The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The worker is appealing the decision made by the Workers Compensation Board ("WCB") that their average earnings have been correctly calculated. A file review was held on March 23, 2023 to consider the worker's appeal.

Issue

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

Decision

The worker's average earnings have been correctly calculated.

Background

The worker filed a Worker Incident Report with the WCB on June 5, 2017 for right elbow ulnar neuropathy arising out of the repetitive job duties the worker performed. The WCB gathered medical information and accepted the worker's claim on August 1, 2017, based on an accident date of May 16, 2017.

The employer provided the worker's wage information from 2016 through May 31, 2017 to the WCB, noting the worker had started their employment on May 31, 2016 and was subject to a seasonal layoff from December 1, 2016 to April 4, 2017. The employer also advised the WCB the worker had been suspended from work due to disciplinary issues from May 16, 2017 to June 14, 2017. On August 1, 2017, the WCB advised the worker of the weekly net loss of earnings calculation and provided the worker with wage loss benefits from June 15, 2017 to July 28, 2017.

On September 1, 2017, when the worker’s claim extended beyond 12 weeks, the WCB reviewed their benefit rate and the worker's weekly wage loss benefit was reduced based on the wage information received from the employer and the maximum weekly amount for employment insurance for the time the worker was laid off. The worker authorized the WCB to receive copies of their prior income tax returns.

On November 2, 2017, the worker requested reconsideration of the WCB's calculation of their average weekly earnings to Review Office, noting their benefits were reduced because they collected employment insurance benefits due to a winter shut down. Review Office returned the worker's file to the WCB's Compensation Services to investigate further. On November 16, 2017, the WCB payment assessor revised the calculations of the worker's average weekly earnings, based on the worker's actual earnings as indicated on their income tax returns for the period of May 31, 2016 to May 31, 2017 and advised the worker their weekly earnings had increased due to the revised calculations as of September 7, 2017.

The worker again requested reconsideration of the WCB's calculated weekly average earnings to Review Office on March 2, 2018, noting in their submission that their coworkers advised there was no seasonal shut down, and as the weekly average earnings were calculated to include an amount for employment insurance benefits, they felt the result was unfair as they would have continued to work had they not been injured.

On April 12, 2018, Review Office contacted the employer who advised the seasonal layoff period for 2017 to 2018 would have been similar in length to the previous year, with a December 2017 layoff and call back in April 2018. Review Office determined on April 27, 2018 that the calculation of the worker's average earnings effective September 7, 2017 was incorrect in that it used the worker's earnings to May 31, 2017, which was after the accident date. Review Office returned the worker's file to the WCB's Compensation Services for further review.

The WCB payment assessor recalculated the average earnings, as noted on file dated April 30, 2018, noting that worker's weekly average earnings increased. On the same date, the WCB provided an adjustment to the worker for the period of September 7, 2017 to April 20, 2018 based on the new calculations.

By January 13, 2020, the employer had advised the WCB the worker's layoff was likely permanent. Following a functional capacity evaluation, on April 6, 2021, the WCB put permanent restrictions in place for the worker and referred them for vocational rehabilitation services.

On August 30, 2021, the worker requested Review Office reconsider the weekly average earnings calculated by the WCB, noting they were willing to perform the modified duties requested of their employer in May 2019, but those duties were not provided. The worker also noted they were not given the opportunity to attempt modified duties and did not know if they were capable of working, and further, had now missed out on 4 years of full earnings. Further, the worker noted their entitlement to medical coverage was based on an hours-banked system, and as they were not working, they did not accrue hours and were unable to obtain chiropractic care that would have been covered. The worker further noted they did not contribute to their pension as they were not working and believed their average earnings should also be adjusted to reflect that loss.

On October 8, 2021, the WCB payment assessor supervisor provided an opinion to the worker's file indicating that a review of the April 30, 2018 calculation by the payment assessor was conducted and that the WCB Payments Department considered employment similar to the worker's, on large, multi-year projects to be a significant change in employment. As such, the worker’s "…employment prior to the accident employer was not used in establishing average earnings." The supervisor further noted that if the worker was employed with the employer for 2 years or more, previous years' earnings were sometimes used in the average earnings calculations; however, the worker had started their employment in May 2016 and that option was not available. The supervisor noted the Probable Yearly Earning Capacity formula was used to establish an average earning capacity for the worker consistent with the Payment Department's practice.

On October 13, 2021, Review Office determined the worker's average earnings were incorrect. Review Office noted that as the worker was a seasonal worker and subject to layoffs with no guaranteed employment, the best formula to represent the worker's earnings would be average yearly earnings. The worker's file was returned to the WCB's Compensation Services for further adjudication.

