Area of Law: Workers' Compensation
Answer Number: 644
Benefits and costs of workplace safety and insuranceRegion: Ontario Answer Number: 644
Registering with the WSIB
Most employers in Ontario have an obligation to register for Workplace Safety and Insurance coverage with the Workplace Safety and Insurance Board (WSIB) within 10 days of hiring their first employee. Even if an employer contracts out work, they may be responsible for Workplace Safety and Insurance premiums for contractors, sub-contractors and their employees, if the contractor or subcontractor defaults in their premium payments to the Board. Employers can register their business online at the WSIB.
Mandatory registration for construction industry
For anyone who is an independent operator, sole proprietor, partner or executive officer and works or carries on a business in construction, Workplace Safety and Insurance coverage is required by law and registration is mandatory. The legislation does not apply, however, to people who work as employees of construction-related firms.
Employers who do not pay premiums
Not every employer is required to be registered with the WSIB. Each province and territory sets the criteria for employers exempted from premiums or registering with their Workers’ Compensation Board or Commission. Most public sector employers engaged in inter-provincial transportation and communication do not pay premiums and, instead, are directly responsible for all the costs of an injured worker’s claim plus the payment of an administration fee to the WSIB. These employers include governments, Crown corporations, telephone companies and railways.
Benefits of paying employer premiums
Private sector employers are obligated to pay Workplace Safety and Insurance premiums to insure employees for work-related injuries and disease. Most public sector employees, including the provincial and municipal governments, do not pay premiums but pay benefits under the legislation directly to employees. Public and private sector employers, covered by the Workplace Safety and Insurance Act, cannot be sued for work-related injury or disease.
Costs of paying employer premiums
The costs for most employers are the premiums set each year by the Workplace Safety and Insurance Board. Premium payments are based on the size of the employer’s payroll, and the rate for the industry category that the employer is a member of. The industry categories depend on the nature of the work. Generally, the higher the risk of accidents in an industry, the more an employer will pay in premiums.
Experience Rating: Premiums based on rate of accidents
In an effort to reduce accidents and occupational diseases, the WSIB has developed three experience rating programs. Which program is used is based on the type of employer and the amount of premiums paid. An employer’s premiums may increase or decrease, depending on the number of accident claims, the cost of claims, or both.
1. MAP Program: Premiums less than $25,000
For all employers, non-construction and construction, which are smaller in size, and whose WSIB premiums are between $1,000 and $25,000 per year, the WSIB uses the Merit Adjusted Premium experience rating program, or MAP. MAP reviews an employer’s number of claims with more than $500 in costs over a three-year period and adjusts the employer’s premiums based on this information.
- No claims and costs of more than $500. Employers who have no claims with costs over $500 during this period will receive a 5% premium discount.
- Claims and costs of between $500 and $5,000. Employers who pay premiums of less than $20,000, will see neither an increase nor a decrease in their premiums if they have claims with a cost of between $500 and $5,000. Employers who have one or more claims with costs between $500 and $5,000 and whose annual premium is between $20,000 and $25,000 will receive a premium increase of up-to 50%.
- Claims and costs of over $5,000. If an employer has a claim costing over $5,000 they will automatically receive a 10% premium rate increase for each claim.
Generally, employers with zero claims, will receive a premium discount of 5-10% depending on the amount of premiums they pay. All employers with seven or more claims, regardless of the amount of premiums they pay, will see a 50% premium increase.
2. NEER Program: Non-construction employers, premiums over $25,000
For private sector employers and some public sector employers that pay annual premiums over $25,000, the WSIB reviews the frequency and cost of claims under a system called the New Experimental Experience Rating program (NEER). NEER compares the employer’s actual claim costs over a four-year period, to the expected costs for a business of the same type and size. If the employer’s claims experience is lower than expected, they may receive a premium rebate. If the claims experience is higher than expected, the employer will likely have to pay a surcharge.
3. CAD-7 Program: Construction employers, premiums over $25,000
A similar experience rating program called CAD-7 (Council Amendment to Draft #7) is used for construction employers that have annual premiums over $25,000. This program compares the employer’s actual number of claims over two years, and claims costs over five years, to the expected frequency and costs of claims for construction employers of that size. Like NEER, if an employer’s costs and frequency of accident claims are low, then they will receive a refund, but if they are high, they will have to pay a surcharge.
For more information about the benefits or costs to employers, or if you need to register you can contact a lawyer, call the Workplace Safety and Insurance Board, or visit the WSIB website.
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