Workplace injuries happen daily across Canada. According to the Association of Workers' Compensation Boards of Canada (AWCBC), over 240,000 claims were accepted in 2022 alone. It’s not hard to imagine why: Something as seemingly minor as a trip from a loose wire can result in a twisted ankle, weeks of lost work, potential medical bills and legal fees. Workers’ compensation isn’t just a legal requirement, it’s a lifeline for small businesses and their employees.
What is worker’s compensation benefit?
Workers’ compensation is a mandatory, no-fault insurance system designed to protect both employees and employers. Funded by employer premiums, this system provides injured workers with wage replacement, medical care, and rehabilitation services while shielding employers from lawsuits.
Each province and territory in Canada administers its workers' compensation program through a dedicated Workers’ Compensation Board (WCB). While the core coverages – like work-related injuries - are offered throughout the country, the specifics, like eligibility and benefits, vary by jurisdiction.
Why small businesses need worker’s compensation
Workplace injuries can lead to significant expenses for small businesses, from medical bills and rehabilitation costs to lost wages for injured employees. Here are some considerations for why it’s so important:
Financial safety net
Without workers’ compensation insurance, your business could face significant financial burdens. Medical expenses, lost wages, and legal fees can quickly add up, especially for small businesses.
For example, if an employee needs surgery, follow-up care, and weeks of rehabilitation, you could be looking at tens of thousands of dollars in bills and lost work. Workers' compensation ensures those costs are covered, allowing you to focus on running your business without risking financial ruin.
Employee protection & retention
Having workers’ compensation in place builds confidence and loyalty among your employees. They’ll know you’ve got their back if the unexpected happens. This reassurance can improve morale, reduce turnover, and make your business more attractive to skilled workers, especially in competitive industries like skilled trades or hospitality.
Legal consequences of avoidance
Failing to register for workers’ compensation isn’t just risky; it’s against the law. Most provinces require employers to register with their respective WCB as soon as they hire workers. Noncompliance can lead to hefty fines, lawsuits, and even business closure.
For example, in Ontario, employers must register with the Workplace Safety and Insurance Board (WSIB) within 10 days of hiring their first employee. Deadlines and requirements vary by province, so it’s essential to check with your local WCB.
How does workers’ compensation work?
When an employee is injured on the job, the process involves these steps:
- Reporting the incident: The employee must inform their employer immediately. Employers are then required to notify their provincial WCB promptly—often within 72 hours of becoming aware of the accident.
- Filing a claim: The employer submits a detailed claim to their provincial WCB, including incident reports and medical documentation.
- Receiving benefits: Once approved, the injured employee can access benefits, which may include coverage for medical expenses, wage replacement (usually between 70-90% of pre-injury earnings), rehabilitation services, or permanent impairment compensation.
- Follow-up: Employers and employees must cooperate during the recovery process. If recommended, modifications to the workplace or gradual return-to-work programs should be implemented.
Learn more: Professional vs, general liability insurance: What coverage does your business need?
Who does it cover?
Worker’s compensation provides coverage for a wide range of workers, including full-time, part-time, seasonal, and even temporary employees.
It provides comprehensive coverage to address various needs following a workplace injury or illness. Here's what it generally includes:
Wage replacement benefits: Workers receive a portion of their income—typically 70-90% of net earnings. For example, in Ontario, injured workers receive 85% of their pre-injury net income up to a maximum annual threshold.
Medical expenses: Everything from emergency care and surgeries to medications and physiotherapy is covered. Some provinces also include travel costs for required treatments.
Rehabilitation services: Programs to help employees recover and reintegrate into the workplace, like physical therapy or job retraining, are included.
Permanent impairment benefits: If the injury results in long-term or permanent impairment, employees may be eligible for additional compensation.
Pain and suffering benefits (province-specific): Some provinces offer additional compensation for significant, long-term pain due to injuries.
Costs of workers’ compensation
The cost of workers’ compensation insurance depends on several factors, including the industry, the size of your business, and your province. Premiums are calculated per $100 of insurable earnings. For instance:
- Manitoba: $0.95
- Ontario: $1.30
- Nova Scotia: $2.65
These rates reflect the varying risk levels of industries across provinces. Employers’ claims history may also influence premium rates. Businesses with fewer injuries may earn discounts, while those with frequent accidents could face surcharges.
Provincial differences
While the basics of workers’ compensation are consistent nationwide, the specific rules and benefits vary by province. Here’s a snapshot of notable provincial differences:
- Ontario (WSIB): Covers up to 85% of net earnings up to an annual maximum of $110,000 (2023). Registration is mandatory within ten days of hiring the first employee.
- Nova Scotia (WCB): Benefits include 75% of pre-injury wages for the first 26 weeks, which increases to 85% thereafter.
- British Columbia (WorkSafeBC): Wage replacement is based on 90% of net earnings, capped annually at $112,800 in 2023.
- Alberta (WCB): Premiums are among the lowest in Canada at $1.26 per $100 of payroll, and wage replacement benefits cover up to 90% of net earnings.
When operating across provinces, register with the WCB in each jurisdiction to ensure compliance and proper coverage.
Common misconceptions about worker’s compensation
"My business is too small to need it"
Small businesses, in fact, are often more vulnerable because they may not have the financial reserves to handle unexpected costs like medical bills or lawsuits. Worker’s compensation isn’t just for big corporations, it’s a safeguard that protects both employers and employees, regardless of your company’s size.
"It’s too expensive"
Some business owners worry that worker’s compensation coverage will stretch their budgets too thin. However, the cost is generally calculated based on factors like your industry and payroll, meaning premiums are often proportional to your specific risk levels.
Without this insurance, just one workplace injury could result in expenses far exceeding the cost of coverage—from medical bills to potential legal fees. For most small businesses, the price of worker’s compensation is a small investment compared to the financial security it provides.
"It only covers dangerous jobs"
It’s easy to assume that worker’s compensation is only relevant for high-risk industries, such as construction or manufacturing. However, accidents can happen in any work environment. Picture an office employee slipping on a wet floor or a retail worker injuring their back while lifting a box—these scenarios are surprisingly common.
"It encourages fraud"
Another myth is that worker’s compensation opens the door to fraudulent claims. While no system is entirely immune, modern worker’s compensation programs have safeguards in place to detect and address this issue, such as thorough claim investigations and medical assessments.
The cost of coverage pales compared to the financial impact of a serious injury. A single claim without coverage can bankrupt a small business. Nonetheless, there are still ways to save on costs:
Promote a culture of safety: Fewer accidents mean lower premiums. Training staff on safe practices and maintaining a hazard-free environment can significantly reduce workplace injuries.
Participate in incentive programs: Some provinces reward businesses through discount programs. For example, Alberta’s Partners in Injury Reduction program offers up to 20% off premiums for proactive safety measures.
Bundle insurance policies: Some insurance providers allow you to bundle workers’ comp with other policies, such as general liability insurance, for added savings.
While workers' compensation insurance covers physical injuries on the job, professional liability insurance safeguards your business from claims of errors or negligence by you or your employees. This type of coverage is essential, whether you're a solo provider or managing a team, as it helps protect your business from costly lawsuits and potential damage to your reputation. With professional liability insurance, you can operate with confidence, knowing you're prepared for unexpected challenges.
By putting the right systems in place, you’re not only supporting your employees—you’re securing the sustainability of your small business.
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