Monday, June 23, 2014

How does the workers' compensation scope of coverage influence the OH&S mandate?

Governments implement legislation to fulfill a specific societal desire or “social policy objective”.   One social policy objective is:

to protect workers from work-related injury, disability, illness and death in a compassionate and sustainable way that still allows the economic activity and innovation necessary for societies to operate and thrive.

The statutes created by legislators to achieve that objective vary.  There is, however,  a set of “levers” that can be used to achieve the objective .  Governments create “statutory agencies” to control the levers.  Where the percentage of “employed labour-force”  covered by workers’ compensation approaches 100%, it makes sense to place all the levers of control in the hands of a single statutory body that can set, adjust, and fine-tune the levers to achieve the social policy objective.  This is exactly what we find in practice in Canada. 

The following table is based on data from the Association of Workers’ Compensation Boards of Canada (

For the statutory agencies near the top of the list, the workers ’ compensation board of commission generally controls all the levers (workers’ compensation and OH&S).  In jurisdictions towards the bottom of the list, workers’ compensation levers can have no impact on those outside the scope of coverage.  The ability of one  statutory agency  to fine tune or set the full range of levers  for the part of the labour force not covered is lost. 

In order to achieve consistency across the economy, jurisdictions with low percentages of employed labour force covered must struggle to achieve the social policy objective with only half the tool set  for those outside the scope of coverage.  The need for consistency across all workplaces, however, requires the enforcement, regulation, education/training and prevention levers  that influence the health and safety outcomes in the workplace be applied (largely) independently from what happens in workplaces within the scope of workers’ compensation coverage.  The tool set that can be used by the statutory agency responsible for OH&S  is restricted.  To achieve the social policy objective, the incentives tend to be more “stick” oriented (including increased use of prosecution and fines).

The statutory agencies responsible for workers’ compensation in these low-coverage jurisdictions have a limited tool set as well.  Often, this spawns more aggressive use of  the levers within its exclusive control like experience rating, classifications, surcharges, discounts and other  incentives (including retrospective rating systems and rebates).  This dichotomy—even in the presence of extensive consultation—can result in perverse outcomes including claim suppression. 

There may be other social policy reasons to decide to exclude significant portions of the employed labour force from workers’ compensation coverage.  It is up to each jurisdiction to determine if some other objective is of greater importance to justify that exclusion.  There is nothing inherently wrong with doing so.  It is up to the constituency of each jurisdiction to determine its own priorities.  My point is simply that decisions on the scope of coverage for workers’ compensation systems have consequences for workers and employers both inside and outside the scope of coverage.  It also has consequences for the range and precision of the levers that can be applied and coordinated to achieve safe and healthy workplaces in a thriving economy.  

1 comment:

B.Quirke said...

Compelling posts this month, particularly around the impact of the regulation setting within the OHS levers to determine scope of workforce coverage. I appreciate the concept that agencies with joint OHS and WC responsibilities may have access to a bigger toolbox to carry out their mandate. As noted this also allows for greater potential use of ‘carrot’ approaches.

It also raises a lot of questions for me around scope of workforce coverage a) how are boards using this lever – are they increasing or decreasing their % coverage on average b) how does coverage correlate to injury rate and c) how does coverage correlate to disability duration?

Running rough scatterplots using the AWCBC data tell us (acknowledging these measures are not comparing apples to apples):

a) Boards are increasing their coverage of the workforce on average over the years 2001-2014. AB, MB, NS, ON, and PEI have extended their coverage between 5-10% over this time. BC, NL and SK have increased covered between 1-4%. While NB and QC are the exceptions, decreasing coverage between 1-4%

b) Coverage appears to have little correlation with injury rate as measured by KSM 21 (Injury Frequency per 100 workers of assessable employers)

c) Increasing coverage appears to moderately correlate with increasing disability duration as measured by KSM 25.3(% of Wage-Loss Claims off Compensation at 90 days). We see provincial boards with the highest coverage (NL, PEI, BC) having lower number of claims off compensation at this point (70, 73 and 77 respectively) compared to boards with the lowest coverage % (MB, NS, ON) having higher number of claims off compensation (81, 78 and 82 respectively)

Many possible explanations for this, lots to think about…