SUMMARY. Earnings basis (seasonal employment); Earnings basis (period of unemployment).

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1 SUMMARY DECISION NO. 1731/99 Earnings basis (seasonal employment); Earnings basis (period of unemployment). The worker appealed a decision of the Appeals Officer regarding the earnings basis for calculation of benefits. The worker worked seasonally as a truck driver. In the seven years prior to the accident that the worker had been working for the employer, the worker worked between four and eight months per year and received unemployment insurance benefits for the remainder of the year. Unemployment insurance benefits formed an integral part of the worker's earnings. It would distort his income to base benefits on earnings at the time of the accident or on earnings over the year prior to the accident but without including his unemployment insurance benefits. A fair calculation of earnings required consideration of the worker's earnings during the year prior to the accident including unemployment insurance benefits. The appeal was allowed. [6 pages] DECIDED BY: Zimmerman; Timms; Howes DATE: 15/02/2000 ACT: WCA TRIBUNAL DECISIONS CONSIDERED: Decision No. 221/99 (1999), 50 W.S.I.A.T.R. 193 apld; Decision No. 471/99 apld BOARD DIRECTIVES AND GUIDELINES: Operational Policy Manual, Document No

2 2000 ONWSIAT 366 WORKPLACE SAFETY AND INSURANCE APPEALS TRIBUNAL DECISION NO. 1731/99 [1] This appeal was heard in Toronto on September 27, 1999, by a Tribunal Panel consisting of : A. G. Zimmerman : Vice-Chair, G.K. Howes : Member representative of employers, D.C. Timms : Member representative of workers. THE APPEAL PROCEEDINGS [2] The worker appeals the decision of Appeals Officer L. Kitchen dated March 25, In that decision the Appeals Officer excluded unemployment insurance benefits in calculating the worker s earnings basis in calculating the worker s earnings basis for the year ending in the date of his compensable accident. THE RECORD [3] The Panel considered the material included in the Case Record Volumes I and II prepared by the Tribunal Counsel Office (Exhibit #1), dated May 5, In addition, we considered: Exhibit #2: Information Request (Worker/Appellant). [4] An oral hearing was not requested. THE ISSUES [5] The Panel was asked to determine the appropriate method for calculating the earnings basis for a seasonal worker pursuant to section 40 (1) of the (pre-1997) Workers Compensation Act (The Act). THE REASONS (i) Background [6] The worker was seasonally employed as a truck driver. On July 9, 1993 he had an accident at work and lost the use of his right eye. Lost time benefits were approved and calculated in accordance with the provisions of s.40(1)(a). On that basis, the worker had weekly earnings of $ ($10.25x44 hrs./wk). The employer objected to this method of calculation. The Board then recalculated the worker s earnings in accordance with the provisions of section 40(1)(b) resulting in a reduction of the earnings basis to $ per week effective November 1, [7] The worker had worked for the employer on a seasonal basis since He would start work in April for between four and eight months and receive unemployment insurance benefits for the balance of the year.

