Decision #93/24 - Type: Workers Compensation

Preamble

The worker is appealing the decision made by the Workers Compensation Board ("WCB") that they are not entitled to an annuity. A file review was held on September 16, 2024 to consider the worker's appeal.

Issue

Whether or not the worker is entitled to an annuity.

Decision

The worker is not entitled to an annuity.

Background

The worker has an accepted WCB claim for a low back injury that occurred at work on October 10, 2013, which was later diagnosed as an L4-L5 disc sequestration. Wage loss and medical aid benefits were paid to the worker starting on the date of accident. In February 2014, the worker returned to work on modified duties at reduced hours. The worker underwent surgery in May 2014, later returning to full regular duties in July 2014 and later missed additional time in July 2018, returning again to modified duties on reduced hours in October 2018 and full regular duties in November 2018. On September 27, 2019, the worker underwent a further surgery consisting of an L4-L5 decompression, fusion and fixation and a bilateral foraminotomy.

As part of the adjudication of the worker’s claim, the WCB wrote to the employer on May 19, 2020 to advise that pursuant to the Act, as the worker’s claim will reach 104 weeks of wage loss benefits as of July 5, 2020, the worker may be entitled to an annuity retirement account. The WCB requested information from the employer regarding contributions made to the worker’s pension prior to and after the October 10, 2013 workplace accident up to July 5, 2020 to determine if the worker was eligible. On May 20, 2020, the employer advised the WCB contributions to the worker’s pension were continuing as if the worker was still working. The WCB advised the worker on May 27, 2020, they were not entitled to an annuity retirement account as of July 5, 2020, as the employer continued to contribute to their pension and as a result, they did not suffer a loss.

After discussions between the WCB, the employer and the worker, the worker returned to sedentary duties on reduced hours in September 2020. Further discussions took place between the parties at various times in relation to the employer’s ability to accommodate the worker’s restrictions. At the request of the WCB, the worker attended for a call-in examination with a WCB medical advisor on December 8, 2022 where permanent restrictions of sedentary duties with accommodations to sit and stand as tolerated and modified hours, up to 5 hours per day and 25 hours per week were placed. The employer advised they were not able to accommodate the worker’s restrictions and the WCB referred the worker for vocational rehabilitation services. The Deem Recommendation placed to the worker’s file on July 14, 2023, indicated based on the worker’s compensable and non-compensable difficulties, in the opinion of the WCB’s vocational rehabilitation consultant, the worker was determined to be “…competitively unemployable with benefits to continue until the age of retirement.” The WCB’s Deem Committee accepted the consultant’s recommendation.

On August 14, 2023, the worker’s WCB case manager had an email discussion with the worker regarding their entitlement to a retirement annuity. The case manager advised they had requested clarification from a WCB senior payment specialist who confirmed enrollment in a WCB retirement annuity was open at 104 weeks of wage loss benefits, which for the worker was July 5, 2020, after which there is no further option to enroll after that time. A formal decision letter was provided to the worker on August 30, 2023.

The worker’s representative requested reconsideration of the WCB’s decision on the worker’s entitlement to annuity to Review Office on November 8, 2023. The representative argued that when the worker was deemed unemployable by the WCB in December 2022, they were taken off the employer’s payroll and placed on long term wage loss by the WCB. This meant the employer was no longer contributing to the worker’s pension, as had been previously determined. As the worker’s opportunity to enroll in a WCB retirement annuity had closed in July 2020, it was noted this placed the worker at a disadvantage as they no longer had the ability to contribute to a pension.

Review Office determined on November 17, 2023, the worker was not entitled to an annuity. Review Office found the evidence demonstrated when the worker’s eligibility to enroll in a WCB retirement annuity was open, the employer had advised they were contributing to the worker’s pension and as such, neither the WCB nor the worker were able to contribute. Review Office further found there was no provision in the WCB’s policies or legislation to allow for a modification of that entitlement due to a change in the worker’s circumstance after the entitlement period ends.

The worker’s representative filed an appeal with the Appeal Commission on June 14, 2024 and a hearing was arranged.

Reasons

Applicable Legislation:

The Appeal Commission and its panels are bound by The Workers Compensation Act (the “Act”), regulations and policies of the Board of Directors. As the worker’s claim was made in 2013, their benefits are assessed under the Act as it existed at that time (the “2013 Act”).

