The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The worker is appealing the decision made by the Workers Compensation Board ("WCB") regarding the calculation of his average earnings. A file review was held on July 23, 2018 to consider the worker's appeal.

Issue

Whether or not the worker's average earnings have been correctly calculated.

Decision

That the worker's average earnings have not been correctly calculated.

Background

The worker has an accepted claim for a right hip/leg injury which occurred as he was stepping down from a truck during the course of his employment on June 5, 2017.

The worker was paid twelve weeks of wage loss benefits at a rate of $749.04 gross ($536.42 net), based on his earnings during the approximately three week period of his employment with the employer, from May 17 to June 5, 2017. On October 31, 2017, the WCB undertook a review of the worker's average earnings.

In a November 1, 2017 memorandum to file, a WCB payment assessor recommended that the worker's average earnings be reduced to $182.15 per week effective August 29, 2017, based on an averaging of earnings of co-workers with a similar job and status as the worker. It was noted that the employer had stated that the period of employment average earnings of $749.04 per week was not an accurate reflection of what the worker would have earned in a year had he not been injured. The number of hours per week were not guaranteed; they depended on the client's needs and workers would decide if and when they wanted to work. It was further noted that income tax information for 2015 and 2016 indicated the worker had employment and self-employment income, and showed average earnings for those years of $181.67 per week.

On November 2, 2017, Compensation Services advised the worker that his weekly benefit rate had been reduced to $182.15 gross ($172.21 net) starting August 29, 2017. Compensation Services noted that income tax information for 2015 and 2016 had been reviewed and could not be used as it was self-employed income and was not relevant to the current employment situation. As there were no substantial earnings to support an average earnings decision, 2016 earnings from five workers with the same position had been provided for comparison, resulting in average total earnings being calculated at $182.15 per week.

On November 6, 2017, the worker requested reconsideration of Compensation Services' decision by Review Office. The worker disagreed with the reduction in his weekly benefit rate, noting that he could not support his family on the reduced amount.

On November 29, 2017, Review Office determined that the worker's average earnings calculation was accurate and correct. Review Office noted that the worker was employed with the accident employer for less than three weeks. The employer was a temporary employment agency which did not hire workers on a full-time or permanent basis. The worker's work history over the last two years had been sporadic, including contract jobs and employment in his own short-term business. He had also been out of the country for several months between late 2016 and April 2017.

Review Office stated that in this case, the WCB could choose the worker's average yearly earning rate based on his historical earnings or use his probable earnings. In determining which one would be best, Review Office considered the nature of the worker's historical work, including the jobs, work patterns and earnings, and compared that with the short period of employment with the accident employer.

Review Office noted that the worker's historical gross weekly earnings based on a two-year average ($181.67) were within one dollar of the gross weekly average earnings of the five co-workers ($182.15). Given how close the numbers were, Review Office was of the view that either would be a fair representation of the worker's loss.

Review Office agreed with Compensation Services in using an average of the earnings of five different individuals who worked for the accident employer in the same capacity as the worker. Averaging their actual earnings to find probable yearly earnings for the worker was fair given the likelihood of available work, the type of work offered by the employer and the worker's work pattern over the past two years. Given that the probable earnings were consistent with the worker's historical earnings but were derived out of the employment where he was injured, Review Office found the use of this amount was consistent with Board policy and the Act.

On December 16, 2017, the worker appealed the Review Office 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 WCB's Board of Directors.

The worker is appealing the calculation of his average earnings to be used in setting his wage loss benefits.

Subsection 45(1) of the Act deals with the calculation of average earnings, and states as follows:

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 "Policy") directs that in establishing a worker's average earnings under section 45 of the Act, the WCB will use formulas that incorporate regular earnings at the time of accident, average yearly earnings, or probable yearly earning capacity. The Policy stipulates that "The formula that best represents the worker's loss of earnings will be chosen."

"Regular Earnings" are defined in the Policy as follows:

Regular earnings are 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. Earnings from concurrent employment (whether in a covered or non-covered industry) which are reduced or eliminated due to an accident in a covered industry are included in regular earnings.

"Average yearly earnings" are defined as:

Average yearly earnings include any remuneration that the worker received as a result of employment or employment-insurance benefits. To determine a worker's true loss of earnings, the WCB will generally use documentable employment data from any consecutive 12-month period during the one or two years before the compensable accident. If the WCB determines that this calculation does not produce an accurate reflection of a worker's loss of earnings, it will generally use documentable employment data from a 12-month period during, or an average of, a longer period of up to five years.

"Probable Yearly Earning Capacity" is defined as:

Probable yearly earning capacity is the worker's projected earnings for the next twelve months. It is based on the worker's regular earnings at the time of accident as applied to the worker's established work pattern. Consistent with section 45 of the Act (1992), the probable yearly earning capacity must be based on the worker's earnings before the accident, but may be based on "income from employment and employment insurance benefits, and over such period of time, as the board considers fair and just."

Worker's Position

The worker was represented by a worker advisor, who provided a written submission in support of the worker's appeal.

The worker's position was that the average earnings rate of $172.21 does not accurately reflect his actual loss of earnings. The worker requested that his initial weekly benefit rate of $536.42, representing an average of his period of employment earnings with the accident employer, be reinstated.

