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No matter what industry you're in, nearly all businesses in Canada are required to register with their provincial Workers’ Compensation Board (WCB) and pay Workers' Compensation insurance premiums. But if you’re new to business ownership, you might be wondering how the system works and what it all means for you as an employer. To better understand the importance of WCB and Workers' Compensation insurance, we asked Knit People’s Senior Accounting Associate Guriqbal ‘Guri’ Singh for his perspective.
What is Workers' Compensation insurance?
Understood in the simplest terms, Workers’ Compensation insurance is a system that employers fund to ensure that workers are taken care of if they are injured at work. More specifically, it’s a form of insurance that ensures that if a worker is injured, they will be protected monetarily and compensated for lost wages, as well as medical and rehabilitation needs. In return, the employer is afforded protection from lawsuits. Moreover, the program is no fault, which means that blame is not assigned in the event of an injury and compensation for lost wages is provided regardless of how the injury occurred.
What are my responsibilities as an employer?
As an employer, you are responsible for making an effort to prevent illness and injury, report injuries that do occur, and help injured employees return to work. In addition, you are responsible for registering your business with your provincial WCB and paying the appropriate Workers' Compensation insurance premiums.
Who has to register for Workers' Compensation insurance?
Nearly all businesses in Canada are required to register with their provincial WCB—with some exceptions. While Workers' Compensation insurance is mandatory for most Canadian businesses, it's administered provincially, meaning that Workers' Compensation insurance varies from province to province.
In certain cases, sole proprietors or independent operators running unincorporated businesses with zero employees do not have to register—depending on the province. Moreover, it doesn't matter if the employees are full-time, part-time, casual, contract workers, or subcontractors. In most provinces, if you hire a proprietor to do work for you, the proprietor is considered to be one of your workers, unless he maintains his own WCB account. In the case that contractors or subcontractors have their own WCB accounts, you have a responsibility to ensure that these accounts are in good standing.
In other words, if you’re an employer in the process of hiring your first employee, you’ll need to reach out to your provincial WCB to determine your obligations as an employer.
How much doesWorkers' Compensation insurance cost?
Not every business carries the same risks, which is why the cost of Workers’ Compensation insurance varies depending on what industry your business operates in. When you first register with the WCB, you’ll have to describe your business so that the board can determine your industry category. The rates for Workers' Compensation insurance are calculated per $100 of insurable earnings and you can find the rates by industry classification on the the Association of Workers' Compensation Boards of Canada’s website.
The average premium rates can vary widely from province to province. For instance, in 2019, Manitoba has the lowest premium rate at $0.95 per $100 of payroll, while Nova Scotia and New Brunswick have the highest premium rates at $2.65 per $100 of payroll.
What are the benefits of Workers' Compensation insurance?
By registering with the WCB and paying Workers’ Compensation insurance, employers receive a number of benefits, including:
- Protection from lawsuits
- No-fault insurance
- Workpace insurance benefits for your workers
- revention training and educational programs to help prevent injuries before they happen
- Help getting injured workers back on the job
Remember, even if you think that injury is unlikely, just imagine what the ramifications would be if even a single injury occurred. Could your business cover the cost of the employee’s medical bills or rehabilitation? What if an injured employee launched a lawsuit? The WCB system helps protect employers by pooling the risk and sharing the costs.
For more information on WCB and Workers’ Compensation insurance, visit the Association of Workers' Compensation Boards of Canada.
Disclaimer: This article provides general information and should not be construed as tax advice. Since tax rules may change over time and can vary by location and industry, please consult a CPA or tax advisor for advice specific to your business.