The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The worker isappealing the decision made by Review Office of the Workers Compensation Board("WCB") regarding the calculation of his initial benefit rate.  A file review was held on September24, 2015 to consider the worker's appeal.

Issue

Whether or not the worker's initial benefit rate for thefirst 12 weeks has been correctly calculated.

Decision

That the worker's initial benefit rate for the first 12weeks has been correctly calculated.

Decision: Unanimous

Background

The worker suffered multiple injuries as a result of a work-related motor vehicle accident on August 19, 2009. The worker returned to work on August 21, 2009, with modified duties, and continued working until he was laid off as of September 10, 2009. The worker's claim for compensation was accepted by the WCB and various benefits and services were paid.

On May 1, 2014, legal counsel for the worker requested the WCB recalculate wage loss benefits payable to the worker for the first 12 weeks of benefits, to take into account bonus income that the worker had earned while working for the employer, stating as follows:

"WCB had calculated [the worker's] gross annual income to be $229,498.36. This was based upon the calculation of his income from June 16, 2009 to August 16, 2009 which amounted to $39,720.83. That covered 9 weeks and resulted in an average weekly wage of $4,413.43 which was converted to an annual total of $229,498.36. However, the sum of $39,720.83 simply represented the wages that were paid to [the worker] during that period of time and not his bonus income. We are attaching hereto the pay statement that our client received with respect to bonus income of $49,750.00 for the period of time that he worked at [the employer] prior to the accident. Bonus income is paid every 13 weeks. This cheque was issued to [the worker] on September 10, 2009 but it represented the bonus income that he had earned during the 9 weeks he had been working at [the employer] prior to the accident."

In a memorandum to file dated July 10, 2014, a WCB payment assessor stated:

"Worker's benefit rate for the first 12 weeks of benefits was established using his period of employment earnings with [the employer] as follows:

June 16/09 - August 16/09 = $39,720.83 ÷ 9.0 weeks = $4,413.43 per week

Documents from Worker's lawyer have requested this initial benefit rate be adjusted to include the bonus income he earned while working on this project.

[The employer] has confirmed in their email of July 10/14 that the bonus amount that the Worker received was not affected by injury and therefore there was no loss of this bonus income.

The Workers Compensation Board's wage loss system is designed to replace the employment income lost as a result of a workplace injury. As there is no loss of this bonus income due to his injury, it is not included in the calculation of his benefit rate."

By letter dated August 6, 2014, Compensation Services advised the worker's lawyer that based on the July 10, 2014 memorandum (a copy of which was attached), the worker earned the same bonus while on modified duties that he would have earned if he had not had the injury, and that there was therefore no loss of income.

In a further letter dated August 14, 2014, Compensation Services clarified that:

"[The worker] was laid off in September/09 due to a lack of work and not due to the injury. Therefore, his WCB benefit rate has been calculated correctly, as his bonus income, both pre and post injury, per his employer, was not affected by his injury. That is, [the worker] did not have a loss of earning capacity related to the bonus."

By letter dated September 2, 2014, the worker's legal counsel stated that it was correct that the worker was paid his bonus up until the date the job ended, but that if it were not for his injuries, the worker would have started another job thereafter. He pointed out that all of the jobs involve bonus income, that there is a basic salary as well as a bonus, and that the worker lost both basic salary and bonus income because he was not able to work at any other employment once the job with the employer came to an end.

On November 17, 2014, the worker's legal counsel provided documentation in support of his assertion that every job paid bonus income.

In a memorandum dated November 18, 2014, a WCB payment assessor stated:

"The Worker's benefit rate for the first twelve weeks will remain based on his demonstrated loss of earnings at the date of injury as there is no provision in the policy to adjust the Worker's benefit rate based on change in employment circumstances after the date of injury other than the 12 week average earnings review date.

An average earnings review was completed using Worker's annual earnings for 2008 and 2009 (sic) as reported to CRA. The average earnings benefit rate was established based on the average of his T4 gross earnings, EI benefits and Net business income for bonuses received from both 2008 and 2009 (sic). This amount of $2,826.14 gross per week was less than the initial benefit rate of $4,413.43 per week, therefore decrease will not be effective until the 13th week."

By letter dated November 20, 2014, the case manager advised that the worker's benefit rate for the first 12 weeks of his claim would remain unchanged.

The worker's legal counsel appealed the case manager's decision to Review Office. In a submission to Review Office dated December 5, 2014, counsel stated:

"... the Case Manager in a letter dated August 6, 2014 [indicated] that [the worker] was paid the same bonus while on modified duties that he would have earned if he had not had the injury and there was therefore no loss of income.

It is submitted that this response makes no sense. [The worker] was also paid the same wages while he was working modified duties and WCB did not pay any wage loss benefits to [the worker] until September 11, 2009. In other words, he received both his base salary and his bonus income up until September 10, 2009. Wage loss benefits commenced on September 11, 2009 but only based upon part of the income that he had been earning at [the employer]….

