Annual Review of Compensation Benefits Policy 21-270 | Effective Date: November 9, 2017

Purpose

The purpose of this policy is to communicate WorkSafeNB’s guidelines for reviewing and adjusting loss of earnings benefits during annual reviews.

Scope

This policy applies to all injured workers receiving loss of earnings benefits.

Statements

1.0 General

WorkSafeNB annually reviews compensation benefits paid to injured workers. This includes loss of earnings benefits, pre-1982 pension benefits and survivor benefits. These benefits are reviewed and indexed by the percentage increase in the New Brunswick Industrial Aggregate Earnings (NBIAE).

2.0 Loss of Earnings Benefits

Loss of earnings is the difference between what the injured worker was earning before the accident (average net earnings) and what the injured worker is capable of earning at suitable employment after the accident (net estimated capable earnings).

The injured worker’s loss of earnings is used to calculate compensation benefits, and is payable as either regular loss of earnings (RLOE) benefits, or long-term disability (LTD) benefits.

WorkSafeNB reviews an injured worker’s compensation benefits annually on:

  • The date of the injury or recurrence of injury when receiving RLOE benefits; or
  • The first day of the month of the injury or recurrence of the injury when receiving LTD benefits.

WorkSafeNB reviews loss of earnings benefits annually until:

  • The loss of earnings ceases to exist, or
  • The injured worker reaches 65 years of age, whichever occurs first.

If an injured worker is 63 years old or more at the time of the injury or recurrence, the injured worker is entitled to benefits for up to two additional years from the commencement of the worker’s loss of earnings. WorkSafeNB reviews these benefits annually until:

  • The injury ceases to exist; or
  • The two-year period is complete.

To assist WorkSafeNB in completing the annual review, injured workers receiving LTD benefits may be required to submit their previous year’s income tax return information from the agency responsible for administering the Income Tax Act.

WorkSafeNB will adjust benefits retroactively when proof of additional tax exemptions is obtained from the agency responsible for administering the Income Tax Act. The effective date of the retroactive adjustment will be the date of the first annual review following the effective date of the income tax exemption.

2.1 Adjusting the Loss of Earnings Benefits

During the annual review, WorkSafeNB adjusts the injured worker’s loss of earnings benefits by:

  • Increasing the injured worker’s average earnings (AE) by the percentage increase in the NBIAE;
  • Subtracting estimated income tax (IT), employment insurance (EI) premiums and Canada Pension Plan (CPP) contributions that would be payable on the increased earnings; and then
  • Subtracting from the injured worker’s indexed average net earnings, estimated capable earnings (ECE) of the injured worker minus estimated IT, EI premiums and CPP contributions.

The formula is as follows:

LOE = [(AE x NBIAE % Increase) – (IT+EI+CPP)] – [ECE – (IT+EI+CPP)]                   

When injured workers have actual earnings from employment that are greater than their estimated capable earnings, the actual earnings are used as the estimated capable earnings.

2.2 Transitional Period

Injured workers who receive benefits set at 90% of their estimated loss of earnings after January 1, 1993 have their compensation benefits reviewed annually on:

  • The date of the injury or recurrence of injury when receiving RLOE benefits; or
  • The first day of the month of the injury or recurrence of the injury when receiving LTD benefits.       

WorkSafeNB reviews injured workers’ benefits annually to determine when to adjust the benefits from 90% of loss of earnings to 85% of loss of earnings. For more information see Policy 21-213 Transitional Entitlement.

Injured workers who continue to receive benefits at the 90% rate will not have their average earnings indexed beyond their 1992 anniversary date.      

Once an injured worker starts receiving benefits based on 85% of the loss of earnings, WorkSafeNB annually reviews the benefits using the same process outlined in section 2.1.       

3.0 Pre-1982 Pensions

Amounts received for pre-1982 claims are not considered loss of earnings benefits nor are they considered in the annual review of loss of earnings benefits.