The WCB payment assessor gathered additional information for the worker's file, including 2015 and 2016 income tax returns and on November 9, 2021, advised the worker that, based on the decision of Review Office, an average yearly earning had been calculated and established retroactively to September 7, 2017. The WCB noted the worker's weekly average earnings had decreased and as a result, an overpayment had occurred.

On January 24, 2022, the worker again requested reconsideration of the WCB's calculation of their weekly average earnings, noting the WCB could use an average of 5 years of income tax information rather than 2 years, and enclosing copies of their 2012 to 2014 income tax returns with the request. On February 24, 2022, Review Office agreed that 5 years of income tax returns should be used to calculate an average yearly earning amount for the worker and returned the worker's file to the WCB's Compensation Services for further calculations.

The WCB requested income tax information for the worker for 2012, 2013 and 2014 on February 28, 2022 and received the information on March 24, 2022. Based on that information, the WCB payment assessor calculated the worker’s average earnings effective September 7, 2017. These calculations were reviewed by a WCB sector manager on April 21, 2022 who confirmed the “…new average earnings decision will be implemented from the effective point of the prior review office decision when the workers wage was reduced in October 2021.” On May 3, 2022, the WCB discussed the new weekly average rate with the worker and advised their file was being referred for long term wage loss.

On June 13, 2022, the worker requested Review Office reconsider the WCB’s implementation of the February 24, 2022 Review Office decision, noting that WCB Policy 44.80.10.10 allowed the WCB to choose one or more consecutive 12 month period in the previous 5 year period to use to base their calculations on and that they believed the WCB should have used that provision to calculate their earnings. On July 12, 2022, Review Office determined the worker’s average earnings were correct. Review Office found the WCB payment assessor correctly calculated the worker’s average earnings based on the previous 5 year period and noted that approach allows for a “…more accurate average for those with an irregular earnings pattern.”

The worker filed an appeal with the Appeal Commission on November 10, 2022 and a file review was arranged.

Reasons

Applicable Legislation and Policy

The Appeal Commission and its panels are bound by the provisions of The Workers Compensation Act (the "Act"), regulations under that Act and the policies established by the WCB's Board of Directors. The provisions of the Act in effect as of the date of the worker’s accident are applicable.

A worker is entitled to benefits under s 4(1) of the Act when it is established that a worker has been injured as a result of an accident at work. Under s 4(2), a worker who is injured in an accident is entitled to wage loss benefits for the loss of earning capacity resulting from the accident, but no wage loss benefits are payable where the injury does not result in a loss of earning capacity during any period after the day on which the accident happens. When the WCB determines that a worker has sustained a loss of earning capacity, an impairment or requires medical aid as a result of an accident, compensation is payable under s 37 of the Act. With regard to wage loss benefits, s 39(2) of the Act sets out that such benefits are payable until the worker's loss of earning capacity ends or the worker attains the age of 65 years.

The Act outlines the method of calculation of a worker’s average pre-accident earnings in s 45, as follows:

Calculation of average earnings 

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.

Average earnings includes all employment income 

45(2) In making a calculation under subsection (1), the board shall consider any employment income the worker has at the time of the accident from which the worker sustains a loss of earnings, whether or not the employment is in an industry to which this Part applies.

Adjustment of earning capacity 

45(3) Where the board is satisfied that a worker's average earnings before the accident do not fairly represent his or her earning capacity because the worker was an apprentice in a trade or occupation, the board may adjust wage loss benefits from time to time by deeming the worker's average earnings to be an amount that, in its opinion, reflects the probable earning capacity of the worker in the trade or occupation.

WCB Policy 44.80.10.10, Average Earnings (the “Policy”) outlines how the WCB will determine a worker’s average earnings at the time of a compensable injury based upon either regular earnings at the time of accident, or average yearly earnings or probable yearly earning capacity. This policy sets out that the formula used is the one that “best represents the worker’s employment and earnings pattern before the accident.” Under the regular earnings formula, the worker’s average earnings are calculated based on the amount of earnings they would normally receive as remuneration in all occupation(s) in which they were employed on the date of accident, as long as their ability to earn income from each of these occupations was affected by the compensable injury. The WCB may use the average yearly earnings formula when a worker has an irregular earnings pattern due to the nature of their work (e.g. seasonal worker, contract worker, pieceworker, or fluctuating overtime). Average yearly earnings include any verifiable remuneration that the worker received as a result of employment and employment insurance benefits, and in contrast to the regular earnings formula, this formula does consider overtime, special reimbursements, allowances and/or bonuses. Under this formula, the WCB will generally use documented employment data from any consecutive 12-month period occurring during the one or two years before the date of the accident. The WCB may choose one or more consecutive 12-month periods from any of the previous five calendar years if of the view that doing so would produce a more accurate reflection of the worker’s employment and earnings pattern before the accident. The probable yearly earning capacity formula forecasts what a worker might be expected to earn for a consecutive 12-month period after the day of accident. While still based on the worker’s earnings before the accident, this formula uses the worker’s regular earnings or average yearly earnings and adjusts them to reflect the worker’s probable employment and earnings pattern going forward, or alternatively, the employment and earnings pattern of a representative sample of similarly employed workers. It also may include presumed employment insurance benefits. This formula is used when the formulas for regular earnings and average yearly earnings do not accurately reflect what the worker’s average earnings likely would have been, but for the accident, and generally, the WCB will only use probable future earning capacity to calculate average earnings when there is a sufficient degree of certainty about what the worker’s average earnings likely would have been.