Section 42 of the 2013 Act provides for a retirement annuity and reads as follows:

Definitions

42(1), In this section,

"contribution rate" means the contribution made by an employer to a pension plan for the benefit of a worker as a percentage of the worker's pre-accident earnings;

"qualifying period" means a total period of 24 months during which a worker receives wage loss benefits.

Board's contribution to annuity

42(2) Where wage loss benefits are paid to a worker after the qualifying period, the board must invest on the worker's behalf an amount equal to the following percentage of future wage loss benefits payable to the worker under this Part:

(a) where the employer's contribution rate before the accident was 5% or less, the difference between 5% and the employer's contribution rate after the qualifying period;

(b) where the employer's contribution rate before the accident was more than 5% but did not exceed 7%, the difference between the employer's contribution rate before the accident and the employer's contribution rate after the qualifying period;

(c) where the employer's contribution rate before the accident was more than 7%, the difference between 7% and the employer's contribution rate after the qualifying period;

but in no case may the amount be less than zero.

Worker may contribute to annuity

42(3) For the purpose of investment under this section, a worker may, in writing, in a form and manner acceptable to the board, within three months after the qualifying period, advise the board that the worker elects to contribute an amount of not more than the amount contributed by the board under this section. The amount must be deducted from the wage loss benefits paid to the worker and added to the amount under subsection (2).

Establishment of annuity for retirement

42(4) The amounts referred to in subsections (2) and (3), together with accrued interest, must be used to provide an annuity for the worker at retirement.

42(5) Repealed, S.M. 2005, c. 17, s. 29.

Use of annuity funds

42(6) The amounts referred to under subsections (2) and (3) may be retained in the accident fund and administered by the board or, on the request of the worker, paid into a registered pension plan.

Payment of lump sum instead of annuity

42(7) Where the amounts referred to under subsections (2) and (3) are retained in the accident fund and, at the time the worker is eligible to receive annuity payments, are less than an amount that may be determined by the board, the board may pay to the worker the accumulated capital and interest in lieu of an annuity.

Annuity payment on death of worker

42(8) Where a worker for whom contributions are made under this section dies before electing the type of annuity under subsection 36(2), the board shall pay

(a) where the worker is survived by a spouse or common-law partner, to that person a lump sum equivalent to the accumulated capital and interest; or

(b) where the worker is not survived by a spouse or common-law partner, to the estate of the worker a lump sum equivalent to the accumulated capital and interest.

Lump sum converted to annuity

42(9) Where the lump sum referred to in clause (8)(a) is greater than an amount that may be determined by the board, the board may, at the election of the spouse or common-law partner, convert the lump sum into an annuity to be retained in the accident fund and administered by the board.

Division of annuity benefits on marriage breakup

42(10) The amounts referred to under subsections (2) and (3) are a family asset as defined under The Family Property Act and, where a worker and his or her spouse or common-law partner live separate and apart, are subject to division in the manner set forth in The Pension Benefits Act.

Worker's Position:

The worker was represented by the Worker Advisor Office and made written submissions on the worker’s behalf prior to the Panel’s File Review. It was the worker's position that they ought to be entitled to a retirement annuity.

The worker indicated that the consequences of the current WCB interpretation leaves them, a worker who is totally disabled and unemployable for the remainder of their life, unable to contribute to a pension, annuity or Canada Pension plan for the remaining 16 years until their retirement. They noted that this resulted in a significant financial loss to the worker because of the workplace accident and the legislative gap the WCB’s interpretation creates. The worker indicated that they could face financial crisis in retirement because they were injured in a workplace accident.

The worker submitted that the WCB’s interpretation of section 42 was contrary to the intention of the Act and that the legislative intention of Section 42 is to ensure no worker has a significant financial loss in retirement as a result of a workplace accident that negatively affects their employer’s pension contribution.

The worker argued that on the modern principle of statutory interpretation, subsection 42(2) of the Act should be interpreted liberally as allowing for multiple calculations of the WCB’s retirement annuity contribution rate for a worker. This would allow the worker to receive benefits if the employer’s contribution were to change. The worker argued that this interpretation would also be consistent with calculations for other benefits that change as the circumstances surrounding the claim change.

The worker further submitted that the contentious phrase “after the qualifying period” is used multiple times in the immediate context of section 42 and its meaning can be presumed to be consistent. The WCB’s interpretation would result in Subsection 42(2) using the phrase in two very different ways in close succession.

