The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The employer is appealing a decision made by the Review Office of the Workers Compensation Board (“WCB”), which held that the worker’s bridge benefit should not be included when calculating his post-accident earnings. A file review was held on May 5, 2010 to consider the matter.

Issue

Whether or not the worker’s bridge benefit should be included as a source of income in the worker’s post-accident earnings.

Decision

That the worker’s bridge benefit should not be included as a source of income in calculating the worker’s post-accident earnings.

Decision: Unanimous

Background

The worker sustained an injury while employed as a truck driver on September 13, 2005. He was diagnosed as suffering from severe tinnitus and his claim for compensation was accepted by the WCB.

The worker’s condition made it difficult for him to continue his employment with the accident employer. Pursuant to the collective agreement, an employee who is at least 50 years of age and who will be eligible for early retirement under the company’s pension plan within 5 years is entitled to opt for a “bridging benefit.” In August 2006, the worker, who was then 50 years of age, made an irrevocable application for bridging and early retirement, which entitled him to be paid 65% of his regular wages by his employer until he was formally eligible for the employer’s pension plan. While the worker was no longer actually working with the accident employer, he continued employment with other employers until June 2008, when he advised the WCB that he could not continue working due to the deterioration of his tinnitus. The WCB accepted the claim as a recurrence of his loss of earning capacity resulting from the 2005 compensable accident and wage loss benefits commenced from June 25, 2008.

In an email dated March 11, 2009, the accident employer wrote to the WCB requesting clarification of the worker’s claim. The accident employer stated that “[the worker] is a retired employee so he should not be receiving wage loss benefits.”

In a letter dated April 6, 2009, the WCB case manager advised the employer that the worker continued to work for other employers after he took the partial retirement pension in 2006, and that the WCB had determined that the worker’s loss of earning capacity was a recurrence of the compensable condition that resulted from the 2005 accident.

In an email to the WCB dated April 15, 2009, the accident employer advised that the worker was on bridge status and was being paid a lower wage “but is essentially retired from [the employer] (even though his official retirement date is in May 2011).” The employer requested that the WCB recalculate the worker’s wage loss benefits and provide an overpayment credit in light of the bridge benefits the worker was receiving.

Previous WCB Decisions

In a decision dated April 20, 2009, the WCB case manager addressed the two issues that had been raised by the employer. With respect to the employer’s position that the worker was not entitled to wage loss benefits because he had retired, the WCB case manager referred to WCB Policy 44.60.20 that provides guidelines on when the WCB may consider that a worker has voluntarily retired from the labour force. The WCB policy provides that a worker may be considered to have retired where the worker has accepted a retirement pension unless the worker demonstrates a continuing commitment to the labour force. The case manager noted that the worker had continued to be fully employed from the time of retirement until June 2008 and at no time had the worker indicated an intention to retire from the labour force. As the worker’s condition was considered a recurrence of the compensable 2005 accident, the worker was entitled to wage loss benefits notwithstanding that he had taken an early retirement pension.

With respect to the employer’s position that the worker’s bridge benefits should be included as a source of income in calculating the worker’s post-accident earnings, the WCB case manager referred to the WCB Policy 44.80.30.10, which specifically excludes “retirement pension benefits” in calculating post-accident earnings. The case manager was of the view that while the worker was on bridge status, he was essentially collecting a reduced pension to bridge him to his normal retirement date. These payments were therefore retirement pension benefits that would not be taken into account in calculating the worker’s wage loss benefits.

In response to the WCB case manager’s decision, the employer advised that the bridge payments were not a retirement pension and that his official retirement date was in 2011. The employer advised that all the regular taxable deductions are being made and therefore the bridge benefits should be included in post-accident earnings so as to reduce the worker’s wage loss benefits.

By letter to the employer dated May 25, 2009, the WCB case manager provided additional reasons for upholding the decision that the bridge benefits were essentially a retirement pension that should not reduce the worker’s wage loss benefits. In reaching this decision, the case manager reasoned as follows:

· According to the provisions of the collective agreement, once the worker elects the bridging benefit “active employment is severed”, which suggests that the payments are more similar to a retirement allowance rather than to employment income. This is in keeping with the employer’s emails that also characterized the worker as “retired;”

· Section 40(1) of the Workers Compensation Act (the “Act”) provides that post-accident earning capacity is an amount that “the worker is capable of earning after the accident.” The case manager was of the view that the bridge benefit, like pension income, accrued to the worker prior to the accident by virtue of the terms of the collective agreement and the worker’s age and years of service. The worker was therefore not capable of earning these amounts after the accident; and

· The case manager also referred to WCB Policy No. 44.80.30.10, which provides that “employment benefits earned or accrued prior to receiving WCB benefits will not be included in post-accident earnings” in concluding that the bridge benefits should not be included in post-accident earnings.

The employer appealed the decision not to include the worker’s bridge benefits as post-accident earnings to the Review Office.

On September 16, 2009, Review Office held that the worker’s bridge benefit should not be considered post-accident earnings. Review Office was of the opinion that the bridge benefit was on balance more similar in its characteristics to a retirement pension benefit and severance pay (both of which are specifically excluded from post-accident earnings) than to employment income.

In reaching this conclusion, Review Office noted that under the bridge benefit the worker is being paid not to work for the employer; the amount he receives is based on his service and wages with the employer; and the worker will not be returning to work with the same employer.

On October 7, 2009, the employer appealed the Review Office’s decision not to include the worker’s bridge benefit as post-accident earnings to the Appeal Commission. A written submission dated April 26, 2010 was provided by the employer’s advocate. The Appeal Commission reviewed the file at a meeting of the panel on May 5, 2010.

Reasons

In determining whether the worker’s bridge benefit should be considered to be a retirement pension benefit and excluded from post-accident earnings, the panel agrees with the analysis of the WCB case manager and Review Office. It is the panel’s opinion that the characteristics of the bridge benefit are on balance similar to a retirement pension benefit for the following reasons:

· The collective agreement provides that the worker must make an irrevocable election for both the bridge benefit and early retirement in order to access the bridge benefit. This suggests that the bridge benefit is tied to early retirement and is a form of reduced pension until the worker is eligible for early retirement benefits. Under these provisions the worker cannot return to work while on the bridging plan, which is similar to retirement;

· The collective agreement also provides that once the worker elects the bridging option “it is understood that active employment is severed and the employee shall not be entitled to future wage adjustments.” This suggests that the worker’s bridge benefit is not connected to the normal indicia of an employee/employer relationship. The worker is not required to perform any duties; is not subject to reviews or employer oversight; and is not entitled to benefit from any job progression or wage adjustments that might be available during the years that the bridge plan is in effect. The severance of the employment relationship is a critical factor that is similar to an employee accepting a retirement pension; and

· The employer in this case referred to the worker as “retired” or “essentially retired” while on the bridge plan.

The panel has therefore concluded that the worker’s bridge benefit should be treated as a retirement pension benefit and should not be included as a source of income in calculating the worker’s post-accident earnings. Accordingly, this appeal is denied.

Panel Members

M. Thow, Presiding Officer
A. Finkel, Commissioner
P. Walker, Commissioner

Recording Secretary, B. Kosc

M. Thow - Presiding Officer

Signed at Winnipeg this 29th day of June, 2010