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 average earnings have been correctly calculated. 

2. Their deemed earning capacity has been correctly determined; 

3. They have been overpaid benefits; and 

4. They are required to repay the overpayment.

A hearing was held on March 5, 2025 to consider the worker's appeal.

Issue

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

2. Whether or not the worker's deemed earning capacity has been correctly determined; 

3. Whether or not the worker has been overpaid benefits; and 

4. Whether or not the worker is required to repay the overpayment.

Decision

1. The panel refers this issue back to the WCB for further investigation; 

2. The worker's deemed earning capacity has been correctly determined; 

3. The worker has been overpaid benefits; and 

4. The panel refers this issue back to the WCB for further investigation into undue hardship.

Background

The worker has an accepted WCB claim for a lower back injury that occurred at work on March 21, 2011. The worker's accepted diagnosis is left L5 and S1 radiculopathies secondary to spondylosis and spondylosis causing L5-S1 narrowing and spondylolisthesis. The worker underwent spinal surgery on August 18, 2011, and by June 2013, was placed into early vocational rehabilitation services by the WCB as it was determined the worker was nearing maximum medical improvement and their restrictions would be made permanent by the end of 2013.

On March 29, 2016, the worker requested reconsideration of the WCB's decision to deem them based on their actual earnings within National Occupation Classification (NOC) 2263, Occupational Health and Safety, and placed the worker back on full wage loss benefits while a new vocational rehabilitation plan was developed. A new vocational rehabilitation plan was created for the worker under NOC 6552, Other customer and information services representatives, starting on June 5, 2017 and ending on September 13, 2017, and included job search assistance. Once completed, the WCB determined the worker would be capable of earning the starting wage of NOC 6552, if they had not found employment. As the worker had obtained part-time employment, they were paid partial wage loss benefits as of August 28, 2017. The worker requested reconsideration of the WCB's decision on their partial wage loss benefits, as they were working part time hours and earning less than the deemed earning capacity; however, on July 10, 2018, the Review Office determined reducing the worker's wage loss benefits based on the deemed earning capacity was correct.

The worker's earnings were subject to annual indexing with a new earning capacity established in April 2019. The worker's earning capacity was indexed in April 2020, however, the WCB requested and received a copy of the worker's 2019 income tax information and determined on August 12, 2020 that the worker had been overpaid. Based on the income information received, the WCB established a new earning capacity for the worker on August 24, 2020. The worker's earning capacity was indexed again in April 2021 and April 2022 with income tax information received for each year indicating the worker had been overpaid wage loss benefits due to underreporting of income.

The WCB provided a letter to the worker on August 12, 2022 indicating the amount of the overpayment for 2021 and advising that since their earnings were close to their pre-accident earnings, they were not entitled to further wage loss benefits. A review of their 2022 income tax information would be undertaken to calculate if any further earnings were due. It was noted the worker was responsible to repay the overpayment and their file was being forwarded to the WCB's Collections Department for further action.

On June 28, 2023, the worker requested reconsideration of the WCB's decision their average earnings were correctly calculated to the Review Office. The worker noted that if they had not been injured, their earning capacity would have been greater than what the WCB had initially calculated. On August 29, 2023, the Review Office wrote to the worker to advise the issues of whether or not they had been overpaid benefits and if they were responsible to repay the overpayment would be added to their appeal with the Review Office.

The Review Office determined on October 3, 2023 that the worker's average earnings had been correctly calculated, the worker had been overpaid benefits and the worker was required to repay the overpayment. The Review Office found the worker's average earnings were based on the projected earnings for their pre-accident trade and their earnings were indexed annually to capture any average wage increase and as such, the worker's average earnings were correctly calculated. With respect to the overpayment, the Review Office found the worker had not reported increases in their gross earnings but once the WCB confirmed the worker's earnings through their income tax returns, it was determined their earnings were higher than the average earnings calculated on file and accordingly, the worker was overpaid. The Review Office determined the overpayment calculations were performed correctly, and the worker was responsible to repay the overpayment.

The worker filed an appeal with the Appeal Commission, and a hearing was arranged. Following the hearing, the appeal panel requested additional information prior to discussing the case further. The requested information was later received and was forwarded to the interested parties for comment. On July 2, 2025, the appeal panel met further 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.

A worker is entitled to benefits under Section 4(1) of the Act when it is established that a worker has sustained a personal injury arising out of and in the course of employment. Under Section 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 Section 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.

Section 45 of the Act outlines the method to calculate a worker’s average pre-accident earnings and provides that the WCB shall calculate the average earnings based on the income from employment and employment insurance benefits, and over such a period of time, as the board considers fair and just.

The WCB established Policy 44.80.10.10, Average Earnings (the “Average Earnings Policy”), which outlines how the WCB will determine a worker’s average earnings at the time of a compensable injury. The Average Earnings Policy outlines three formulae to determine a worker’s average earnings and sets out that the formula used is the one that “best represents the worker’s employment and earnings pattern before the accident.” There are 3 separate earnings formulae that can be used depending on the circumstances.

