Posted on: January 21, 2025|By: Blake Mancini

Every day in Canada, a workplace injury occurs. According to the Association of Workers’ Compensation Boards of Canada (AWCBC), over 240,000 claims were accepted in 2022 alone. Unfortunately, it’s easy to understand why accidents happen every day. Something as minor as an employee tripping on a loose wire can result in a twisted ankle. This twisted ankle can result in weeks of lost work, potential medical bills, and even legal fees. This is where WSIB, or the Workplace Safety and Insurance Board, a.k.a. ‘Worker’s Compensation’, comes into effect. Not only is it legally required as a business, but it’s your business’s lifeline for their employees. Are you considering opening a business and unfamiliar with worker’s compensation? Don’t fret; isure has everything you need to know!

What is WSIB?

WSIB is a no-fault insurance system created to protect employers and their employees. Employer premiums fund this system and provides injured workers with wage replacement, medical care, and rehabilitation services. At the same time, it protects employers from lawsuits that may result from accidents.

No matter where you are in Canada, every business administers its worker’s compensation through the Worker’s Compensation Board (WCB). While the core coverages such as work-related injuries are offered throughout the country, many specifics vary by province and territory.

So, why do small businesses need worker’s compensation? Well, workplace injuries can often result in significant expenses for small businesses. These can include medical bills, rehabilitation costs, and lost wages for employees who are injured and unable to work.

Is WSIB mandatory in Ontario?

Though WSIB coverage isn’t always mandatory in Ontario, it is highly recommended. The Government of Ontario decides which industries and which employee types need to have mandatory WSIB coverage. The entire list is available on the Workplace Safety and Insurance Act (WSIA) website. If a specific business isn’t required to have coverage but still wants it, they can apply for coverage for their employees through the website.

Once a business is registered with WSIB, its premiums will cover the premiums of all employees except for the owner of the business. An exception to this is most construction businesses. On the other hand, owners can apply for WSIB coverage for themselves as long as they have coverage for any employees within the business. This is also the case for partners, sole proprietors, independent operators and executive officers. Applying for WSIB will require the same coverage.

The amount of coverage that WSIB provides is the same for every type of business that registers, regardless of whether or not the registration is mandatory. Coverage will last the business a minimum of three months and will not end until you cancel it.

Benefits of WSIB

The WSIB offers a plethora of benefits. In many cases, people believe that their business is too small for workers’ compensation to be effective. However, this is far from the case. Small companies are often more vulnerable because they don’t have the financial stability to handle the unexpected costs of medical bills or lawsuits. Signing up with WSIB or worker’s compensation is heavily recommended regardless of the type of business you run or its size. Let’s take a look at some of the benefits worker’s compensation brings to the table.

1. Financial safety

If your business doesn’t have worker’s compensation insurance, you could face extreme financial burdens if an accident occurs. Medical expenses, lost wages, and legal fees can quickly increase, especially for smaller businesses. For example, if your employee falls and needs surgery, follow-up care, and weeks of rehabilitation, that is tens of thousands of dollars in bills and lost work. With worker’s compensation, you have peace of mind knowing these costs are covered. So you’ll be able to focus on running your business without risking financial ruin.

2. Employee loyalty

Having worker’s compensation in place can also help your employees build confidence and loyalty. When employees learn you have worker’s compensation, they are more likely to build loyalty because you know you have their back in case the unexpected happens. This reassurance can improve morale, reduce turnover, and make your business more attractive to new employees. This is especially the case in industries such as hospitality or trade.

3. Legal consequences

Failing to sign up for worker’s compensation doesn’t just put your business at risk, but it’s against the law. In most provinces, employers must register their business with their respective WCB when they hire their first worker. You may be hit with hefty fines, lawsuits, or even business closure by not doing so. In Ontario, an employer must register with the Workplace Safety and Insurance Board (WSIB) within 10 days of hiring their first employee.

What does WSIB cover?

Worker’s compensation provides a wide variety of coverage. This includes full-time, part-time, seasonal, and even temporary employees. Generally, it will provide coverage to address various workplace injuries and/or illnesses. Let’s take a look at what it can include:

Wage Replacement Benefits: Workers receive a portion of their income, typically 70%-90% of their earnings. For example, in Ontario, injured workers receive 85% of their pre-injury income up to a maximum annual threshold.
Medical Expenses: Everything from emergency care to surgeries to medications and physiotherapy are covered.
Rehabilitation: Rehabilitation programs can help employees recover, heal, and reintegrate into the workplace. These services are included and can include physical therapy or job retraining.
Permanent impairment benefits: Employees are eligible for additional compensation if the injury results in long-term impairment.

How does WSIB work?

If the unexpected happens and an employee gets injured on the job, the process of using worker’s compensation involves these steps:

Reporting the incident: If an employee is injured on the job, they must immediately inform their employer. From there, employers must notify their provincial WCB as soon as possible. Often, the cutoff is to report within 72 hours of the accident.
Filing a claim: The employer will then submit a detailed claim to their provincial WCB, which includes incident reports and medical documentation.
Receiving Benefits: The injured employee can access benefits once the submission is approved. These can include coverage for medical expenses, rehabilitation services, or wage replacement. The benefits are usually between 70% and 90% of the pre-injury earnings.
Follow-up: The employer and the employee must cooperate during recovery. In some cases, gradual return-to-work programs will be implemented. Alternatively, modifications to the workplace will be recommended.

