Personal injury loss accounting – income replacement benefit

March 05, 2020

Employed 26 out of 52 weeks before the accident?

The decision from the Licence Appeal Tribunal (LAT) in the matter of P.K. and Pembridge Insurance Company (Pembridge) (Tribunal File Number: 18-000865/AABS) addresses the criteria that establish an employee/employer relationship to be eligible to receive a weekly income replacement benefit (IRB).

P.K. was involved in a motor vehicle accident on August 28, 2015, for which an application was made to receive a weekly IRB. However, Pembridge denied the application on the basis that the claimant was not employed for at least 26 weeks during the 52 weeks before the accident, nor was he receiving Employment Insurance (EI) benefits at the time of the accident. These are both requirements according to subparagraph 5(1)(1)(ii) of the Statutory Accident Benefits Schedule (SABS) – effective September 1, 2010, Ontario Regulation 34/10 SABS, for individuals who are not employed or self-employed at the time of the accident.

Although the applicant was not in receipt of EI benefits at the time of the accident, he did argue that he was employed for at least 26 weeks during the 52 weeks before the accident. In this regard, the applicant commenced employment on October 6, 2014, and continued to work until February 17, 2015, for a total of 19.29 weeks. On February 18, 2015, the applicant went on sick leave and, on March 3, 2015, a Record of Employment (ROE) was issued allowing for him to apply for EI sickness benefits but also indicating a recall date of March 21, 2015. Although the applicant received EI sick benefits until June 20, 2015, when they expired, he ultimately had to repay these benefits when it was determined that he was ineligible for these benefits. The applicant did not work for the balance of the 52 weeks before the accident.

As a result of the accident, the employer completed an OCF-2 indicating that the applicant had worked a total of 20 weeks and earned $11,560.00. Pembridge relied on the OCF-2 as well as argued that the completion of the ROE terminated the applicant’s employment relationship on March 3, 2015, therefore he did not meet the eligibility criteria as set out in the SABS as he was employed for only 21.29 weeks in the period October 6, 2014 to March 3, 2015.

The Adjudicator rejected Pembridge’s argument. She did so stating that the issuance of an ROE does not in-itself terminate the employment relationship but rather just confirms the last date worked for purposes of an application for EI benefits. Not only did the ROE indicate a recall date, but the OCF-2 also indicated that the applicant was on medical leave at the time of the accident. Also, sick notes were issued indicating that the applicant was unable to work after August 25, 2015 (sic) due to the motor vehicle accident on August 28, 2015, but that he was expected to return to work once his disability ended.

Looking collectively at the ROE, which established that until at least March 21, 2015 there was an intention for recall by the employer; the OCF-2, which indicated that the applicant was on medical leave at the time of the accident; the sick notes, which referred to his inability to work at employment due to the accident; as well as an exchange of emails between the applicant and employer in June 2018 regarding his employment status, the Adjudicator concluded that the employee/ employer relationship continued throughout stating that “I find that by March 21, 2015 and through to August 2015 the employment relationship continued”.

As a result, the applicant was found to have been employed for at least 26 weeks during the 52 weeks before the accident and, therefore, entitled to an IRB. The findings in this matter serve to assist us in establishing what constitutes an employee/employer relationship for the eligibility test for a claimant who is unemployed and not receiving EI benefits at the time of the accident and possibly, to determine if the claimant is considered employed at the time of the accident under these circumstances. The issuance of an ROE in and of itself does not sever the employee/employer relationship, akin to when an ROE is issued to individuals who take maternity or parental leave from their employment.

For more information, please contact:

Monique de Bruin-Lewis, CPA, CA•IFA, CFF
Director, Forensic Accounting
BDO Canada LLP
Direct: 416 233 5577 ext. 4188
mlewis@bdo.ca

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