Workers Compensation Act – The New Rules On Permanent Disability Benefits, Retirement Age and the Maximum Wage Rate
Effective January 1, 2021, significant changes came into effect with respect to the Workers Compensation Act with regards to permanent partial disability benefits, retirement age and the maximum wage rate.
Permanent Partial Disability Benefits
Permanent Partial Disability benefits are paid to a worker if a worker fails to completely recover from a work-related injury or occupational disease and is left with a permanent residual disability.
All workers will now have their permanent partial disability benefits assessed on both a loss of function method and a loss of earnings method and then be paid the higher of these two values.
Prior to this change, most permanent partial disability benefits were provided based on a loss of function method. The loss of function method estimates a worker’s impairment of earning capacity based on the nature and degree of the injury.
The loss of earnings method compares the worker’s pre-injury average earnings with either the worker’s actual post-injury earnings or the worker’s potential post-injury earnings, whichever WorkSafeBC determines better represents the worker’s loss of earnings.
Prior to January 1, 2021, the loss of earnings method was only considered if the worker could pass the “so exceptional” test, making it difficult to obtain a loss of earnings award.
As a result, we should see an increase in permanent partial disability benefits for workers as their loss of earnings will now be considered at the outset and without having to first pass a difficult “so exceptional” test.
This is great news for injured workers with a loss of earnings.
Another significant change is the method in which the retirement age can be calculated. This change affects the duration of compensation benefits as most benefits are terminated based on the date that WorkSafeBC sets as a worker’s retirement date.
Prior to 2021, retirement age was determined when the worker’s permanent disability benefits were determined. This could be early on in the worker’s lifetime, when the worker would not have the necessary proof to show that they intended to work beyond the age of 65 and would only consider the worker’s circumstances prior to the injury. Thereby, limiting the duration of the worker’s permanent disability benefits to age 65.
- For example, prior to 2021, Joe, was found to have a permanent back injury as a result of his work and was provided a permanent disability benefit at age 25.
- – Prior to 2021, Joe would have had to show WorkSafeBC that prior to his injury he had planned to work beyond age 65.
- – At age 25, Joe did not have any proof that he would work beyond age 65.
- – Therefore, Joe’s permanent partial disability benefits would end at age 65.
WorkSafeBC will now have the power to make this determination when the worker is over age 63. This allows WorkSafeBC to take into consideration the worker’s circumstances at that time, making it more likely that the duration of the worker’s benefits more accurately reflects the worker’s retirement age.
- For example, Joe’s permanent disability award is determined at age 25, and WorkSafeBC makes the retirement decision when Joe is 64.
- – WorkSafeBC can now look at Joe’s circumstances before and after his injury.
- – Joe now has more proof about the date of his retirement.
- – WorkSafeBC agrees with Joe and pays Joe his permanent disability benefits to age 70.
Given these changes, the duration of payment of permanent disability benefits should increase to more accurately represent when workers plan to retire.
Maximum Wage Rate
The maximum wage rate for 2021 has also been increased to $100,000. Prior to 2021, this rate was set to be $89,800. This change means that worker’s with higher earnings can now have more of their income considered when WorkSafeBC calculates their benefits. Workers’ benefits are calculated on wage rates set by WorkSafeBC. The maximum wage rate sets the bar as to how high WorkSafeBC can set these wage rates.
It is exciting to see changes to the Workers’ Compensation system which are hoped to benefit injured workers. It is expected that these changes will result in higher permanent partial disability benefits as a result of the following changes:
- – looking at both the loss of function method and the loss of earnings method at the outset of decision-making; and
- – basing decisions on higher wage rates, to a maximum of $100,000.
- – Also, the ability to look at a worker’s circumstances after the age of 63 should increase the duration over which permanent disability benefits are paid to workers, if they planned to work beyond the age of 65.
As we begin to see the implementation of these changes in decisions issued by WorkSafeBC this year, we will be able to see if, and how, these changes affect workers’ compensation overall.
Note to our Readers: This is not legal advice. Please contact our offices, if you are looking for legal advice.
GKS Law Firm