An Employer’s Confirmation Form (OCF-2) is, as the name states, filled out by the employer to confirm the insured’s work history. It provides employment dates, basic income details, and information on the potential availability of other income replacement assistance (collaterals). All of this information would be used in the calculation of the Income Replacement Benefit (IRB).
It is, however, grossly deficient in outlining the information required from an employer in light of arbitration decisions over the years. Part of this is likely due to the OCF-2 having not been updated since 2004.
Deficiencies with the Form
Right off the bat, we can see this form presents a few issues as it pertains to relying on this information to calculate an IRB.
Employment Insurance (EI) benefits are explicitly included as a component of gross employment income per the Statutory Accident Benefits Schedule (SABS). Subsection 4(1) defines Gross Employment Income as “salary, wages and other remuneration from employment, including fees and other remuneration for holding office, and any benefits received under the Employment Insurance Act (Canada)…”
So, why the need for a blog post?
EI benefits can be more than just a component of an individual’s pre-accident income, they can also be the basis of their eligibility for an Income Replacement Benefit (IRB).
The Many Roles of EI Benefits
Eligibility is the first question that must be addressed when starting to calculate an IRB. EI benefits are important in determining an insured’s eligibility if they are unemployed at the time of the motor vehicle accident. If an insured is receiving EI benefits at the time of the accident, they qualify for an IRB, as per s. 5(1)1.ii of the SABS. Continue reading
There are many factors that can affect income for an insured. Employment expenses are one piece of this puzzle.
If an employee, in the course of employment, is required to pay certain expenses as a means to earn income, they could have employment expenses. These expenses may be reported on a person’s income tax return, although the allowable amount of expenses will vary depending on how the individual earns income.
These employment expenses are different from business expenses which would be claimed by someone who is self-employed.
For more information on employment status, head over to our blog on that very topic. To learn more about the difference between employed and self-employed, we’ve handily covered that topic in another blog post.
What bearing do these expenses have on an Income Replacement Benefit (IRB)?
Expenses an employee incurs in performing their job, and which are deductible for tax purposes pursuant to the Income Tax Act, would also be deducted in the calculation of an insured’s income for IRBs.
Summary: The New SABS (O. Reg. 34/10) have introduced changes which will require continued efforts on the part of an adjuster to confirm what benefits may be considered payments for loss of income, and subsequently, what will be deductible as other income replacement assistance.
Payments for loss of income which are deductible from an IRB are outlined in paragraph 3(7)(d) of the New SABS. This paragraph is a change from the Old SABS subsection 2(9), apparently codifying previous FSCO arbitrations decisions, such as Sharma-Singh and Co-operators General (A07-000588).
For details on other income replacement assistance, we refer you to our ADS Blog.
So what changes did the New SABS bring?
Insurance Contract – The first change deals with contracts under which periodic payments of insurance are deemed to be payments for loss of income. Specifically, payments are now deemed to be payments for loss of income “irrespective of whether the contract for the insurance provides”:
The past 14 years have seen a few tweaks to both the Eligibility Criteria and the Period of Benefits for an IRB. The New SABS (O. Reg. 34/10) is no different.
We have addressed the changes below, including the removal of the Whiplash Associated Disorder (WAD), and the changes to the Election among Income Replacement, Non-earner and Caregiver benefits found in the new Section 35.
For ease of reference, we have also included the wording of the sections of the New SABS for your review.
When it comes to calculating income, it is not always as straightforward as how much salary an employee earns on their paycheque. Sometimes income also comes in the form of goods and/or services.
But what are you to do if an insured tells you they were provided with an apartment rent-free in exchange for working as a handyman in a building?
How do we translate those goods and services into income when determining Income Replacement Benefits (IRB)?
The most important thing to remember is that goods and services earned through Continue reading