Alternatively, if the initial weekly benefit rate was not to be reinstated, the worker contested the methods which were used to determine his current benefit rate, and submitted as follows:

• The WCB excluded the worker's 2015 declared gross business income of $45,078 when calculating the average of the worker's 2015 and 2016 earnings. If the average earnings formula was considered to be the most appropriate one to apply, based on the 2015 and 2016 annual earnings, the worker's business income should be included in the calculation.

• The worker worked in 2017, he made himself available every day, and the evidence suggested that much work was available. If it was considered more appropriate to calculate the worker's benefit rate based on the average earnings of similarly employed workers (using the probable yearly earning capacity formula), the earnings of all such workers (not just five) over the 12-month period immediately prior to June 5, 2017 (as opposed to 2016 earnings) should be used.

• If it was appropriate to use the probable yearly earning capacity formula, the worker's period of employment earnings over the first 12 weeks should be combined with presumed employment insurance benefits which he would likely have qualified for if he had not been injured.

It was submitted that any of the above alternatives would more accurately reflect the worker's loss of earnings, in keeping with the Policy.

Employer's Position

The employer did not participate in the appeal.

Analysis

The issue before the panel is whether or not the worker's average earnings have been correctly calculated. As noted previously, the Policy directs that the formula or method used to establish a worker's average earnings will be the one that best represents the worker's actual loss of earnings. In order for the worker's appeal to be successful, the panel must therefore find that the method used by the WCB to establish the worker's average earnings does not best represent the worker's actual loss of earnings. The panel is able to make that finding.

The panel finds that the best representation of the worker's actual loss of earnings can be determined by calculating the worker's average earnings from 2015 and 2016 based on documentable employment data, including the worker's T4 and business income in those two years.

Information on file indicates that the worker worked as a bricklayer in another province for eight years prior to 2017. Documented employment data from 2015 and 2016 is on file, and shows that the worker had both T4 earnings and business earnings from contract work and employment in his own business in those years. The worker was out of the country from September 2016 until April 2017. On his return to Canada, he relocated to Manitoba for personal reasons, and on May 17, 2017, he started work as a casual labourer with the accident employer, a temporary employment agency.

The panel notes that while the WCB referred to the worker's historical gross weekly earnings based on a two year average, they used only the average of the worker's T4 income from 2015 and 2016 in determining those earnings, and did not factor in the worker's gross business or self-employed income. Documented information on file shows that in addition to his T4 earnings, the worker had gross business income equal to $45,078.00 and $7,600.00 in 2015 and 2016, respectively. The panel finds that calculation of the worker's average earnings in 2015 and 2016 should also include the worker's documentable gross business or self-employed income. The panel finds that as such, the worker's 2015 and 2016 documented earnings provide a fair and accurate representation of the worker's earning capacity.

The panel further finds that the worker was employed in transitional employment at the time of the compensable injury. The panel finds that the worker's earnings in the less than three week period of time leading up to his compensable injury were an anomaly, and were not reflective of his historical earnings as documented over the previous two years. The panel notes that information on file further shows that the worker was planning to continue his previous work as a bricklayer in Manitoba, but had not yet had time to start his business. The panel is satisfied that prior to his June 5, 2017 injury, the worker was fit to do the kind of work he had done before, including his work as a bricklayer.

The worker's primary argument in his written submission was that his initial benefit rate which represented his period of employment earnings with the accident employer should be reinstated or continued. The panel is unable to accept that argument. The panel is unable to find that the worker's regular earnings or period of employment earnings with the accident employer accurately or best represent the worker's loss of earnings. In this regard, the panel notes that the worker had been employed as a casual worker for less than three weeks when he was injured. The accident employer is a temporary employment agency and information on file shows that there were no guaranteed number of hours of work per week and that the work was dependent on a client's needs.

The panel is further satisfied that a probable yearly earning capacity based on an average of the 2016 gross weekly earnings of five co-workers with similar jobs and status as the worker does not fairly or best represent the worker's loss of earnings. The panel is unable to find that an average of the 2016 gross weekly earnings of five co-workers with similar jobs and status as the worker is consistent with the worker's historical average earnings over the previous two years.

The panel also notes that the Policy indicates that the probable yearly earning capacity formula is used where neither regular earnings nor average yearly earnings accurately reflect the worker's loss of earning capacity. In other words, it is the formula of last resort. In this particular case, the panel is satisfied and has found that the average yearly earnings formula accurately reflects that worker's loss of earning capacity and ought to be applied.

In light of the foregoing, the panel finds that the method used by the WCB to establish the worker's average earnings does not best represent the worker's actual loss of earnings and that the worker's average earnings have not been correctly calculated. The panel further finds that in the particular circumstances of this case, the worker's average earnings should be established based on the documented employment data from 2015 and 2016, including the worker's T4 and business earnings for those years.

The worker's appeal is allowed.

Panel Members

M. L. Harrison, Presiding Officer
A. Finkel, Commissioner
P. Kraychuk, Commissioner

Recording Secretary, J. Lee

M. L. Harrison - Presiding Officer
(on behalf of the panel)

Signed at Winnipeg this 21st day of September, 2018