Payroll administers payments long before an accident occurs
Workplace safety is considered a priority throughout most organizations. While employers need to be concerned with worker health and well-being, the payroll department is actually responsible for a lot more.
“There are a lot of different tasks that a payroll professional needs to do when dealing with workers’ compensation legislation,” says Marie-Pier Coulombe, a consultant with Carswell’s payroll consulting group in Toronto. “The first one is to understand which employees are covered by workers’ compensation.”
Most employees in Canada need to be covered by the worker’s compensation board (WCB) in their respective province. This includes students, part-time, full-time, casual, and temporary employees. An example of an employee who is not automatically covered under workers’ compensation, but may apply for optional coverage which will entitle them to WCB benefits if they suffer a compensable injury, is a “sole proprietor,” she says.
Registering employees with the workers’ compensation board isn’t necessarily the payroll department’s responsibility, but it’s important for payroll professionals to understand how it works, Coulombe says.
“You need to be aware if your industry is covered under workers’ compensation and this varies right across Canada,” she says. “The exemptions for workers’ compensation are also different by each province.”
If an employee works in multiple jurisdictions outside of their home province, she may also be subject to WCB premiums in the other jurisdictions .
“For example, if you have an employee working in Ontario and in Quebec, you should contact the workers’ compensation body in Quebec to find out if registration there is required and to find out whether the worker’s out-of-province earnings should be reported,” she says.
Employers must also confirm employees have coverage for outside Canada, Coulombe points out.
“You need to contact your board and they’ll tell you if it’s covered or not.”
Maximum assessable earnings and the premium
“A premium is a percentage of your assessable earnings,” Coulombe says.
Employers must determine the total insurable gross earnings for all of its employees and report this to the WCB. Prior to the first quarter of each year, the WCB will announce the maximum assessable earnings amount that can be included for each worker. This means an employer will not be charged an assessment on the portion of a worker’s earnings exceeding the maximum assessable earnings.
“Some examples of assessable earnings includes regular salary, overtime pay and bonuses. But if you pay an employee a car allowance, you will need to confirm if this is assessable in your province,” Coulombe says.
The premium an employer pays to the board is dependent on its industry classification.
“Basically, if I work in the mine industry, obviously my employer’s going to pay a higher premium than if I worked in an office just because there is less risk of an accident or industrial disease for employees working in an office,” Coulombe says.
The WCB will determine the premium rate assigned to each company and the employer will be responsible for remitting the payment.
In most provinces, the actual payment is sent to the provincial board — with the exception of Quebec.
Revenue Quebec (RQ) collects WCB premiums on behalf of the Commission de la santé et de la sécurité du travail du Québec (CSST), along with the Quebec Pension Plan (QPP), Quebec Parental Insurance Plan (QPIP) and Quebec provincial income tax deductions.
Another responsibility of the payroll department is to reconcile the WCB account in accordance to the provincial schedules.
When an injury occurs
The first thing that needs to happen is to inform the WCB when a worker is injured, Coulombe says.
“It might be the payroll’s responsibility or HR’s responsibility,” she says, adding there are required deadlines to file an accident report.
“For example, in Ontario, employers have three days to report an on-the-job injury, using Form 7, Employer’s Report of Injury/Disease. In Manitoba employers have five days to complete the Employer’s Report of Injury Form.”
Employers must then determine how much the employee should be paid for the day of the accident. In some jurisdictions, employees are entitled to a full day’s pay, while other jurisdictions just call for the number of hours worked to be paid out. In other jurisdictions, pay may not even be required. For example, in Nova Scotia, injured workers must go three days without pay before receiving WCB benefits.
Some employers may provide a greater benefit than that which is outlined by the WCB, Coulombe says. An employer may choose to pay a top-up payment over and above the WCB benefits up to 100 per cent of their regular salary.
“When you pay out a top-up payment, the payments are pensionable, taxable and reportable at the end of the year,” Coulombe says. “The payments are not insurable.”
Payroll professionals need to make sure any agreements or company policies are being upheld, particularly in unionized environments.
Employers may also elect to pay a salary continuance to an employee. In this case, employees are paid their regular salary as if the accident did not occur.
In a case where the claim is accepted by WCB, the employer will be required to report at year end.
“In the ‘other information’ area of the T4 slip, enter code 77 and the amount received from the WCB. This will enable the individual to claim this amount as a deduction on their personal income tax return,” she says.
WCB payments can lead to confusion, so Coulombe stresses the importance of being thorough.
“I’ve highlighted some case scenarios of WCB payments, however the treatments of WCB awards, advances, et cetera are complex,” she says. “I do suggest employers consult with the WCB or a subject matter expert to understand how to treat these types of situations.”
Assessment rates across the country
The following are the 2013 maximum assessable/insurable earnings for each of the provinces and territories.
• Alberta — $90,200
• British Columbia — $75,700
• Manitoba — $111,000
• New Brunswick — $ 59,500
• Newfoundland and Labrador — $54,155
• Northwest Territories — $84,200
• Nova Scotia — $54,400
• Nunavut — $84,200
• Ontario — $83,200
• Prince Edward Island — $50,000
• Quebec — $67,500
• Saskatchewan — $55,000
• Yukon — $82,105