Fairness: it’s coming in 2018!  But what about fixing the damage done before then?

In a heartening announcement, the government says it will amend Ontario’s workers’ compensation law to “ensur[e] fairness for injured workers” by implementing “full Consumer Price Index indexation of benefits for partially-disabled injured workers,” beginning January 1, 2018.

This is good news: it’ll remove a source of great unfairness in the current system, which has for many years eroded the real value of many permanently disabled workers’ incomes.

But, given the government’s acknowledgement that full CPI indexing is necessary to ensure “fairness,” why wait another two years for its implementation? And why are no steps being taken to address the damage already done? The WSIB’s own economic projections indicate the system can afford it.

The problem

For readers unfamiliar with the problem, some background about how Ontario calculates the benefits for partially disabled workers may be helpful.

Some work injuries are so severe that the worker is totally disabled from working. The WSIB pays these workers a benefit known as full Loss of Earnings benefits, in the amount of 85% of their pre-injury earnings.[1]

Other work injuries result in permanent impairment that doesn’t totally disable a worker from all work, but that does leave them incapable of working in their pre-injuring occupation. In many cases, these workers have no choice but to take on a different, lower paid, occupation, resulting in an ongoing loss of income for the rest of their working lives. The WSIB pays these workers partial Loss of Earnings benefits, in the amount of 85% of the difference between their pre- and post-injury earnings.

Every year, full Loss of Earnings benefits are increased in accordance with the Consumer Price Index, to ensure that the person’s real income is not reduced by inflation.

However, partial Loss of Earnings benefits are not increased in accordance with the CPI. Instead, they are increased by a “general indexing factor,” which is legislated to be less than half of the CPI. It’s calculated with the formula (1/2 x A) -1, in which “A” is the amount of the percentage change in the CPI in the previous year.[2]

So, for example, if in a given year inflation is 4%, the general indexing factor will only be 1%:

General indexing factor =  (1/2 x 4%) -1
=  2% -1
=  1%

The effect of the general indexing factor (“GIF”) is that each year the increase in a partially disabled worker’s income is less than the rate of inflation. The difference between the two compounds, year after year, resulting in a significant erosion in real value of the person’s benefits over time.

This has been going on since 1998.[3]

The government’s response

In 2007, the government acknowledged the unfairness caused by the application of the GIF, and gave three years of ad hoc 2.5% increases to partially disabled workers. And since 2010, it has granted (by regulation) increases of 0.5%, which is higher than the GIF would provide (it would have been 0% in all but one of those years), but still significantly lower than the CPI.

These temporary measures were insufficient: they did not address the losses caused by the past application of the GIF; benefits still failed to keep pace with inflation; and the GIF was not removed from the legislation.

Now, however, the government appears to be promising a permanent fix. It says:

Ontario is proposing amendments to the Workplace Safety and Insurance Act that would provide full Consumer Price Index indexation of benefits for all injured workers on an annual basis.
If passed, beginning January 1, 2018, the amendments would provide all injured workers and their survivors with full Consumer Price Index indexation on the benefit amount.

In the interim, the government will provide a pre-defined increase that will almost certainly be lower than the CPI, namely “an increase of 0.5 per cent on January 1, 2016 and a 1 per cent increase on January 1, 2017.”[4]

The government’s explanation for this change is telling. The Ministry’s announcement states that

The proposed changes would provide fairness in the way that injured workers receiving [WSIB] benefits are treated. Currently only workers on full disability benefits and survivors receive full CPI increases…. [underlining added].

The Minister, Kevin Flynn, is quoted as saying:

We are committed to providing a fair, just and efficient workers’ compensation system. These proposals would ensure that all injured workers are treated the same, as well as ensure that benefits for injured workers on partial disability keep pace with inflation. Respect for those injured at work is essential, and working toward a fair and predictable compensation system is the right thing to do [underlining added].

These statements are an acknowledgment that the failure to increase the benefits of partially disabled workers in accordance with the CPI is unfair and unjust, because their benefits did not “keep pace with inflation.”

So why is the government waiting until 2018 to implement CPI indexing? Wouldn’t “the right thing to do” be to start it immediately? (Even before the passing of the proposed amendments, the government has the power to apply the CPI percentage in 2016 and 2017 by regulation[5].) And why is no attempt being made to make up the losses caused by an unjust and unfair rule in the past?

The usual reason cited for short-changing the disabled—cost—is not an adequate justification in this case.

The WSIB’s recently published 2015 Economic Statement indicates that the system can afford “fairness” now. It’s economic forecast and projections, which include “a provision for increased costs should the government extend full CPI indexing to all injured workers,” show that the WSIB can (a) extend full CPI indexing to all injured workers AND (b) grant employers significant premium reductions AND (c) eliminate the unfunded liability five years ahead of schedule! (See the WSIB’s “Figure three” below.)

Surely, then, there’s no excuse for two more years of an acknowledged unfairness. Let’s have fairness now!

WSIB Figure three

This blog contains general information and should not be relied on as legal advice in an individual case. If you need advice about a WSIB claim or appeal, please visit the website of my law office, asingletonlaw.ca, and book a consultation.

[1] To be more precise, 85% of the worker’s “net average earnings,” which is the amount they earned in their pre-injury job after taxes, CPP contributions etc. are deducted. Partial Loss of Earnings benefits are also based on net-average earnings.

[2] Workplace Safety and Insurance Act, s. 49(1). The WSIA also sets an upper and lower limit: “the indexing factor shall be not less than 0 per cent and not greater than 4 per cent.”

[3] It also occurred from 1995-1997, using a slightly more favorable (but still grossly inadequate) formula: GIF = (3/4 x A) -1.

[4] In the last five years, from 2011 to 2015, the CPI used by the WSIB to index full Loss of Earnings benefits have been 1.6%, 2.8%, 1.8%, 0.9% and 1.8% respectively.

[5] WSIA, s. 52.1.

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