• 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, if 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.

The WCB has also established Policy 44.80.30.20, Post Accident Earnings - Deemed Earning Capacity (the “Deeming Policy”) which describes when the WCB will determine a worker is capable of earning more than they are actually earning. In those circumstances, the WCB will deem an amount that the worker could earn and will include it in the calculation of post-accident earning capacity as if it were earned. The Deeming Policy outlines requirements that the WCB must demonstrate for income to be deemed, which include, in paragraph 3 of the Policy, the following:

a) The WCB must demonstrate (through adequate vocational assessment, plan development, and documentation) that the worker is capable of competitively finding, competing for, obtaining, and keeping employment in the occupation or group of occupations on which the earning capacity is based. 

b) The WCB must demonstrate that the worker has the physical capacity, education, skills, aptitudes, interests, and personal qualities needed to obtain and keep employment in the occupation or group of occupations in the labour market. 

c) The WCB must demonstrate that work exists for the occupation or group of occupations on which the earning capacity is to be based. 

d) The WCB will use the Individualized Written Rehabilitation Plan (or similar format) as described in WCB policy 43.00, Vocational Rehabilitation, as the basis for collecting and weighing information about the worker's earning capacity.

Section 109.2 of the Act provides that where a worker receives an overpayment of compensation, being an amount that the Board determines in excess of that to which the person is entitled, the WCB may recover the overpayment as a debt due to the Board.

WCB Policy 35.40.50, Overpayment of Benefits (the "Overpayment Policy"), establishes the framework of preventing, recovering and writing off overpayments. The Overpayments Policy sets out the principles established by the WCB Board of Directors to guide the WCB in its recovery of overpayments. The Overpayment Policy states in part that:

All overpayments will be pursued for recovery when:

B. Recovery of overpayments: 

All overpayments will be pursued for recovery when: 

1. The overpayment is a result of an administrative error that the injured worker or worker’s dependent is notified of within 30 days of it occurring. Administrative errors noted after 30 days will be pursued if the injured worker or/injured worker’s dependent could or should have been aware of the error. These are not adjudicative or entitlement decision errors. These are errors made by the WCB in implementing a decision, i.e. adjustments made to earnings to correct clerical or mathematical errors; 

2. There is evidence of fraud, deliberate misrepresentation, delays in providing or withholding of key information by the injured worker or worker's dependant affecting benefit entitlement; or 

3. There is a duplication of benefits paid from another source for the same injury, for example Long Term Disability or CPP disability benefits. 

…

IV. Decision not to proceed with recovery of an overpayment:

The WCB will not pursue an overpayment when: 

1. the overpayment is less than $50; or 

2. the overpayment resulted from an adjudicative or entitlement decision reversal at the primary level, Review Office or Appeal Commission.

With the exception of those overpayments resulting from fraud, deliberate misrepresentation, withholding of key information by the worker or dependant or duplication of benefits paid from another source for the same injury, the WCB may decide not to pursue an overpayment when: 

1. the receivable amount is not cost-effective to pursue; 

2. recovery of the overpayment, in whole or in part, would create financial hardship for the injured worker or the worker’s dependant; 

3. the individual who received the overpayment has died without sufficient funds in the estate to cover the overpayment; or 

4. the overpayment occurred more than three years prior to its discovery by the WCB.

Worker’s Position

The worker was present at the hearing, provided a written submission in advance of the hearing and made an oral presentation to the panel at the hearing. The worker answered questions posed by the panel.

The worker’s position with respect to the calculation of their average earnings is that they were not calculated correctly. The worker states that they worked 40 hours per week, and sometimes up to 60 hours per week. The worker described working for a union and was hired for contract projects. The worker notes that the evidence on file confirms that the WCB was aware that the worker worked 40 hours per week. The worker argues that the WCB used the incorrect amount of hours in determining their average earnings.

The worker further argues that the WCB erred in concluding that the worker would have been laid off by the employer after the project they were working on ended. The worker states that it was their union that found them employment and that there would have been available work after the completion of the contract they were working on at the time of their injury.

As it relates to the issue of the worker’s deemed earning capacity, the worker’s position is that there were periods of time that the worker was earning less than the deemed earning capacity and the WCB should have calculated the difference at the end of the year and paid the worker the difference (essentially a “top up”). The worker argues that they never received a top up for those years where they earned less than the deemed amount.

With respect to the overpayment of benefits, the worker relies on a letter from the WCB from May 14, 2018, which provides as follows:

“…..if after a year you have earned less monies from your employer than the [partial wage loss] paid to you reflects, there will be an adjustment made with payment from WCB to make up the difference. By the same token, if you have earned more with the employer and have been overpaid [partial wage loss] benefits, you will pay that back, that amount back to WCB."

It is the worker’s position that they should not be responsible for the overpayment as the WCB was aware or ought to have been aware that the overpayment was occurring. The worker states that the WCB advised them that they no longer needed to provide income information, and that they did not have to report their income to the WCB. The worker states that if they had continued sending in their income information (pay statements) diligently as they had been doing, the overpayment would not have occurred. Therefore, the worker states that the WCB should be responsible for the error in overpayment. The worker also argues that they were financially unable to repay the overpayment.

