1. Implementing Payroll for Canada
  2. Options for Workers' Compensation Liability Processing

Options for Workers' Compensation Liability Processing

Consider these factors while processing Workers' Compensation liability:

  • Rate Retrieval

  • Calculation of Liability

  • Provincial Factors

  • Wage Basis Rules

  • Annual Maximum Assessable Wages for a Province

Rate Retrieval

Here's the list of rates that are used to calculate Workers' Compensation liability:

  • Rate associated with the default Workers' Compensation Account of the payroll statutory unit (PSU).

  • Rate associated with the Workers' Compensation Classification Unit Override and the Workers' Compensation Province Override you enter at the Location, Job, or Department levels.

  • Rate associated with the default rate of the default Workers' Compensation Account for the Workers' Compensation Province Override on the assignment.

  • Rate associated with the default rate of the Workers' Compensation Account Override on the assignment.

  • Rate associated with the Workers' Compensation Classification Unit Override entered on the assignment.

If any of these overrides are defined, that information is used to capture the appropriate rate set up at the PSU level.

Note: If no rates are defined at the PSU level, then no Workers' Compensation liability is calculated.

Calculation of Liability

The employer liability is calculated as a rate multiplied by the assessable wages up to the maximum assessable wage defined for the province. The rate is defined as an assessed amount per 100 Canadian dollars.

Provincial Factors

The province of employment determines which Workers' Compensation Board is associated to the term or assignment of the employee. The rate associated with the default account is used to calculate the Workers' Compensation liability, unless you override the details.

If an employee moves to another province, the assessable wages and liability aren't carried forward to the new province.

Wage Basis Rules

These balances are created and tracked for Workers' Compensation:

  • Workers' Compensation Gross represents the gross earnings.

  • Workers' Compensation Subject represents the earnings used to calculate the Workers' Compensation liability amount. This also includes amounts above the maximum set for each province. It is the result of Workers' Compensation Gross - Workers' Compensation Exempt - Workers' Compensation Exempt Employee.

  • Workers' Compensation Taxable (also known as Assessable) represents the earnings used to calculate the Workers' Compensation liability amount. This is the amount below (or equal to) the maximum set for each province.

  • Workers' Compensation Exempt Employee represents the earnings that are exempt as a result of defining the employee as exempt from Workers' Compensation in the assignment or the tax card.

  • Workers' Compensation Exempt represents earnings that doesn't have wage basis rules setup.

  • Workers' Compensation Excess is the earnings over the maximum assessable amount that isn't used in Workers' Compensation liability calculations.

  • Workers' Compensation Liability represents the calculated Workers' Compensation amount due by the employer

Annual Maximum Assessable Wages for a Province

Annual maximum assessable wages are delivered for each province. They are held in the Calculation Information Repository of each province and Oracle updates them on an annual basis.

Use the Calculate Value Definitions task in the Payroll area to view the annual maximum assessable wages values for each province and update them.

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