Document name

Under and Overestimating Payroll – Penalties and Credits

Document number

POL 03/2019

1. The Workers’ Compensation Act, 2013 (the “Act”) requires employers to report the employer’s actual payroll for their workers covered under the Act from the previous year and the estimated payroll for the current year (Sections 122, 136, 137).
2. If an employer under or overestimates their payroll by more than 50%, WCB will adjust their premiums and may charge penalties or apply credits (The Workers’ Compensation General Regulations, 1985, Section 9 and 10).

1. Employers are required to annually report an estimate of their payroll for the current calendar year and their actual payroll for the preceding year in accordance with POL 24/2010, Assessable Earnings.
2. Employers should revise their estimated payroll for the current calendar year when it no longer reflects the amount they expect to pay their workers for the year. Employers can revise their estimates any time during the year.
3. Any difference in actual payroll compared to the estimated payroll from the preceding year will be reconciled and adjusted. WCB will calculate underestimate penalties or overestimate credits using the industry premium rate.

Underestimated Payroll – Penalty

4. An underestimate penalty will apply when the actual payroll reported on the annual EPS exceeds the last reported estimate by more than 50%.
5. The amount of the underestimate penalty is equal to 6% of the difference between:
   1. The assessment on the actual payroll, and
   2. The assessment on the estimated payroll.

Overestimated Payroll – Credit

6. An overestimate credit will apply when actual payroll reported is less than 50% of the last reported estimate and the employer’s account has been paid in full no later than September 30.
7. The overestimate credit is equal to 6% of the difference between:
   1. The assessment on the actual payroll and
   2. The assessment on the estimated payroll.
8. Generally, the last date when WCB receives payment in full and the date the actual payroll is submitted are the dates used to determine whether an overestimate credit applies.
9. The overestimate credit will be prorated on a daily basis – number of days from date payment in full was received to actual payroll submitted date.
   1. For example, an employer reported their actual payroll 172 days after their account was paid in full. The actual payroll reported is less than 50% of the reported estimate. Therefore, the employer is eligible for an overestimate credit equal to 2.83% (i.e., 172 / 365 x 6% = 2.83% ).
10. An overestimate credit will not be provided if the employer does not provide payroll information and WCB has estimated the employer’s assessable payroll.