Determining Average Earnings Policy 21-210 | Effective Date: January 17, 2019

Statements

When injured workers are eligible for loss of earnings benefits, WorkSafeNB must determine the average earnings that best represents the injured workers regular earning pattern. Average earnings is defined by legislation and used in the benefit calculation formula: Loss of earnings = Average net earnings – Net estimated capable earnings.

Interpretation

1. The WC Act defines average earnings as the daily, weekly, monthly, or regular remuneration that the worker was receiving at the time of the injury or recurrence of the injury, or receiving previously, or at the time of the loss of earnings, or at the time of death, as may appear to the Commission best to represent the earnings of the worker.

2. Depending upon the injured worker’s employment situation, this regular remuneration or regular earning pattern may be established using:

• Only earnings from the accident employer, when there has been a recent, permanent change in employment, and earnings are expected to continue at that level; or
• Other employment-related earnings when they best represent the injured worker’s loss of earnings.

3. WorkSafeNB may use a time period adequate to demonstrate a regular earning pattern. Often, no more than three years is required to demonstrate this regular pattern.

4. WorkSafeNB determines and verifies injured workers’ average earnings:

• Upon accepting a claim so that injured workers receive timely benefits based on what best represents their immediate, short-term earnings loss;
• At twelve weeks so that WorkSafeNB can review the initial determination of average earnings and make adjustments as necessary to best represent the injured worker’s long-term earning pattern; and
• Annually as required by s. 38.11(12) of the WC Act.

Remuneration Not Included When Establishing Average Earnings

5. WorkSafeNB does not include special expense money, or allowances paid for travel, clothing, dry cleaning, or use of a vehicle, when determining average earnings. These allowances are paid in addition to remuneration, on a periodic basis, rather than as part of regular earnings.

6. WorkSafeNB also excludes, income received by an injured worker from:

• A non-employment source;
• Awards that are not related to the loss of earnings; and
• Earnings that cannot be confirmed or verified.

7. Types of income not used to establish average earnings includes, but are not limited to:

• WorkSafeNB survivor benefits;
• WorkSafeNB pre-1982 pension benefits;
• Income assistance or welfare benefits;
• Benefits received from personal, private insurance coverage;
• Lump-sum impairment awards (including Permanent Physical Impairment (PPI) awards);
• Lump-sum long service awards which are paid to injured workers at the end of an employment relationship, in recognition of years of service rendered, i.e., retirement allowances;
• Lump-sum payment made in lieu of notice, to an injured worker, by an employer, because the employment relationship is being terminated early, i.e., severance pay;
• That portion of injured workers’ earnings which exceeds the maximum annual earnings;
• Canada Pension Plan (CPP) retirement pension;
• Old Age Security (OAS) benefits or Guaranteed Income Supplements (GIS);
• Earnings unsubstantiated by formal documentation and not reported to the government department responsible for taxation;
• Dividends reported on a T5 (taxation form);
• Investment or rental income;
• Any other taxable benefits which are not monetary; and
• Employer’s portion of RRSP withdrawals or contributions if locked in until age 65.

Using Specific Types of Remuneration as Average Earnings

Vacation Pay

8. When vacation pay is received regularly as a lump sum, WorkSafeNB:

• Confirms with the employer the time period for which the payment is intended;
• Prorates the lump sum vacation pay over the intended period; and
• Uses only that portion of vacation pay, which applies to the time period being used to establish average earnings.

Bonuses

9. For bonus payments received periodically, as part of the injured worker’s regular earning pattern, WorkSafeNB:

• Confirms with the employer the time period for which the bonus is intended;
• Prorates the lump sum bonus payment over the intended period; and
• Uses only that portion of the bonus, which applies to the time period being used to establish average earnings.

Specific Situations

Reopenings

10. Reopenings are a planned continuation of the original claim that was closed. These include events such as when an injured worker is required to attend medical or rehabilitative appointments or pre-arranged appointments with WorkSafeNB after returning to work. When a claim is reopened and the injured worker experiences a loss of earnings, WorkSafeNB calculates benefits based on the earnings that best represent the loss of earnings at the time of reopening.

Weeks with Zero or Reduced Earnings

11. WorkSafeNB normally includes weeks with zero or reduced earnings when determining average earnings. When there are inconsistencies in the earnings information provided, WorkSafeNB confirms with the employer if weeks with zero or reduced earnings are part of the injured worker’s regular earning pattern. If they are part of a regular pattern, WorkSafeNB includes these weeks when determining average earnings.

