The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The worker is appealing the decision made by the Workers Compensation Board ("WCB") that:

1. Their initial weekly wage loss benefit rate has been correctly calculated; and 

2. Their average earnings have been correctly calculated.

A file review was held on June 21, 2023 to consider the worker's appeal.

Issue

1. Whether or not the worker's initial weekly wage loss benefit rate has been correctly calculated; and 

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

Decision

1. The worker's initial weekly wage loss benefit rate has been correctly calculated; and 

2. The worker's average earnings have not been correctly calculated.

Background

On June 21, 2022, the WCB accepted the worker’s claim for a right shoulder strain that occurred at work on June 15, 2022, when the worker tripped and fell over a piece of equipment. In an Employer’s Accident Report provided to the WCB on June 22, 2022, the employer confirmed the worker was paid $750.00 per day, which was calculated to $62.50 per hour based on 84.0 hours per week. The employer advised the worker’s rotation was 6 weeks on and 2 weeks off, and that the worker began their current rotation on June 6, 2022.

On June 29, 2022, a WCB payment assessor calculated the short-term average earnings for the worker based on employment from August 6, 2021 to June 15, 2022, with an hourly rate of $62.50 for 12 hours per day and issued a wage loss payment based on those interim calculations, until the employer provided further information. On July 8, 2022, the WCB payment assessor gathered further information from the employer and the WCB calculated an interim average earning amount and advised the worker of their revised weekly wage loss benefit rate.

The WCB advised the worker on August 22, 2022 that their benefit rate and further entitlement to wage loss would be reviewed for average earnings as the claim was reaching twelve weeks of wage loss. The WCB requested and received a release form from the worker to obtain their income tax information and the WCB payment assessor prepared a new average earning calculation. In a September 20, 2022 memorandum to file, the payment assessor noted that because the worker’s income fluctuated year over year, an average of their previous 5 years of income would be used to calculate their average earnings. Based on that calculation, the worker’s average earnings were established and noted to be lower than the previous calculation. The WCB wrote to the worker on September 22, 2022 advising of the new weekly benefit rate, calculated based on the worker’s averaged income over the period of 2017 through 2021, as evidenced by the worker’s income tax returns.

On October 3, 2022, the worker requested Review Office reconsider the WCB’s decision as to the weekly wage loss benefit rate and their average earnings, noting they were currently receiving less than 50% of the rate they were previously paid. Review Office determined on November 24, 2022 that the worker’s weekly wage loss benefit rate and average earnings were correct. Review Office noted the worker’s initial weekly wage loss benefit rate was calculated based on their stated flat rate earnings of $750.00 per day, which was greater than the WCB’s maximum annual earnings and resulted in an adjusted weekly benefit rate. Review Office noted that the worker was paid at that rate until the claim reached the twelve week wage loss benefit stage, at which point, an average earnings review took place. Review Office found that based on the worker’s short period of employment and their being subject to lay-offs, the WCB calculated the worker’s average earnings based on an average of their last 5 years income tax returns and accepted that as being an accurate basis to calculate the worker’s average earnings. As such, Review Office found the worker’s weekly wage loss benefit rate and average earnings were correctly calculated.

The worker filed an appeal with the Appeal Commission on March 9, 2023 and a file review was arranged. Following the hearing, the appeal panel requested additional information prior to discussing the case further. After the requested information was received and provided to the interested parties for comment, the appeal panel met on November 14, 2023 to discuss the case and render its final decision on the issues under appeal.

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. Section 39(2) of the Act sets out that wage loss 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.

Section 46 of the Act provides that in calculating a worker’s earnings, any earnings in excess of the maximum annual earnings for that year are to be excluded and specifies in s 46(2) that the maximum annual earnings in relation to an accident occurring in 2022 are $150,000.

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. The Policy sets out that the formula used is the one that “best represents the worker’s employment and earnings pattern before the accident.”

The regular earnings formula calculates the worker’s average earnings 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. This formula normally excludes overtime, special reimbursements, allowances and bonuses.