Employer’s Position

The employer did not participate in the appeal.

Analysis

There are 4 issues before the panel. They are set out below.

Issue 1: Whether or not the WCB correctly calculated the worker’s average earnings. For the worker’s appeal to succeed, the panel would have to determine that the WCB failed to apply the correct formula in calculating the worker’s average earnings, or that in applying the formula, the WCB erred in applying the provisions of the Average Earnings Policy. As detailed in the reasons that follow, the panel found that the investigation into the worker’s pre-accident employment was lacking. Therefore, the panel returns the matter to the WCB for further investigation.

In considering this issue, the panel took note of the worker’s evidence that work was available to them had they not been injured. This is in direct contrast to the evidence relied on by the WCB in making their decision, which is that the project the worker was working on at the time of their injury would have been concluded and the worker would have been laid off from employment.

The WCB used the date of the worker’s injury and the end date of the project the worker was hired to work on for their calculations. The worker argued that their average earnings calculation should have been based on 40-hour work weeks, rather than 34.77 hours per week as was set out in a WCB memorandum dated October 21, 2013. The WCB confirmed that the average number of hours per week was based on a weekly average and that this formula is used when a worker’s hours per week fluctuate, the worker has overtime or experiences periods of layoff. As a result of the worker’s evidence that they consistently worked 40-hour work weeks, the panel sought additional information, and the worker provided a letter from their union which stated that during the period of the worker’s injury there were a few major projects which meant the employment opportunities and demand for workers was high. The letter from the union confirmed that work would have been available for the worker after their contract was done.

The WCB confirmed in a memorandum dated June 13, 2025 that the new information received from the worker’s union would have an impact on the 2013 average earnings decision. Therefore, the panel returns the matter to the WCB to conduct further investigation and recalculate the worker’s average earnings.

Issue 2: Whether or not the WCB correctly calculated the worker’s deemed earning capacity. For the worker’s appeal to succeed, the panel would have to determine that the WCB erred in their calculation of the deemed earning capacity. The panel finds that the worker’s deemed earning capacity was correctly calculated. The worker’s deemed earnings relates to what the worker could reasonably earn.

The worker did not provide arguments respecting the deemed amount, but rather expressed concerns regarding the appropriateness of the VR program and the NOC and customer service.

The panel is not tasked with assessing whether or not the VR plan was appropriate, however, it is noted that a VR plan was developed for NOC 6552, and the WCB demonstrated that the worker was capable of finding employment in that NOC, physically capable of working in that NOC and that work existed in that NOC.

The panel finds that the WCB followed the Deeming Policy in determining the income the worker could earn. There is no evidence before the panel to support a finding that the deemed earning capacity was incorrectly calculated.

Therefore, the panel find that the worker’s deemed earning capacity was correctly determined.

The worker’s appeal is denied.

Issue 3: Whether or not the worker has been overpaid benefits. For the worker's appeal on this issue to be successful, the panel must find that the wage loss benefits paid to the worker by the WCB did not constitute an overpayment. The panel is unable to make that finding, for the reasons that follow.

The worker argued that the WCB indicated to them that if they earned less than the partial wage loss there would be an adjustment, and states that they never received any adjustments and therefore the difference was never made up.

The panel reviewed the overpayment calculations and concludes that the WCB correctly calculated the overpayment. The WCB did annual adjustments and requested tax information, which they eventually needed to obtain directly from the CRA.

The evidence before the panel does not show there was an error in calculating the benefits and therefore, the finding that the worker received amounts in excess of that which they were entitled is correct. The panel finds that the worker has been overpaid wage loss benefits.

The worker’s appeal is denied.

Issue 4: Whether or not the worker is required to repay the overpayment. For the worker's appeal on this issue to be successful, the panel must find that the wage loss benefits paid to the worker should not be pursued for recovery. The panel is unable to make that finding, for the reasons that follow.

The evidence before the panel is that the worker indicated their financial hardship to the WCB. There is evidence that the WCB was aware that the worker had filed for bankruptcy and was paying bankruptcy fees, which should have alerted the WCB to determine whether recovery of the overpayment, in whole or in part, would create financial hardship for the worker.

Accordingly, the panel finds that a determination whether the worker is responsible to repay the overpayment is premature as the WCB has not considered whether the worker will experience undue hardship by the repayment. The WCB ought to have confirmed whether the repayment would have caused this worker hardship. Therefore, the panel returns the file to the WCB to appropriately consider the requirements under the Overpayment Policy and its Administrative

Panel Members

R. Lemieux Howard, Presiding Officer
J. Peterson, Commissioner
M. Kernaghan, Commissioner

Recording Secretary, J. Lee

R. Lemieux Howard - Presiding Officer
(on behalf of the panel)

Signed at Winnipeg this 22nd day of August, 2025