Indeed, the benefit rate was and should have been based upon the income that [the worker] was earning at [the employer] at the time of the accident. The request was simply to make the initial wage loss calculation based upon all of the income that the [worker] was earning from his employment at [the employer] at the time of the accident. Wage loss benefits should have been calculated and commenced on September 11, 2009 based upon the combination of base salary and bonus income."

In a decision dated February 26, 2015, Review Office determined that the method used to calculate the worker's average earnings for the first 12 weeks was not correct; that the worker's bonus income should be considered as part of the worker's regular earnings and included in the calculation of the worker's average earnings/weekly benefit rate for the first 12 weeks.

On March 6, 2015, the Director of Review Office advised the worker and his counsel that the February 26, 2015 Review Office decision was being revised, due to an error in the application of the "First Payment" section of the WCB's Average Earnings Policy. The Director explained that the initial benefit rate is established under that section to cover the worker's initial loss, using earnings actually paid as of the date of the accident. As the bonus income was paid after the accident, it could not be factored in to the initial benefit rate. Review Office's decision, as revised, was that the worker's initial benefit rate had been appropriately calculated using period of employment earnings paid up to the worker's date of accident as per the policy, and was a reasonable approximation of the worker's average earnings for the first 12 weeks.

On March 31, 2015, the worker's legal counsel provided Review Office with 2009 payroll documentation which referred to banked quality earnings, and submitted that in addition to the bonus payment, banked quality earnings which were paid upon completion of the project should have been taken into account when determining the worker's actual loss of earnings.

On April 1, 2015, having reviewed the March 31, 2015 letter and payroll documentation, the Director of Review Office advised the worker's legal counsel that the revised Review Office decision remained unchanged.

On April 16, 2015, the worker's legal counsel appealed Review Office's decision to the Appeal Commission and a file review was arranged.

Reasons

Applicable Legislation and Policy

The Appeal Commission and its panels are bound by The Workers Compensation Act (the "Act"), regulations and policies of the Board of Directors.

Subsection 39(1) of the Act provides that where an injury to a worker results in a loss of earning capacity, wage loss benefits are payable in accordance with section 40. Subsection 40(1) states that the loss of earning capacity of a worker is the difference between the worker's net average earnings before the accident, and the net average amount that the board determines the worker is capable of earning after the accident.

Subsection 45(1) provides that "… [t]he 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…."

"Average Earnings" are addressed in WCB Policy 44.80.10.10 (the "Policy"). That Policy provides that in calculating a worker's average earnings under section 45 of the Act, the WCB will use formulas that "… incorporate either regular earnings at the time of accident, or average yearly earnings or probable yearly earning capacity", and that the "… formula that best represents the worker's loss of earnings will be chosen."

The "First Payment" section of the Policy provides for the initial calculation of a worker's average earnings, as follows:

"At the time of first payment, the WCB will apply the average earnings formula which, on the basis of verifiable information readily available to the WCB, allows for:

a) Expeditious payment of benefits; and

b) Reasonable approximation of the worker's average earnings at the time of the accident. In most cases this formula will be the regular earnings at the time of accident, although the WCB may use the average yearly earnings if it has sufficient documentation and the resultant average earnings would be greater."

"Regular earnings" are defined in the Policy as:

"… 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 ….

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

Worker's Position

The worker was represented by legal counsel who provided a written submission dated April 21, 2015.

The worker was seeking to have the calculation of his benefit rate for the first 12 weeks of wage loss benefits adjusted to include both his bonus and banked quality earnings. With respect to bonus earnings, counsel submitted that the bonus income was in fact regularly paid by employers, including the worker's employer, and represented a very substantial portion of the remuneration being paid by the employer to the worker at the time of the accident. For the reasons which had previously been advanced, it was submitted that the bonus income represents earnings that a worker would normally receive as remuneration in the occupation in which the worker was employed at the time of the injury, and including the loss of bonus income best reflects the worker's actual loss of earnings.

Counsel also noted that 50% of "quality earnings" were paid to the worker during the course of the project and were included when calculating the worker's earnings. However, the remaining 50% of the quality earnings (banked quality earnings) were not paid until after completion of the project. It was submitted that an adjustment should also be made to include these banked quality earnings when calculating the remuneration that the worker normally received in the occupation in which he was employed at the time of the injury.

Analysis

The issue before the panel is whether the worker's initial benefit rate for the first 12 weeks has been correctly calculated. For the worker's appeal to be successful, the panel must find that the calculation of that initial rate was not correct. The panel was not able to make that finding.

The worker's injury occurred on August 19, 2009. He missed work on August 20, then returned to the job on August 21, and worked modified duties up until September 10, 2009, when the job came to an end and he was laid off. The worker was paid full wage loss benefits for August 20, then again starting September 11, 2009.

