Employee's commission varies significantly from week to week
Question: How is workers' compensation determined for an employee who is paid by commission and has significantly different amounts from one pay to another? Are performance and sales bonuses factored in?
Answer: In Ontario, it is the policy of the Workplace Safety and Insurance Board (WSIB) to consider earnings derived from commissions and bonuses as insurable earnings. Typically, when a worker covered by the Workplace Safety and Insurance Act (WSIA) is injured, the WSIB will pay the worker loss of earnings (LOE) benefits for the first 12 weeks based on her short-term average earnings. LOE benefits account for 85 per cent of an injured worker’s take home pay prior to the accident.
If a worker’s earnings vary from day to day or week to week due to irregular hours or because her salary is based on irregular commissions and bonuses, the average of the worker’s total earnings in the four weeks before the injury are used as the short-term average earnings. Oftentimes, LOE benefits will continue to be paid to the worker beyond the 12-month mark on the basis of her short-term average earnings.
However, in some circumstances, if it would be unfair to continue paying LOE benefits to the worker beyond the 12th week based on her short-term average earnings, the worker’s average earnings can be recalculated based on her long-term average earnings.
An example of such a situation would be where the worker’s short-term average earnings profile does not reflect her long-term average earnings profile on account of the fact the worker earned irregular bonuses or commissions prior to her workplace accident that are not accurately reflected in the four-week period prior to her injury.
Where that worker was in a permanent and regular job, either the worker or the employer may request, after the first 12 weeks, that the WSIB recalculate the worker’s average earnings based on her long-term average earnings in the 12 months before the injury. Conversely, where that worker was in a non-permanent or irregular job, a WSIB adjudicator will automatically recalculate the worker’s average earnings at the 12-week mark based on her long-term average earnings in the 24 months before the injury.
According to the WSIB, permanent employment exists where:
•The worker is employed (by the employer) 52 weeks a year, with no seasonal or cyclical layoffs.
•The worker has no set termination date, apart from retirement.
•The worker is full- or part-time.
•The worker has earnings that vary from day to day or week to week due to irregular hours or method of payment. Moreover, workers in permanent employment may include workers whose salary is based solely on commissions.
Thanks to my colleague at Miller Thomson LLP, Erik Marshall, for this response.
Stuart Rudner is a partner who practices commercial litigation and employment law with Miller Thomson LLP’s Toronto office. He can be reached at (416) 595-8672 or [email protected]
