benefit calculation and adjustment had never been explained to him. Following the hearing, the panel requested the WCB to provide an explanation as to the WCB’s policy regarding calculation of the sheltering adjustment and to outline how it was applied in the present case to arrive at a weekly deduction of $11.55.

The WCB subsequently provided the panel with general information on the sheltering adjustment which attached the applicable WCB Policy 44.80.30.10, a WCB Fact sheet concerning calculation of wage loss benefits, along with a Wage Loss Calculation Worksheet which demonstrated how the sheltering adjustment was applied in the worker’s case. This information was then shared with the worker for comment.

The adjustment for sheltering is a calculation which is performed by the WCB to make adjustments for the fact that the receipt of tax-free wage loss benefits will affect the amount of income tax that a worker has to pay. The sheltering adjustment results in a reduction of wage loss benefits, but provides a more accurate reflection of a worker’s yearly loss of earning capacity.

The panel has reviewed the information provided by the WCB and we are satisfied that the sheltering adjustment was properly applied by the WCB when calculating the worker’s loss of earning capacity.

$50 per week garnishment deduction

At the hearing, the worker argued that the deduction of $50.00 per week from his wage loss benefits was an illegal deduction and should be returned. The panel understands that the $50.00 per week has been deducted from the worker’s wage loss benefits pursuant to a garnishing order obtained by a third party and served on the WCB.

This panel only has the authority to review the issue of whether or not the worker’s net average earnings have been properly calculated. As per the foregoing analysis, we have performed this review and we have concluded that the WCB properly calculated the worker’s wage loss benefits to be $304.59 per week. The further deduction of $50.00 from the wage loss benefits on account of the garnishment is a separate matter and does not form part of the calculation of wage loss benefits, as set out in the Act. It is a deduction which takes place after the calculation is complete.

It is not for this panel to comment on the legality of the garnishment, and we understand that the worker is challenging the garnishment in another forum. We do note, however, that there is nothing in the Act which shields WCB wage loss benefits from being subject to garnishment nor is there anything which relieves the WCB from the requirement to comply with a properly obtained and served garnishing order.