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Document name
Calculation of Probable Compensation
Document number
POL 03/2007
Effective date: February 28, 2007
Application: Applies to all claims.
Policy subject: Benefits for Workers - Initial benefits
Purpose:
To explain the calculation of net compensation.
BACKGROUND
- Section 2(1)(k)(ii) of The Workers’ Compensation Act, 2013 (the “Act”) states that net earnings shall be the worker’s “gross earnings from employment less the probable deductions for:
(a) the probable income tax payable by the worker calculated by using only the worker’s earnings from employment as their income, and using only the worker’s basic personal exemption, exemption for dependants and employment-related tax credits, as at the date of the worker’s injury and each anniversary date, as the worker’s deductions;
(b) the probable Canada Pension Plan premiums payable by the worker; and
(c) the probable employment insurance premiums payable by the worker.”
- Section 68(1)(b) of the Act states that a worker who sustains an injury on or after this clause comes into force shall be compensated for their earnings loss "in an amount equal to 90% of that loss of earnings."
- Section 2(3) of the Act states the Workers’ Compensation Board (WCB) must annually establish a schedule setting out a table of earnings and probable compensation from employment for the purposes of Section 2(1)(k).
- New tables must be calculated and published on each occasion where there is a legislated change to income tax deductions either federally or provincially.
POLICY
- For all legislated changes to the base calculations, WCB will publish revised tables of earnings and incorporate them into the calculation of "net earnings loss" when income tax changes become available.
- As per Sections 2(1)(k) and 68 of the Act, a worker’s net earnings will be calculated based on gross earnings from employment, less the probable deductions for tax credits and/or tax exemptions. Probable deductions will be based upon the information that the worker has authorized the employer to deduct from their employment earnings for income tax purposes and which is available as of the commencement of the loss of earnings.
- Where, after the initial commencement of loss of earnings, a change occurs to the following:
- Tax exemption status (TD1), or
- WCB tax tables (due to federal and/or provincial government announcements regarding retroactive income tax changes)
- the wage base will be adjusted in the current year, on the anniversary of the worker’s commencement of loss date.
- A worker’s original wage base will not be adjusted retroactively, unless it is determined that information used to establish the initial wage base was incorrect (POL 06/2016, Establishing Initial Wage Base).
Policy references
Section heading
Legislative Authority
Legislative Authority
The Workers’ Compensation Act, 2013
2(1)(k), 2(3), 37, 68(1)(b)
Section heading
Document History
Document History
(1) May 9, 2022. Housekeeping change to policy to update terminology.
(2) January 1, 2018. Title updated from Calculation of Net Compensation Payable to Calculation of Probable Compensation to ensure consistency with terminology in the Act.
(3) January 1, 2014. References updated in accordance with The Workers’ Compensation Act, 2013.
(4) October 1, 2013. Policy review completed.
(5) June 4, 2010. Policy review completed.
(6) POL 10/1988, Sections 68 3(b) and (4) – Calculation of Net Compensation Payable (effective April 20, 1988 to February 27, 2007).