3 Page: 2 (ii) Law and policy [8] Section 40(1) of the Act states: 40(1) In determining the average earnings of a worker, the Board shall, (a) (b) calculate the daily or hourly rate of the worker's earnings with the employer for whom the worker worked at the time of accident as is best calculated to give the rate per week at which the worker was remunerated at the time of the accident; if the calculation under clause (a) does not fairly represent the average earnings of the worker, upon application, the Board shall determine the worker's average earnings with the employer for whom the worker worked at the time of the accident during the twelve months or such lesser period immediately preceding the accident when the worker was employed with the employer. [9] The Board s policy in determining a worker s earnings basis under section 40(1)(b) is set out in Operational Board Policy Manual Document # : If the worker or the employer does not agree with the compensation rate, the WCB recalculates the rate, using the worker s earnings for one year prior to the accident, or a lesser period, if the worker has not been with the accident employer for one full year. For requests received on or after July 1, 1989, periods of unemployment are factored in to reduce the earnings basis when they are characteristic of the employment cycle in the industry in which the worker is employed, and if they can be anticipated to occur. Periods of unemployment are also factored in when they form a pattern in the worker s usual work cycle. [10] Pursuant to this policy the Board does not include unemployment insurance benefits as part of the worker s earnings during the twelve months preceding the accident. [11] The role of Board policy in Tribunal decisions is set out in section 126 of the Workplace Safety & Insurance Appeals Tribunal (WSIAT) and is partially reproduced here: 126(1) If there is an applicable Board policy with respect to the subject-matter of an appeal, the Appeals Tribunal shall apply it when making its decision. (2) The Board shall state in writing which policy, if any, applies to the subject-matter of an appeal after receiving notice of the appeal under subsection 125(3). (3) If the Board does not state that a particular policy applies in respect of the subjectmatter of an appeal, the tribunal may ask the Board to notify it if there is an applicable policy and the Board shall do so as soon as practicable. SUBMISSIONS [12] The worker submits that unemployment insurance benefits formed an integral part of his employment cycle and therefore should be included when calculating his earnings basis. He cited a number Tribunal decisions that support this view (Decision Nos. 1164/97, 428/97, 994/88, 607/96 and 1011/96). Excluding unemployment insurance benefits when calculating his earnings basis resulted in his receiving less than minimum wage.

4 Page: 3 REASONS [13] In this case, the worker s pattern of cyclical employment over seven years clearly demonstrates that unemployment insurance benefits formed in integral part of his earnings. To calculate his earnings on the basis of his pre-accident employment income pursuant to section 40(1)(a) would distort this figure to the worker s advantage. Likewise, to calculate his earnings in accordance with the Board s interpretation of section 40(1)(b) would distort that figure to his disadvantage. A similar situation was considered in Decision No. 221/99. In resolving this disparity, the Vice-Chair wrote: Board policy does not allow us the flexibility of distinguishing between different periods of disability and whether they occur during the working or lay-off period of the seasonal cycle. While I can conclude that it is unfair to the worker in this case to calculate average earnings under section 40(1)(b) of the Act (using the Board s method of calculation), in my view it is unfair to the employer not to do so. Nevertheless, there is a way through this impasse, which provides the possibility of finding an alternative method of calculation and provides a fairer solution for both the worker and the employer. This approach is cogently argued in a recent Tribunal decision. Decision No. 1342/98 takes a robust approach to the merits and justice clause contained in Board policy cited earlier. Every decision must be made according to the merits and justice of the case. Although I was critical of the argument made in Decision No. 696/98, I believe that the merits and justice argument could be applied to that case to support the decision, which I find inherently just. The Panel in Decision No. 1342/98 reviewed what it referred to as an impressive body of American court cases on an issue where it appeared to them that Board policy was in conflict with the arguments presented in those cases. The Panel noted that Operational Policy Document # states that, if a general policy does not reasonably apply to the particulars of a case, then decisionmakers consider the provisions of the Act. In their view, this policy quite sensibly provides an override protection in specific instances where other, perhaps more specific, policies cannot reasonably be made to apply. Using that reasoning in the case before me (and the case considered in Decision No. 696/98), the real merits and justice lead to the inescapable conclusion that a third method besides that prescribed under 40(1)(a) of the Act and that used by the Board must be found. Thus, I conclude that it is reasonable to use the worker s average earnings over the year before his accident, but include his employment insurance benefits as part of his earnings. In choosing this method, I follow the argument in a long line of Tribunal decisions. Before 1998, many Panels directed the Board to include employment insurance benefits, although the Board s general policy at that time was to include them only in certain limited situations. This, in itself, is not sufficient reason to follow these decisions, but they are persuasively reasoned. Board policy under the WSI Act includes employment insurance benefits in the calculation of average earnings, suggesting that the Board sees this, in some cases as fair, although neither the new nor the old provisions contain explicit reference to employment insurance benefits. Considering the facts in this case, I conclude that it would not be fair to exclude employment insurance earnings, particularly since they would probably have been included had the Tribunal heard this case before January Finally, I rely on the real merits and justice provision in the policy to include these benefits. Although Decision No. 696/98 does not set out its analysis in great detail, it appears that the Vice-Chair also felt that the merits and justice of the case required the inclusion of employment insurance benefits. [14] This passage was quoted with approval in Decision No. 417/99 in which the Vice-Chair went to say:

