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.
As we mentioned in our blog post on common errors and deficiencies found in the OCF-2 form, there are ways to make the form work better for you.
By requesting not only the correct supporting documentation, but asking the right questions, as well, you can ensure a correct Income Replacement Benefit (IRB) calculation every time.
Let’s start with the documentation. Why are these so important?
As noted in our previous blog post, the people completing the OCF-2, don’t always have the requisite knowledge to correctly and completely provide answers to the questions they are asked. As such, supporting documentation helps to support the amounts noted on the OCF-2, and ensure it has been completed correctly. Continue reading
Generally, loans received by an insured, regardless of the source, are not considered income for IRB purposes. But, as with most situations, and because this would be a really short topic otherwise, it’s not quite so cut and dry.
Traditionally, this issue is more prevalent after an accident than before, but the same principles apply. Whether it is a self-employed individual who cannot work post-accident and is taking loans from their business to survive, or an employee who is receiving loans from his employer, family, or friends, you need to understand whether the receipt of money is related to employment or self-employment activities.
Subsection 4(1) of the SABS defines gross employment income as “salary, wages and other remuneration from employment…”
Subsection 3(1) of the SABS defines self-employment as a “trade, occupation, profession or other type of business…” It would appear then that income from self-employment would be as a result of providing services as a business to customers in return for money or other payment type.
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: A new term for what was previously called collateral payments for loss of income under the prior legislation, OIRA appears to bring together s.7(1) and (2) of the Old SABS. The only significant change appears to be the addition of “gross”…but does that have an impact?
The New SABS (O. Reg. 34/10) introduces us to “Other Income Replacement Assistance” (s 4(1)). Commonly referred to as collateral benefits, the new definition highlights that OIRA:
- Relates to the current accident
- Is the amount of any gross weekly payment for loss of income that is being received, or that may be available to the person but is not being received as an application has not been made.
- The following are excluded benefits: the Employment Insurance Act (Canada), payments under a sick leave plan that is available to the person but is not being received, and certain payments under a workers’ compensation law or plan that is not being received by the person
The content of this definition, appears to bring together subsection 7(1) and (2) of the Old SABS. As a result, the only significant portion of this change appears to be that “net weekly payments for loss of income” has become “gross weekly payment for loss of income”.
Cold, hard cash can be very hard to trace. This makes accounting for cash wages in Income Replacement Benefit (IRB) calculations tricky.
There are any number of instances when a person might be paid in cash: tips for waiting tables, housekeeping, contractors, whether employed or self-employed, and often when working for family members.
So, how do we prove a claimant earned a particular wage where they were paid in cash?
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