WorkSafeNB completes a separate annual review of pre-1982 pension benefits as outlined in Policy 21-207 Pension Benefits – Pre-1982 Accidents.

4.0 Survivors’ Benefits

When an injured worker dies as a result of a compensable injury or occupational disease, dependants of the injured worker may be entitled to survivors’ benefits.

Benefits are reviewed annually on the first day of the anniversary month of the death of the worker. For more information see Policy 21-515 Benefits for Survivors.

Workers’ Compensation Act (RSNB 1973, c W-13)

38.1(1), 38.11(12)(a), 38.11(12)(b), 38.2(4)(a), 38.2(4)(b), 38.2(4.1), 38.2(4.2), 38.2(4.3), 38.52(3), 38.52(4), 38.53(2), 38.6(5), 38.8(2) 

Case Law

Gallant v Workplace Health, Safety and Compensation Commission of New Brunswick, 2000 CanLII 20262 (NB CA)

The Court determined that the Commission’s approach to determining income tax was keeping with the legislative intent of the Workers’ Compensation Act that the scheme and object of the Act was a “speedy and cost efficient determination” of compensation claims. The Court stated that the Commission's approach to the computation of the income tax that would be payable “reflects an appropriate balance between competing concerns, namely worker specificity and administrative effectiveness.” 

Policy 21-207 Pension Benefits – Pre-1982 Accidents

Policy 21-210 Calculation of Benefits

Policy 21-213 Transitional Entitlement

Policy 21-515 Benefits for Survivors

Appeals Tribunal – means the Workers’ Compensation Appeals Tribunal established under the WHSCC & WCAT Act.

Average earnings - is 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, unless the worker was at the date of the accident under twenty-one years of age and it is established to the satisfaction of the Commission that under normal conditions the earnings would probably increase, in which case this fact should be considered in determining the worker’s average earnings and in no case shall average earnings exceed the maximum annual earnings. (WC Act)

Average net earnings - the average earnings of the worker less any income tax and premiums under the Employment Insurance Act and contributions under the Canada Pension Plan that would be payable by the worker based on those earnings. (WC Act

Estimated capable earnings – for the purpose of this policy, estimated capable earnings are the earnings that the injured worker is estimated to be capable of earning at a suitable occupation at the time of the review (adapted from WC Act).

Loss of earnings – average net earnings, less the earnings the worker is estimated to be capable of earning at a suitable occupation after sustaining the injury, less any income tax and premiums under the Employment Insurance Act and contributions under the Canada Pension Plan that would be payable by the worker based on those earnings. (WC Act)

Net family income – the aggregate of:

(a) The average net earnings of the worker, and

(b) The earnings of the new spouse, if any, not exceeding the maximum annual earnings, at the time of the award or review of benefits under this section, less any income tax and premiums under the Employment Insurance Act and contributions under the Canada Pension Plan payable by the new spouse based on those earnings. (WC Act)

New Brunswick Industrial Aggregate Earnings (NBIAE) - the amount set by the Commission as of the first day of January of each year, which shall be equal to $27,323 for the year 1993 and which shall thereafter be increased by the percentage increase in the Consumer Price Index for Canada for all items for the twelve month period ending the thirtieth day of June in each year as determined by the Commission in August of each year on the basis of monthly reports published in that respect by Statistics Canada for that period. (WC Act)

Pre-accident earnings - means the daily, weekly, monthly or regular remuneration that the worker was receiving at the time of the injury or recurrence of the injury, as may appear to the Commission best to represent the earnings of the worker. (WC Act)

Pre-accident net earnings - the pre-accident earnings of the worker less any income tax and premiums under the Employment Insurance Act and contributions under the Canada Pension Plan that would be payable by the worker based on those earnings. (WC Act)

WorkSafeNB – means the Workplace Health, Safety and Compensation Commission or "the Commission" as defined by the WHSCC & WCAT Act.

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