The average yearly earnings formula is used when a worker has an irregular earnings pattern due to the nature of their work, for example, as a seasonal worker, contract worker, pieceworker, or with fluctuating overtime. Average yearly earnings include any verifiable remuneration that the worker received from employment and employment insurance benefits, and includes overtime, special reimbursements, allowances and/or bonuses. Under this formula, the WCB will generally rely on data from any consecutive 12-month period occurring during the one or two years before the date of the accident but may choose one or more consecutive 12-month periods from any of the previous five calendar years if 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. Although 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 was represented by legal counsel in the appeal. The worker outlined their position in the Appeal of Claims Decision form, dated March 8, 2023, and their lawyer set out the worker’s position in correspondence to the Appeal Commission received on June 14, 2023.

The worker’s Appeal form sets out that the worker has been in pain since the date of the accident and feels that they are being “punished for having an accident” in that the wage loss benefits paid by the WCB are significantly less than the worker’s daily earning rate of $750.00 in their pre-accident work. The worker noted they remain unable to return to work due to the pain and weakness in their shoulder and are struggling to make ends meet based on the WCB wage loss benefits they are receiving.

The worker’s counsel outlined the worker’s position that the WCB’s calculation of the worker’s average earnings is not fair and reasonable, suggesting that the WCB should rather have determined the worker’s probable yearly earning capacity based on the worker’s earnings in 2022 to the date of their injury. Alternatively, the WCB should have relied upon an average of the worker’s 2021 and 2022 earnings to the date of injury. The worker’s position is that use of either of these two approaches would more fairly compensate the worker; whereas the use of the 5-year average does not achieve that result but creates an injustice to the worker.

Counsel submitted that the use of the 5-year average earnings formula is not appropriate because the worker’s income fluctuated significantly from 2017 through 2021. The worker’s income earning capacity in these years was impacted by the worker’s childcare responsibilities, which limited the worker’s ability to take on more lucrative work away from home until the child was older and did not need the same level of care, which the worker stated began in 2021. The worker’s income was also reduced due to the Covid-19 pandemic which resulted in restrictions that limited the work available to the worker in 2020, and when those restrictions were lifted in 2021, the worker’s income was again increased. Further, the worker was promoted in 2021 which increased their rate of pay and income going forward.

For these reasons, the worker submits that their appeal should be granted.

Employer’s Position

The employer did not participate in the appeal.

Analysis

This appeal considers firstly whether the worker’s initial weekly wage loss benefit rate was correctly calculated and secondly, whether the worker’s average earnings were correctly calculated. For the appeal to succeed, the panel would have to determine that the WCB did not correctly apply the provisions of the Act and Policy in calculating the worker’s initial weekly wage loss benefit rate or in calculating the worker’s average earnings. As outlined in the reasons that follow, the panel was unable to make such a finding in respect of the initial weekly wage loss benefit rate but was able to make such a finding in relation to the calculation of the worker’s average earnings. Therefore, the worker’s appeal is granted in part.

When a claim is first accepted, the Policy permits the WCB to establish a worker’s short term average earnings based on the formula that best allows for expeditious payment of benefits and most accurately approximates the worker’s average earnings at the date of accident, which may later be recalculated upon receipt of verifiable information. In this case, the file evidence documents that the worker’s interim average earnings were initially calculated on June 29, 2022 based on the worker’s overall period of employment earnings from August 6, 2021 to the date of accident, at $1325.99 per week. Then, the file documents that the WCB, upon obtaining further information from the employer, recalculated the short term average earnings amount on July 8, 2022, based on the worker’s most recent period of employment, at $3937.50 per week, which was applied from the date of accident.

In considering whether the worker’s initial weekly wage loss benefit rate was correctly calculated, the panel considered that the worker’s short term average earnings amount as established on July 8, 2022, when annualized, exceeded the maximum annual earnings in relation to an accident occurring in 2022, set by s 46 of the Act at $150,000. For this reason, the worker’s initial wage loss benefits were adjusted and recalculated based on the maximum annual earnings amount. The panel finds that this approach was appropriate in light of the applicable statutory requirements and the provisions of the Policy.

On the basis of the evidence before the panel, and on the standard of a balance of probabilities we find that the worker’s initial weekly wage loss benefit was correctly calculated.

In establishing a worker’s wage loss benefit rate, the Act requires that the WCB calculate the worker’s average earnings before the accident, from employment and employment insurance benefits. The Policy sets out three possible methods that the WCB will use in determining a worker's average earnings. The first relies on the worker’s actual earnings from all work impacted by their injury as of the date of accident. The second is based on the worker’s historical earnings, averaged, over any 12 month period in the 1, 2 or up to 5 years prior to the date of the accident. The third formula projects what the worker’s income would have been in the 12 months after the accident, based on their earnings at the time of the accident, and adjusted.