Recent Changes in Employment

12. When there is a recent and permanent change in an injured worker’s employment pattern, WorkSafeNB uses earnings from the new employment situation to determine average earnings.

Contractors/Subcontractors

13. For injured workers who have earnings through a contract with an employer (principal or sub-contract), and who are covered under the Workers’ Compensation Act (WC Act), WorkSafeNB determines the injured worker’s gross earnings by multiplying the gross contract value by the most appropriate labour percentage type.

14. To establish the gross contract value WorkSafeNB uses:

• Proof of earnings, as submitted to the government department responsible for taxation, on page one of the income tax return; or
• Other satisfactory proof of earnings, i.e., contractor’s declaration, or official receipts, as long as they do not exceed the yearly assessed contract amount.

15. WorkSafeNB selects the most appropriate labour percentage type from the following list:

For more information see Policy 23-200 Assessable Earnings.

16. If the Statement of Business Activities submitted to the federal department responsible for taxation indicates that there were wages paid to another worker to carry out the work, then these wages are deducted from the injured worker’s calculated gross earnings, as the injured worker would not receive the usual labour percentage derived from that type of business.

17. WorkSafeNB ensures the information used only applies to the injured worker. For example, WorkSafeNB must identify joint contracts of husband/wife, parent/child or multiple-owner teams, and use only that portion of the contract, as earnings, that apply to the injured worker.

Injured Workers with Personal Coverage

18. Injured workers who do not earn wages or a salary may be eligible for compensation if they have personal coverage with WorkSafeNB. To determine what best represents the injured worker’s average earnings, WorkSafeNB uses the lesser of:

• Personal coverage purchased; or
• Actual earnings or net business income, whichever applies, as long as the earnings do not exceed the amount of the personal coverage purchased.

19. WorkSafeNB confirms:

• That personal coverage was in effect;
• The level of coverage; and
• The time frame covered by the personal coverage.

20. Personal coverage expires each year on December 31^st or when workers begin to draw a salary or wages. WorkSafeNB ensures that coverage is still in effect when accidents occur. For more information on personal coverage, see Policy 23-100 Employer Registration.

Emergency Workers

21. WorkSafeNB uses injured workers’ paid employment to determine average earnings when the worker is injured while participating as a volunteer:

• Firefighter:
• Police officer;
• Emergency medical technician (ambulance attendant);
• Peace officer, when assisting in the arrest of any person or in preserving the peace; or
• Associated with recognized Emergency Measures Organization activities.

22. For volunteers assisting a peace officer, if their paid employment is inequitable or impossible to determine, WorkSafeNB may use the earnings of the peace officer to determine the injured worker’s loss of earnings. For more information, see Policy 21-010 Definition of Worker.

Fishers

23. To determine average earnings, WorkSafeNB uses wages submitted by the injured worker and confirmed by the employer or the company who purchased the catch.

Students/Learners

24. WorkSafeNB uses an average of the injured worker’s earnings from summer employment or work exposure programs, as appropriate, to determine average earnings.

Li WorkSafeNB may determine average earnings by using the time period which establishes an earning pattern that best represents the injured worker’s average earnings if it is expected that the:

• Duration of disability will extend beyond the summer employment or work exposure program period;
• Injured worker will not return to school; and
• Injured worker will be in a loss of earnings situation as a result.

26. Once the student or learner returns to school, that student or learner’s loss of earnings reflects only part-time employment earnings.

Workers Under 21 Years of Age

27. The WC Act recognizes the unique situation of workers under the age of 21. Legislation provides WorkSafeNB with the authority to compensate for increases in average earnings when it is established that the earnings of an injured worker who was under 21 years of age at the time of the accident would probably have increased. For more information, see Policy 21-208 Workers Under 21.

Multiple / Concurrent Employment

28. If an injured worker has more than one job, the injured worker’s regular and part-time earnings are used when determining average earnings, provided the earnings from the accident employer are covered under the WC Act and the injured worker is disabled from working at the other employment. There is no requirement for earnings from other employment situations to be assessable earnings.

Calculating Average Net Earnings for Workers Injured During Government Work Initiatives or Indigenous Peoples

29. WorkSafeNB must consult the government department responsible for taxation to confirm if remuneration earned through government work initiatives or by indigenous peoples on a reserve is taxable. In some situations, EI premiums and CPP contributions are not paid on these earnings; therefore, they would not be deducted when establishing average net earnings.

30. WorkSafeNB also confirms if the employer, for which the indigenous person was working, meets the criteria as an employer covered under the WC Act and in Policy 23-100 Employer Registration.