5 Page: 4 Is there anything in the Act or Board policy which precludes the inclusion of employment insurance income in the calculation of average earnings under section 40(1)(b)? Section 40(1)(b) requires the Board to determine the worker s average earnings with the employer for whom the worker worked at the time of the accident during the twelve months or such lesser period immediately preceding the accident when the worker was employed with the employer. The definition of earnings in section 1(1) of the Act provides: earnings and wages include any remuneration capable of being estimated in terms of money but does not include contributions made under section 7 for employment benefits; ( gains, salaire ) The Board policy referred to above specifically permits the inclusion of employment insurance earnings in the calculation of average earnings under section 40(1)(a), where those benefits are paid under a Federal work-sharing program or job creation program. This suggests that the Board has concluded that such earnings fall within the definition of earnings under the Act. However, the Board policy is silent with respect to whether employment insurance benefits are to be included in a section 40(1)(b) calculation of average earnings of workers who experience periods of lapse in employment as part of the worker s usual employment cycle. The Vice-Chair in Decision No. 221/99 concluded that the absence of a specific reference in the Board policy to employment insurance earnings did not prevent these earnings from being included in the average earnings calculation. She pointed out that this approach was frequently followed in pre-1998 Tribunal decisions, and is consistent with the Board s current policy affecting post-january 1, 1998, claims. This policy was referred to by the Vice-Chair in Decision No. 696/98 (October 5, 1998) as follows: Policy 4.1 deals with the calculation of a worker s average earnings. It states: The Board considers periods of unemployment to be part of the employment pattern for non-permanent workers. The Board therefore does not factor out periods of unemployment due to lay-offs, terminations, seasonality of employment, or unavailability of work from the recalculation period. However because these periods are included, gross employment insurance (EI) benefits received for these periods are included as earnings. It is worth noting that the definition of earnings in the Workplace Safety and Insurance Act, 1997 (WSI Act) is almost identical to that contained in the pre-1998 Act. I also note that the definition of earnings in the pre-1998 Act has been interpreted to include remuneration other than employment earnings by several other Tribunal panels. (See, for instance, Decision No. 509/98, 47 W.S.I.A.T.R. 148; and Decision No. 797/89 (April 26, 1990)). Having regard to the definition of earnings in the Act, and to the decisions referred to above, I am satisfied that a worker s employment insurance earnings during the year preceding an accident can be included in the calculation of average earnings under section 40(1)(b) of the Act in circumstances other than those specifically referred to in the Board policy. Whether these earnings should be included in the calculation of average earnings depends upon a review of the facts of each case in the context of the statutory requirement to achieve a fair calculation of earnings, as reflected in the wording of section 40(1)(b) of the Act, and the requirement under the Board policy that each decision be made in accordance with the real merits and justice of the case. [15] We agree. On the facts of this case, we are persuaded that a fair calculation of the worker s average earnings under section 40 of the Act can only be made by including his unemployment insurance income. The worker s benefits from the date of the accident until

6 Page: 5 November 1, 1993 were calculated in accordance with the provisions of section 40(1)(a) and therefore reflected the actual short term loss of employment income. Thereafter, his long term loss was best reflected in his, long term income, that is, by examining his average earnings over the twelve months immediately preceding the accident including unemployment benefits. THE DECISION [16] The appeal is allowed. DATED: February 15, 2000 SIGNED: A. G. Zimmerman, G.K. Howes, D.C. Timms

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