Transferring a Firm’s Experience
Effective date: December 1, 2016
Application: All employer accounts.
Policy subject: Rate setting, classification, and experience
To establish guidelines for transferring a firm’s experience.
Experience is an employer’s claims and premium history.
Original firm means the firm that the business operations or assets are moving from.
Successor firm means the firm that the business operations or assets are moving to.
- The Workers’ Compensation Act, 2013 (the “Act”) authorizes the WCB to:
- Set the assessments of employers at different amounts related to the hazards or activities of each employer (Section 138), and
- Adopt a system of merit rating (Section 139).
- This policy establishes the process for transferring a firm’s experience from one:
- Firm to another, and/or
- Classification to another.
- The WCB will determine if the original firm’s experience should be transferred to the successor firm in situations including, but not limited to, the following:
- Ownership or a significant portion of ownership changes.
- Significant aspects of the business activities change.
- Assets move between firms.
- The WCB transfers experience to ensure an appropriate premium rate is charged.
- If the WCB transfers the original firm’s experience to the successor firm, the WCB will use the combined experience to determine the successor firm’s premiums.
Transfer of experience from one firm to another
- The WCB considers firms to be affiliated when:
- A firm’s business activities are supportive to another business (e.g., administration).
- There is common ownership between two firms operating in a similar industry (e.g., one firm controls another firm or both firms are controlled by the same group of people), or
- Family members, either immediate or extended, have the ability or power to direct or cause the direction of the management of the firm’s business operations (e.g., a child or other family member has the power to direct the management of the parents/family business operations).
- In most cases, the WCB will not transfer the original firm’s experience to the successor firm if the firms are not affiliated.
- In most cases, the WCB will transfer the original firm’s experience to the successor firm if the:
- Firms are affiliated, or
- Change in ownership results from a share purchase.
- If the WCB determines that the original firm’s experience should transfer to the successor firm, the effective date of the transfer will be January 1st of the year the business ownership, operations or assets move.
Transfer of experience from one classification to another
- The WCB will transfer the firm’s experience from one industry classification to another if the:
- Nature of the business has gradually changed and the current industry classification is no longer appropriate, or
- Firm is misclassified.
- In most cases, the WCB will not transfer experience from one classification to another if the firm:
- Starts a new operation in a different industry, or
- Operates in more than one industry and they are eligible for an additional industry classification.
- The effective date of the transfer will be determined by POL 01/2020, Classification Change.
POL 01/98 New Accounts, Opening of and Carry-Forward of Cost Histories after Reorganization in Business