Funding Fairness: State of Workers’ Compensation Funding

Workers’ compensation insurance is entirely funded through mandatory employer premiums and investment earnings. Ideally, provincial/territorial workers’ compensation boards/commissions (boards from hereafter) should aim to adequately balance their funding to protect the compensation benefits of injured workers in the long term, while preventing the volatility of premiums or overcharging employers. Boards, however, should not accumulate large surpluses in their funding as it deprives employers of crucial resources that could be reinvested to meet the massive challenges being faced by many small businesses.

This snapshot provides an overview of the latest funding levels of provincial and territorial boards, outlines the benefits of direct rebates for small businesses across Canada, and highlights payroll rules that add cost and complexity for employers.

Key takeaways

• The latest data shows seven boards are overfunded, five of which were also overfunded last year.
• If all seven overfunded boards provided rebates, small businesses would receive an almost $5 billion boost.
• Eight out of twelve boards have a policy to return funds to employers.
• Only the Ontario government has legislated mandatory rebates under set targets.
• New Brunswick is returning $53 million in surplus funds this year while Ontario and Manitoba have returned $4 billion and $122 million respectively.
• Requiring employee tips to be included in assessable earnings can be an administrative headache for small businesses.