Chapter 6: Employer Payroll Expenses
6.3 Employer Workers’ Compensation Premiums
6.3.1 Employer Contributions to Workers’ Compensation Funds
Canadian employers contribute to workers’ compensation funds administered by Workers’ Compensation Boards (WCBs). The purpose of WCBs is to provide a no-fault system that compensates employees for work-related injuries or illnesses.
No-fault means that an employer does not need to be proven negligent or at fault in court; instead, workers with a work-related injury or illness can apply to their province or territory’s WCB for compensation. The WCB assesses the worker’s claim, investigates, and determines eligibility for benefits. If approved, the injured employee may receive medical treatment, wage replacement, and other supports such as vocational rehabilitation. Employers contribute to a collective fund that finances these benefits.
Each province and territory has its own WCB, except the Northwest Territories and Nunavut, which share one board. There is also a federal workers’ compensation service for federal government employees, but it does not cover private employers in federally regulated industries. Provincial and territorial exemptions vary widely (Mehta, 2022). For example, Alberta’s list of exempt activities can be found here: WCB Alberta – Exempt Activities.
Although specific WCB premium structures vary by jurisdiction, employers generally pay premiums based on industry classification and the assessed risk of injury for their sector. Premiums are calculated based on factors such as payroll size, historical injury claims, and the employer’s safety record.
Payroll should track industry-specific rates and rate changes for the employer organization to calculate accurate WCB premiums. While the process may differ slightly between jurisdictions, the following steps generally apply:
- Calculate the gross assessable earnings for employees. Determine the total gross earnings for all covered employees. This includes salaries, wages, bonuses, and other assessable forms of compensation.
-
Calculate the net assessable earnings (NEA) for employees. The WCB sets a maximum assessable earnings limit for each employee. For example, if the maximum assessable earnings are $90,000 per year, the employer pays premiums only on the first $90,000 of each employee’s annual earnings.
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Determine the premium rate. Each jurisdiction sets premium rates based on industry classification and historical injury frequency. Rates may be shown as a percentage or as an amount per $100 of NEA (the two are mathematically equivalent).
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Calculate the WCB premium. Multiply the total NEA by the assigned premium rate:
Rates can vary widely, both within and across jurisdictions. Here are some examples (2023 rates):
|
Jobs and how to check rates |
Alberta |
Ontario |
British Columbia |
|---|---|---|---|
|
College instructors |
$0.41 per $100 NEA |
$0.38 per $100 NEA |
0.24% |
|
Pipeline construction workers |
$1.95 per $100 NEA |
$1.81 per $100 NEA |
1.54% |
|
Meat-processing workers |
$3.21 per $100 NEA |
$1.32 per $100 NEA |
3.34% |
|
To check rates: |
References
Mehta, S. (2022, April 5). How does workers compensation work in Canada? Canadian Payroll Services. https://canadianpayrollservices.com/workers-compensation-canada/
Workers’ Compensation Board (WCB) – Alberta. (2018a). Exempt activities. https://rm.wcb.ab.ca/wcb.ratemanual.webserver/ExemptActivities
Workers’ Compensation Board (WCB) – Alberta. (2018b). Premium rate manual. https://rm.wcb.ab.ca/WCB.RateManual.WebServer/
Workplace Safety and Insurance Board (WSIB) Ontario. (2023). Employer classification manual. https://safetycheck.onlineservices.wsib.on.ca/safetycheck/ecm/naics/611210?lang=en
WorkSafeBC. (2024). Find your classification unit, industry, or rate. https://www.worksafebc.com/en/insurance/know-coverage-costs/find-classification-industry-rate
Image Credit
Workers’ Compensation Board (WCB) – Alberta. (2024). Home page [Logo]. https://www.wcb.ab.ca/
