The Historical WCB Trade off

How are WCB rates set?

First off, let’s learn the language of workplace compensation. Each province has its own workplace compensation board with its own unique name.

Click here to see the name of your provincial workers compensation board.

For ease of reference for this post, let’s use WCB as the common term.

To understand WCB in Canada, one must first understand the concept of the “Historic Tradeoff” under Canadian Workers’ Compensation law. Workers have given up the right to sue their employers in exchange for access to workplace compensation should they (the workers) be injured at work. In exchange, employers have gained the great benefit of not being sued, and they (the employers) must fund the cost of providing the workplace insurance system which compensates injured workers. That, in essence, is the “Historic Tradeoff.”

Employers must fund WCB through payroll assessments called rate groups. Usually this is defined as an amount per $100 of payroll. For example, a grocery stores rate group will pay $2.20 per $100 of payroll.

In Ontario, the workplace compensation board (known as WSIB) is planning to put employers in the driver’s seat with regard to payroll assessment costs. The WSIB is planning to modernize its assessment rates in order to provide more an effective trade-off between the employee and the employer.

Source: Canadian HR Reporter. The above content constitutes a link to the source website. Please click on the play icon to stream the video.

WSIB in Ontario is planning a new three step system to help allow employers to have greater control over their individual premiums by including:

  1. Employer classification
  2. Class level premium rate setting
  3. Employee level premium rate adjustment

Click here to see WSIB information on the new rating system.

Hopefully, this new system will allow employers who have less workplace accidents to lower their workplace insurance premiums over time. Employers who put time and energy into a ensuring that they have a good safety record will be rewarded through lower WCB costs and increased safety systems.

It will be interesting to see how this new trade-off unfolds in Ontario.

Discussion Questions:

  1. You are working for a company in Alberta that wants to expand into two new provinces. Your CEO has asked you to recommend which provinces the organization should consider moving into. The CEO wishes you consider the WCB premium costing as the factor of study.
    1. Pick an industry, identify its current rate group cost in Alberta and then pick two (2) other provinces you would recommend.
    2. In your analysis include current rate group costs and any possible future trends.

Click here to see rating chart.

  1. Pick three provinces and review any workers compensation assessment incentive inventive programs that the province offers, how do they differ? How are they similar?
  2. Would the new compensation system in Ontario entice you to move the organization to that province?