The worker argued that there is no evidence that the legislature intended subsection 42(2) to be interpreted in a way that creates the legislative gap that they have fallen into. Rather, the scheme of the Act would better meet its objective with the liberal interpretation and that this is consistent with the legal norm that social welfare legislation should be interpreted in a way that advances its benevolent goals.

The worker also referenced the previous decision of the Appeal Commission, Decision 129/12, which was noted by the WCB in their submission. They indicated that Decision 129/12 relied on a subsection of section 42 that has been repealed. In addition, a previous version of the Act applied to the case in question and the wording of that version of the Act differed, distinguishing this Appeal from Decision 129/12.

As an alternative argument the worker noted that they did not receive Wage Loss Benefits (“WLB”) from the WCB directly until November 1, 2022. Previous to this, the worker received employment income from their employer who was reimbursed by WCB the amount of WLB that would have been payable under the Act to the worker. The worker took the position that because section 42 specifies that the 24 months of WLB must be paid to the worker, the date used for the qualifying period may be incorrect in this case.

WCB Position:

The WCB was given an opportunity to provide a submission on this appeal given the subject matter of the appeal and the fact that the decision could affect the WCB’s procedures in determining annuities.

In its submission, the WCB noted that the absence of language regarding recalculation of the annuity is indicative of the legislature's intent that the annuity be a one-time determination that is not subject to change. It further noted that the Act contemplates periodic adjustments or recalculations of payments to workers in other sections of the Act and had it been the intention of the legislation to include periodic adjustments in subsection 42(2) of the Act, there would be language to that effect located in that subsection.

The WCB further submitted that, when read alongside subsection 42(3) of the Act, it is clear that subsection 42(2) should be interpreted as being a one-time determination that is fixed immediately after the qualifying period has expired. This is because Subsection 42(3) allows a worker to contribute to the retirement annuity only if the worker informs the board in writing within three months after the qualifying period that the worker wishes to contribute the annuity. Accordingly, the worker's decision regarding their contribution must be made within the first three months after their qualifying period and is fixed from that time.

Finally, the WCB referenced Decision 129/12 where the Appeal Commission found the proper interpretation of subsection 42(2) of the Act, as it existed at that time, was that the board's annuity contribution is a fixed one-time determination following the qualifying period. The WCB noted that the wording of subsection 42(3) of the 1997 Act, which heavily influenced the Appeal Commission's decision in Decision #129/12, is very similar to the wording of subsection 42(3) of the 2013 Act.

Analysis:

The issue before the panel is whether or not the worker is entitled to an annuity. In order for the worker's appeal to succeed, the panel must find an authority in the Act or WCB policy which would entitle the worker to an annuity. The panel was unable to find such authority.

The Panel’s decision in this appeal focuses on the interpretation of the specific wording of section 42 and notes that it is not bound by previous decisions of the Appeal Panel.

The interpretation of the Act is silent with respect to whether a worker is entitled to one or more calculations regarding their annuity entitlement after the 24-month qualifying period. Accordingly, the Panel must limit its analysis to the wording of the Act to determine whether the Act should be interpreted to require subsequent calculations of a worker’s annuity entitlement. In this regard, the Panel found it persuasive that the legislature did not include specific language within the Act which would require subsequent calculations should the circumstances of a worker change after the qualifying period. The Panel notes that the Act does contain specific reference to entitlement calculations being adjusted subsequently for example at section 40(2) and could have easily included a requirement for subsequent entitlement calculations with respect to a worker’s annuity entitlement but did not. The Panel does not find the WCB’s interpretation of section 42(2) to be inconsistent with other sections of the Act. Rather, the Panel notes that such an interpretation of section 42(2) is consistent with section 42(3) which contemplates that a worker will be entitled to only one annuity entitlement calculation given it restricts the worker’s option to contribute to the annuity to a period of time within three (3) months after the qualifying period. Section 42(3) suggests that it was the intention of the legislature to limit a worker’s annuity entitlement calculation to a one-time calculation which is at a fixed point in time after the qualifying period.