At the time of the accident, the worker had been working for the employer for approximately 9 weeks, and was not guaranteed any set hours. In the circumstances, the worker's benefit rate for the first 12 weeks of benefits was established using his period of employment earnings, being the amounts that he was paid from June 16, 2009 (date of hire) to August 16, 2009 (end of the last pay period before the date of accident).

The worker, through his counsel, has not disputed the use of the regular earnings formula to determine the initial benefit rate, but rather the way in which that formula has been applied in this case. Specifically, he claims that the initial benefit rate should have been based on all of the income that the worker "was earning" from his employment at the time of the accident, and not just what he had been paid.

The panel disagrees, and is satisfied that the "First Payment" section of the Policy and the formula for "regular earnings" were correctly applied by the WCB in establishing the initial benefit rate for the first 12 weeks.

The panel notes that the intent of the "First Payment" section, as indicated therein, is to compensate the worker for loss of income due to a workplace accident on a timely basis. The section thus stipulates, among other things, that at the time of first payment, the WCB will apply the average earnings formula which, on the basis of verifiable information readily available to the WCB, allows for expeditious payment of benefits and reasonable approximation of the worker's average earnings at the time of the accident. (emphasis ours)

The "First Payment" section provides that in most cases the formula which will be applied will be the regular earnings at the time of accident. The regular earnings formula provides that regular earnings are the amount of earnings that a worker normally receives as remuneration in the occupation in which he was employed at the time of injury, and are based on the normal payment schedule converted to a weekly amount. The regular earnings formula further specifies that "[r]egular earnings do not normally include overtime, special reimbursements for employment expenses or bonuses that are not regularly paid." (emphasis ours)

The panel is satisfied that the reference to earnings in this context is to earnings that have actually been paid at the time of accident. Such earnings can usually be readily and reliably identified by reference to, for example, a regular paycheque. This is consistent with the intent of providing timely, rather than 100% accurate, relief in the event of an interruption of income due to a workplace accident.

The panel notes that in this instance, the worker had not received or been paid any bonus income in respect of his employment at the time he was injured. The evidence indicates that the bonus was in the nature of an incentive or performance bonus, to be paid at the end of the project, and upon its successful completion. The worker's bonus was paid at the time the project was completed, on September 10, 2009. In the circumstances, and given that the bonus earnings were actually paid to the worker after the date of accident, the panel finds that the worker did not have an initial loss of bonus income at the time of accident.

The same applies with respect to the banked quality earnings. The banked quality earnings were paid to the worker on September 10, 2009, when the project was completed. Given that the banked quality earnings were not actually paid until after the date of the accident, the panel finds that the worker did not suffer an initial loss of income in respect of those earnings at the time of the accident.

Quite apart from the calculation of the initial benefit rate, the panel would note that the worker did not ultimately suffer any loss of bonus or banked quality earnings on the project, as the full amounts of the bonus and the quality earnings were actually paid to the worker in September 2009. On July 10, 2014, in response to an inquiry by the WCB, the employer advised as follows:

"[The worker's] bonus was based on $250.00 per Km for the entire job. He was paid full bonus which is the same bonus amount as others on the job. The bonus was not affected by the injury. The payment was made September 09 or 10, 2009. As well, [the worker] was paid quality hours for the entire duration even though it is usually only paid if the employee is actually on 'the line' working."

The panel would also observe that, as indicated above, a review of the worker's benefit rate was conducted after the initial 12 weeks of benefit payment in accordance with the "Average Earnings Review" section of the Policy, using the worker's 2007 and 2008 income tax returns. That review took into account, among other things, the worker's T4 earnings, EI benefits and net business income including bonuses received in 2007 and 2008. The rate which resulted from the review, based on the worker's average yearly earnings, including bonuses, was significantly lower than the rate that had been applied for the initial 12 week period of benefits. Counsel for the worker has acknowledged that after the first 12 weeks of wage loss benefits, further wage loss benefits are based upon an individual's average income as set forth in their pre-accident income tax returns, and that there is no issue or dispute in that regard.

Had the worker been disadvantaged in terms of the benefits he received for the first 12 weeks of benefits, as compared with his average yearly earnings, this would have been picked up in the average earnings review which was conducted after the first 12 weeks of payment. Since the eventual benefit rate was lower than the initial rate, however, no adjustment was made to the initial rate and the new rate became effective at 13 weeks only.

In the result, the panel finds that the worker's initial benefit rate for the first 12 weeks was correctly calculated.

The worker's appeal is denied.

Panel Members

L. Harrison, Presiding Officer
A. Finkel, Commissioner
P. Walker, Commissioner

Recording Secretary, B. Kosc

L. Harrison - Presiding Officer

Signed at Winnipeg this 20th day of November, 2015