Workers’ compensation offers an important safety net in case of injury or illness caused on the job. But workers’ compensation in Canada can certainly cause a headache for employers trying to navigate the rules and regulations.
Why can workers’ comp in Canada be so tricky? Who pays for workers’ compensation in Canada? How does it work?
Here are the basics any employer should know about Canadian workers’ comp.
Does Canada have workers’ compensation insurance?
Workers' compensation is the name of legislation designed to provide benefits, medical care and rehabilitation services to injured workers and anyone with an occupational disease. And yes, most workers in Canada are eligible to apply if they experience a work-related injury or illness.
The Workers’ Compensation Act
It’s easier to understand workers’ comp in Canada when you have some background on the Workers’ Compensation Act.
Canada’s workers’ comp program dates back to 1889 when a group called the Royal Commission on the Relations of Labour and Capital spoke out against dangerous working conditions in many industries. The group made recommendations for improving workplace conditions in Canada.
But Canada’s federal government was concerned that implementing these recommendations across the board would undermine the authority of individual Canadian provinces (similar to the argument for state-level autonomy in the U.S.).
In 1910, Justice William Meredith was appointed to the Royal Commission to study workers’ compensation. His final report, known as the Meredith Report, was produced in 1913. It outlined “a trade-off in which workers relinquish their right to sue in exchange for compensation benefits.”
- No-fault insurance
- Collective liability
- Independent administration
- Exclusive jurisdiction
Ontario was the first province to officially accept these principles with the Ontario Workmen's Compensation Act of 1914. And eventually, all other provinces followed with similar workers’ comp legislation.
Today, each province in Canada has its own Workers’ Compensation Act that outlines how the workers’ compensation program works. This is why it can be tricky for employers to navigate the waters of workers’ comp in Canada.
How does workers’ compensation in Canada work?
To understand how workers’ compensation in Canada works, you must be familiar with the WCB.
What is WCB in Canada?
WCB stands for workers’ compensation board. In addition to individual provinces having their own workers’ comp legislation, each province also has its own provincial workers’ compensation board that runs the program.
There are 12 provincial WCBs. For example:
Find links and contact information for each provincial workers’ compensation board through the Canada Centre for Occupational Health and Safety. Additionally, the AWCBC—or the Association of Workers Compensation Boards of Canada serves as a central source of information for all 12 provincial boards and offers a variety of resources.
What is WCB responsible for? Each WCB determines which businesses must carry workers’ compensation insurance, how much each employer must pay, who is eligible, the process for reporting workplace injuries, etc.
These details vary from province to province. Each provincial workers’ comp board also adjudicates claims and pays out benefits. Finally, most of these workers’ comp boards work diligently to provide injury prevention and support workers and employers in returning to work.
What are employers responsible for?
You might be wondering who pays for workers’ compensation in Canada. The answer is that it largely falls to the employer.
How much do employers have to pay for workers’ compensation insurance? Unfortunately, it’s hard to say. Rates for specific businesses and industries are determined by each provincial board. Employers in Canada must register with the appropriate WCB and pay all applicable premiums.
Other than workers compensation payment, employers are also responsible for:
- Working with employees to prevent injury
- Reporting injuries and illnesses
- Helping injured employees return to work
What about other benefits?
Do you still have to pay other benefits while your workers are out of work? Typically, yes. Unless the employee chooses not to pay their own workers’ comp contributions during an absence, benefits like pension, health and disability benefits, and seniority of an employee still accumulate during the period of absence.
Which businesses must provide workers comp in Canada?
A good rule of thumb? If your business is incorporated or if you have employees, you must provide workers’ compensation insurance. However, the specifics are again dependent on your province and its workers compensation system.
For example, in the Northwest Territories, every business has to register with the WCB within 10 days of beginning operations—even if you’re a solopreneur. Make sure to check with each local WCB where your business is operating for your full responsibilities.
Simplify workers’ comp with an employer of record
Unless you’re employing workers in just a single Canadian province, managing workers compensation in Canada can get complicated quickly. But an employer of record (EOR), also known as an international PEO, already has local resources to help you navigate even the grittiest of details in each of the country’s provinces.
When you use an EOR, you rely on the provider to hire workers on your behalf and take on the legal responsibility for complying with all the payroll and employment laws in the country, including workers’ compensation. The employer of record:
- Onboards local employees with compliant contracts
- Remits salaries, taxes and benefits owed
- Supports in-country employees’ HR needs