The Policy outlines that the formula to be used is the one that “best represents the worker’s employment and earnings pattern before the accident.” The regular earnings formula is used when the worker has regular employment income that does not fluctuate over the course of a year, but when a worker’s income is more irregular, whether due to season fluctuations, contract or piece work, or variable overtime, the average yearly earnings formula may be used to produce “a more accurate reflection of the worker’s employment and earnings pattern before the accident.” To calculate a worker’s average earnings under average yearly earnings formula, 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. The probable earnings formula is used when the regular earnings and average yearly earnings formulae do not accurately reflect what the worker’s average earnings would likely have been but for the accident, based on circumstances such as a change in the worker’s employment status or circumstances.

In considering whether the worker’s average earnings were correctly calculated, the panel considered the evidence that the worker is a contract worker, without guarantee of ongoing employment beyond the contract periods, with a history of working in the same industry with periods of employment interspersed with periods of unemployment. We also noted the evidence of significant fluctuations in the worker’s income over the course of the 5 years prior to the workplace accident. In these circumstances, we are satisfied that it would not be appropriate to rely upon the regular earnings formula; rather, we find that use of the average yearly earnings formula would more accurately reflect the worker’s irregular earnings pattern, as the evidence here demonstrates just such a pattern in the worker’s earning history.

The file evidence indicates the worker’s calendar year earnings for 2017 – 2021 as follows:

2021 $126,138 

2020 $48,997 

2019 $76,800 

2018 $63,569 

2017 $80,992

The evidence further indicates that the worker’s ability to earn income was significantly and negatively impacted in 2020 by workplace closures arising out of the global pandemic. The worker’s evidence is that their income was also impacted prior to 2021 by their childcare responsibilities, which did not permit the worker to take on work away from home. The panel further noted that the worker only began working for this employer in 2021.

While the worker also indicated that they received an increase in their daily rate from $750/day to $800/day, with a promotion to a supervisor role in 2021, the employer’s evidence confirms that at the time of the accident, the worker was earning $750/day. The panel sought further information from the worker to support their assertion and noted that the information provided confirms only that in a particular pay period in 2022, the worker was paid $800/day. We noted however that the worker, in their earlier communications with the WCB, indicated consistently that they were earning $750/day at the time of the accident. In light of the file information provided by both the worker and the employer, the panel is not able to extrapolate from this single pay stub that the worker was earning the higher amount since 2021 as they claimed.

Counsel for the worker also argued that the panel should consider application of the probable yearly earning capacity formula. The panel noted that this formula is only to be used when the formulas for regular earnings and average yearly earnings do not accurately reflect what the worker’s average earnings would have been but for the accident. We noted that none of the circumstances described in the Policy where this formula is appropriate are applicable to the worker.

Having determined that the average yearly earnings formula is the one that best reflects the worker’s earnings at the time of the accident, the panel considered whether it was appropriate to rely on any consecutive 12-month period during the one or two years before the accident, or if it should choose one or more consecutive 12-month periods from the previous five calendar years, as permitted by the Policy. We noted that although the worker’s income fluctuated, both upward and downward, year over year during the five years from 2017 – 2021, the overall trendline indicates an increasing income. Further we noted that the worker’s income in 2020 was adversely affected by circumstances outside the worker’s control, and as such find it would be inaccurate to take that year’s income into account in averaging the worker’s income. We further noted that the worker began working with the accident employer in 2021, and as such, in all these circumstances, we are satisfied that the 12 month period, being the calendar year of 2021, provides the most accurate reflection of the worker’s employment and earnings pattern before the accident. The panel finds that this approach most accurately reflects the worker’s employment and earnings pattern before the accident, as required by the Policy.

On the basis of the evidence before the panel and applying the standard of a balance of probabilities, the panel is satisfied that the 5-year average yearly earnings formula used by the WCB in calculating the worker’s average earnings does not best represent the worker’s employment and earnings pattern before the accident, and that the average yearly earnings formula should rather be based upon the worker’s average earnings for the 2021 calendar year.

Therefore, the worker’s appeal on the first question is denied, and the worker’s appeal on the second question is granted.

Panel Members

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

Recording Secretary, J. Lee

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

Signed at Winnipeg this 24th day of November, 2023