Compensation – Dependent Spouse after Initial Entitlement
Effective date: March 1, 2015
Application: All claims where dependent spouses are receiving benefits under Section 81(6) of the Act beginning at their next annual review.
Policy subject: Fatalities - Dependants
To establish guidelines for estimating earning capacity of dependent spouses.
- Under Section 2(1)(k) of The Workers’ Compensation Act, 2013 (the “Act”) earnings means:
- in the case of a worker who sustained an injury before September 1, 1985, the worker’s gross earnings from employment; or
- in the case of a worker who sustained an injury on or after September 1, 1985, the worker’s gross earnings from employment less the probable deductions for:
- the probable income tax payable by the worker calculated by using only the worker’s earnings from employment as their income, and using only the worker’s basic personal exemption, exemption for dependents and employment-related tax credits, as at the date of the worker’s injury and each anniversary date, as the worker’s deductions;
- the probable Canada Pension Plan premiums payable by the worker; and
- the probable employment insurance premiums payable by the worker.
- Section 81(1) of the Act provides the surviving dependent spouse of a deceased worker a monthly allowance based on the greater of the deceased worker’s compensation at the time of death or one-half of the average weekly wage. The allowance is paid for an initial period of five years and under certain conditions may be paid for longer periods.
- Section 81(2) of the Act provides that where the surviving dependent spouse has dependent children of the worker, the compensation payable pursuant to Section 81(1) is to be extended until the youngest child reaches the age of 16 years, or 18 years where any dependent child is attending school full-time.
- Section 81(6) of the Act directs that following the expiration of entitlement to compensation pursuant to Sections 81(1) and 81(2) and subject to Section 101, a surviving dependent spouse of a deceased worker is entitled to compensation, until the surviving dependent spouse reaches the age of 65 years, equal to the difference between:
- the amount of the monthly allowance that would be payable pursuant to Section 81(1) if the surviving dependent spouse were entitled to that allowance; and
- the earnings that the surviving dependent spouse is earning from employment.
- Sections 101(1) and 101(2) of the Act indicate the circumstances when it may be necessary to terminate or reduce benefits to a dependent spouse after their entitlement under Sections 81(1) and 81(2) of the Act comes to an end. If the spouse has little or no earnings from employment, the amount by which benefits are to be reduced may be determined by estimating their earning capacity.
- Initial compensation and (re)employment assistance to dependent spouses will be established as per the provisions outlined in POL 24/2016, Dependent Spouses – Initial Entitlement and Re-Employment Assistance.
- When establishing initial entitlement, the tax exemption level for the payment of compensation to the dependent spouse will be the same as the tax exemption level recorded for the worker at the time of death. The exemption status for the dependent spouse will not change for the initial entitlement period as referenced in Section 81(1) or Section 81(2) of the Act.
- On the expiration of initial entitlement, a dependent spouse may be eligible to receive additional compensation equal to the difference between the initial compensation amount and the earnings that the dependent spouse is earning from employment. The deductions for earnings from employment will be based on the calculation of earnings defined in Section 2(1)(k). The additional compensation will be calculated using the dependent spouse’s current exemption status.
- If a surviving dependent spouse is eligible to receive additional compensation, benefits will continue until the end of the month in which the dependent spouse reaches the age of 65 years.
- Where the dependent spouse does not have any earnings, the dependent spouse’s earning capacity will be estimated as follows:
- Health or any other factors that preclude the dependent spouse from entering the workforce or that impairs their ability to earn are to be taken into account in the determination of their earning capacity.
- The provisions of POL 01/2018, Benefits – Long-Term Earnings Loss, will apply.
- The WCB will consider the dependent spouse’s exemption status to be single unless the spouse can provide substantiation supporting an alternate exemption status.