How much does worker’s compensation cost?

The cost of worker’s compensation will depend on a variety of factors. These can include the industry, the size of your business, and the province you’re in. Premiums are calculated per $100 of insurable earnings. Some examples include:

Ontario (WSIB): $1.30
Manitoba: $0.95
Nova Scotia: $2.65

These rates can reflect the varying risk levels of industries across provinces. An employer’s history of claims can also influence the premium rates. Like other types of insurance, employers with fewer injuries can earn discounts, while those with frequent accidents expect to pay more.

While the basics of worker’s compensation are similar across Canada, some rules will vary between provinces. In Ontario, WSIB will cover up to 85% of net earnings to an annual maximum of $110,000. As mentioned above, registration is mandatory within 10 days of hiring the first employee.

What is the economic cost of Worker’s Compensation or WSIB?

In Canada, the economic cost of injuries in Canada is estimated at $29.4 billion. This is covering healthcare expenses, lost income and reduced workplace productivity. These can come from both direct and indirect costs. Taking a look at both can give a good understanding as to why WSIB is so important.

Direct Costs

When it comes to workplace injuries, the direct costs are the most visible financial burdens that arise immediately after an incident. These expenses often come from the unavoidable consequences of injuries sustained by workers. A large part of these also come from damage to workplace assets. While direct costs are most accessible to track than indirect costs, they can escalate quickly, impacting the business greatly.

According to the International Labour Organization, businesses face substantial outlays for medical care, equipment replacement and even increased premiums with their insurance following workplace incidents. Let’s take a look at some of the key components of direct costs.

Medical Expenses

Medical Expenses form a significant portion of direct costs. This can include emergency medical care, hospitalization, rehabilitation as well as physical therapy and any prescribed medications. Over time, these expenses can accumulate, especially if the worker requires extended medical care or faces delayed recovery.

Replacement and repair costs

In many cases, injuries lead to damaged equipment or disrupted processes, requiring repairs or replacements. If an operator mishandles machinery that causes an accident, the cost of repairs on said machinery can be substantial. On top of this, insurers may adjust premiums upward if injuries are a repeated incident. While direct, these can also add to financial strain over time

Hiring and retraining

When an employee is injured or unable to work, organizations bear the hassle of having to hire temporary workers to fill in the gap in staff. These can be a significant component of direct costs, affecting both time and money. Hiring a temporary worker involves the cost of recruitment, onboarding as well as training. In a similar fashion, retraining an existing employee may require the same additional resources.

Legal Costs

Legal expenses can arise when workplace injuries result in claims where the workplace is not in compliance with health and safety regulations. This can include attorney fees, court costs and settlement payments. In order to avoid these costs, the workplace must adhere to regular compliance audits, proper documentation make sure all safety protocols are followed.

Indirect Costs

While direct costs can be easy for a workplace to claim, the indirect costs also have equally as damaging reprocussions. These can add up over time and affect employees, operations and even the surrounding community. Indirect costs include lost income and a diminished quality of life for workers who are injured. In return, this can lower morale among employees.

Unlike direct costs, these impacts can be much harder to measure, thus resulting in long-term consequences. These indirect effects highlight the importance of proactive workplace safety. Let’s take a look at some of the key components of indirect impact.

Employee Income

Workplace injuries will reduce a workers income. This affects their ability to support themselves and their families. Even with WSIB and worker’s compensation, employees who are injured can face financial strain due to medical expenses, rehabilitation and time off work. In broader communities, this can have higher economic implications. This can lead to debt, stress and an overall diminished quality of life. Employers can minimize these impacts by providing comprehensive benefits.

Quality of Life changes

Workplace injuries can drastically altar the quality of life for an employee. In many cases, physical injuries can result in chronic pain or other disabilities. This can limit an employees ability to perform daily tasks or enjoy hobbies or activities outside of work. On top of this, emotional affects such as anxiety and depression are also common. This is especially the case if the injury prevents the individual from returning to work or participating in social activities.

Effects on Workplace Morale

Workplace injuries will often impact more than just those injured. In fact, the morale and culture of the entire organization may be affected. When employees witness a colleague injured, it can create fear and stress amongst the team. Over time, this can lead to decreased productivity, higher absenteeism and increased turnover. In order to keep morale high after an injury, the employer must invest in transparent communication, proactive safety measure and team-building activities.

Is worker’s compensation taxable?

Unfortunately, Worker’s Compensation is not taxable. However, the amount still must be reported when filing your taxes. If you are being paid wage loss benefits by the WSIB, you will be given a T5007 statement for each tax year. The T5007 statement from WSIB will arrive in your mail in January or February for the previous tax year. This is done to ensure that any benefits you may be entitled to are calculated properly.

How to save money on premiums

Overall, the coverage cost will pale compared to the financial impact of a serious injury. A single claim without coverage can bankrupt a small business. With this in mind, you can save on costs in many ways. The most common would be to promote a culture of safety. Fewer accidents mean lower premiums. You must ensure your staff are all properly trained and working in a hazard-free environment.

Another great way to save on your provinces is to bundle your insurance policies. Some insurance providers will allow you to bundle your worker’s compensation insurance with other policies, such as general liability insurance.

Worker’s compensation is not only mandatory but crucial to the success of a business, no matter the size! If you have any questions regarding your company and its insurance policy, please get in touch with us at isure! Contact us or request a quote today!