Worker’s Position

The worker set out their position in correspondence to the Appeal Commission dated March 14, 2023, and in the attachment to their Appeal of Claims Decision form, received by the Appeal Commission on November 10, 2022.

The worker’s position is that the WCB’s calculation of their average earnings based upon their income in the five years from 2012 through 2016 was incorrect in that this resulted in a lower average earnings amount given that 2015 was a “low year”. The worker submits that the WCB should have excluded their 2015 earnings to reflect a “closer to true average”. The worker noted that their income in 2015 was “significantly lower than other years because, during that year the …industry in which I worked…had slowed down drastically, forcing me to work in my home province…where the wages are drastically lower.” The worker further noted that they have historically chosen to work outside their home province in order to earn “a significantly greater income” and feel that the WCB decision is penalizing them “because of one bad financial year throughout my work career, a year which was due to economic reasons within the industry over which I had no control.”

Employer’s Position

The employer did not participate in the appeal.

Analysis

The question on appeal is whether the worker’s average earnings have been correctly calculated. For the panel to grant the worker’s appeal, we would have to determine that the formula used by the WCB in calculating the worker’s average earnings is not the one that “best represents the worker’s employment and earnings pattern before the accident” or that the WCB failed to correctly apply the applicable policy provisions in calculating the worker’s average earnings. As outlined in the reasons that follow, the panel was unable to make such findings and therefore, the worker’s appeal is denied.

Review Office previously agreed with the worker that the WCB’s use of the worker’s average income from 2015 and 2016 only was not appropriate and determined that a five-year average would better reflect the worker’s employment and earnings pattern; however, when the WCB implemented that decision, the worker disagreed with the inclusion of 2015 as part of the five-year average. That decision is the basis of the present appeal.

The file evidence here confirms that the worker’s income prior to the accident was not consistent year over year, but varied with the employer, the location of the worker’s employment and the proportion of employment insurance income received in each year. The evidence indicates the worker’s income in the period of 2012 – 2016 was highest in 2014 and lowest in 2015. The panel does not discern any pattern in the worker’s income history during this period, other than significant variation from year to year.

The worker’s position is that the Policy permits the inclusion of the worker’s “good years” and exclusion of their “bad years”; however, the panel does not agree that this is permitted or even intended by the Policy wording. If the Policy meant for the WCB to consider the worker’s best 3, 4 or 5 years of pre-accident income, it would have explicitly provided such an option. Instead, the Policy sets out that generally the WCB will consider “any consecutive 12-month period occurring during the one or two years before the date of the accident” and that it “may choose one or more consecutive 12-month periods from any of the previous five calendar years” in appropriate circumstances. Those circumstances are described as being where that would “produce a more accurate reflection of the worker’s employment and earnings pattern before the accident.” Thus, the Policy is explicit in its inclusion of up to five consecutive 12-month periods and the panel finds that this would not permit the exclusion of any particular 12-month period within the selected years.

The panel finds that this approach accurately reflects the worker’s employment and earnings pattern before the accident, as required by the Policy. The average yearly earnings formula is appropriate when a worker has an irregular earnings pattern due to the nature of their work. The evidence here demonstrates just such a pattern in the worker’s earnings history for the period under consideration.

On the basis of the evidence before the panel and applying the standard of a balance of probabilities, the panel is satisfied that the average yearly earnings formula used by the WCB in calculating the worker’s average earnings best represents the worker’s employment and earnings pattern before the accident and further, that the WCB correctly applied the Policy provisions in calculating the worker’s average earnings based upon their income for the years 2012 through 2016, inclusive. Therefore, the worker’s average earnings have been correctly calculated and the appeal is denied.

Panel Members

K. Dyck, Presiding Officer
J. MacKay, Commissioner
M. Kernaghan, Commissioner

Recording Secretary, J. Lee

K. Dyck - Presiding Officer
(on behalf of the panel)

Signed at Winnipeg this 1st day of May, 2023