In considering the worker’s position regarding interpreting the Act in accordance with the legislative purpose of the Act, the Panel notes that while limiting a worker to one annuity entitlement calculation may create hardship for some workers it conversely could create a benefit to other workers. This is because the WCB does not recalculate a worker's annuity entitlement should the worker’s pension be increased by their employer after the qualifying period. The Panel understands that in a situation whereby a worker’s pension contributions from their employer are increased after their annuity entitlement calculation, the WCB does not claw back or even reduce the annuity entitlement of the worker notwithstanding that the worker’s circumstances have changed such that they are receiving more in pension contributions from their employer than the amount upon which the worker’s annuity entitlement calculation was based. As such, the Panel is of the position that the current procedure used by the WCB does not necessarily run contrary to the legislative purpose of the Act, although the panel acknowledges that it could leave some workers at a financial disadvantage as is the case in this Appeal.

The worker notes that social welfare legislation should be interpreted in a way that advances its benevolent goals, however, the Panel finds that limiting a worker’s annuity entitlement calculation to one calculation does not oppose its goal of protecting workers from financial hardship due to a workplace accident. Rather the WCB’s interpretation of the annuity entitlement calculation appears to draw a line in the sand which allows the WCB to determine annuity entitlement in an efficient manner. The Panel does not deny that this line in the sand may create a disadvantage for some workers but it likewise creates an advantage to other workers for example those who have had their employer pension contributions increased after the qualifying period given that the WCB does not subsequently adjust the calculation to decrease an annuity entitlement.

Most importantly, the WCB’s interpretation of section 42 meets the legislative requirements of the Act as written. In other words, there is nothing in the Act, as written in 2013, that requires the WCB to make subsequent adjustments to a worker’s annuity entitlement calculation should the worker’s circumstances change. Should legislators find that such a requirement to adjust a worker’s annuity entitlement calculation ought to exist, it is open to the legislature to amend the wording of the Act to reflect same. However, the Act as written does not require such an adjustment to a worker’s annuity entitlement calculation and the Panel finds that a legislative amendment would be required in order to require subsequent adjustments to a worker's annuity entitlement calculation. The Panel is not prepared to read into the Act such a requirement given that it is not clear from the wording of the Act that the legislator intended for the WCB to make such an adjustment to a worker’s annuity entitlement calculation.

With respect to the worker’s alternative argument that the worker did not receive WLB from the WCB directly until November 1, 2022 and accordingly the qualifying period used by the WCB is incorrect, the Panel disagrees with the worker’s position on this issue. Although the worker did not receive WLB from the WCB directly until the termination of their employment in or about November 2022 this does not mean that WLB were not received by the worker. WLB which are paid to an employer instead of the worker directly are still considered WLB. Further, the Panel has found no authority for the proposition that any monies paid as WLB must be paid directly to the worker in order to be considered WLB for the purposes of an annuity entitlement calculation.

In sum, the Panel acknowledges that the WCB’s interpretation of section 42 may create a financial disadvantage for certain workers whose circumstances change after their annuity entitlement calculation. It may also create a financial advantage to others and accordingly, the WCB’s interpretation cannot necessarily be seen as a legislative gap within which the worker in this Appeal has fallen. In order to find that the worker is entitled to an annuity the Panel must be able to point to authority either in the Act or in a WCB policy that the worker is entitled to an adjustment to their annuity entitlement calculation in these circumstances. As indicated, the Panel finds no such authority and accordingly it is unable to determine the worker is entitled to an annuity given the wording of section 42 of the 2013 Act. Although the legislative purpose of the Act is to protect workers from financial disadvantage due to a workplace accident, the Panel feels that this purpose does not justify reading into the Act a requirement that is not established clearly in the wording of the Act. Any such requirement would place a large burden on the WCB to recalculate each worker’s annuity entitlement calculation going forward and thus the intention of this requirement would need to be established in the Act with clear and concise language. As written, the Panel finds no clear intention in the Act that the Manitoba legislature intended for the WCB to perform subsequent annuity entitlement calculations after the qualifying period, although it is open for the Manitoba legislature to amend the Act to reflect any such intention should it exist.

The Panel would like to thank the worker and their representative as well as the WCB’s legal representative for their very succinct and helpful submissions.

Panel Members

N. Smith, Presiding Officer
J. Peterson, Commissioner
M. Kernaghan, Commissioner

Recording Secretary, J. Lee

N. Smith - Presiding Officer
(on behalf of the panel)

Signed at Winnipeg this 9th day of October, 2024

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