* IE is insurable earnings
The WSIB sets an annual maximum for insurable earnings. For 2013, the annual maximum was $83,200. For 2014, the annual maximum is $84,100.
For WSIB purposes, it is suggested that you keep payroll and other records for a period of 7 years.
The WSIB bases the premium charged to each classification unit (CU) in an account on the insurable earnings of each worker. The amounts for each individual with optional insurance are also included in the premium calculation.
Once the insurable earnings for each worker and individual with optional insurance are determined, they must be assigned to the appropriate Classification Units (CUs). The premium for the CU is calculated by multiplying the total insurable earnings for the CU by your premium rate and dividing by 100.
To calculate insurable earnings:
- For workers who are not contractors/subcontractors, deduct the non-insurable gross earnings from the gross earnings (see below for details)
- For workers who are contractors/subcontractors in industries other than landscaping, logging, and construction determine the labour portion of the contract. This amount is the insurable gross earnings (details)
- For workers who are contractors/ subcontractors in the landscaping industry, see Calculating Insurable Earnings, Landscaping, for details.
- For workers who are contractors/ subcontractors in the logging industry, see Calculating Insurable Earnings, Logging, for details.
- For workers who are contractors/ subcontractors in the construction industry, see Calculating Insurable Earnings, Construction, for details.
- Apply the annual maximum insurable earnings to eliminate any possible excess earnings for each worker ($83,200 for 2013, $84,100 for 2014).
Earnings records confirm the total gross earnings of your workers for the calendar year. These records should include:
- The names of your workers
- Their positions
- Their earnings
- The hours and days they were paid
- The dates on which they were employed.
Record keeping when hiring contractors/subcontractors
Keep business records, including written contracts and contractors’/subcontractors’ invoices, that show
- Dates worked, days and hours paid
- Amounts earned
- Amounts paid for labour and costs of material/equipment supplied by the contractor/subcontractor.
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For workers who are not contractors/subcontractors, gross earnings are the total earnings from any source. For WSIB purposes, gross earnings are of two kinds: insurable and non-insurable. Only insurable gross earnings are included in the premium calculation, subject to the maximum earnings ceiling.
For contractors who are workers of the principal and deemed workers in the construction industry, see Calculating Insurable Earnings - Construction, section for details.
If you have workers who work outside of Ontario and do not know how to report their earnings, contact a WSIB account representative.
Insurable gross earnings
- Regular gross earnings includes such items as wages (hourly, daily, etc.), annual salary, and payment for piecework. These are usually reported on pay or earnings stubs and on T4 slips and include any amounts reported on a T4 as deductions for:
- Income tax
- Employment Insurance (EI)
- Canada Pension Plan (CPP)
- Extended health care
- Dental plan
- Group insurance
- Loss or use of equipment or tools
- Union dues
- Salary savings
- Loan payments.
- Allowances such as for car, clothing, moving, tools, travel that are reported as taxable benefits and therefore included in income
- Bonuses, incentives, taxable awards, prizes, taxable gifts
- Buyouts paid to performers in the motion picture industry (i.e. up-front amount paid in lieu of royalties/residuals)
- Commissions and draws
- Cost of living allowance (COLA)
- Director Fees’: if the director is an employee of the company, the amount of fee is added to the regular pay period’s earnings
- Disability benefits, short- and/or longterm, paid to the worker directly by the employer
- in the construction industry under compulsory coverage, where executive officers of private corporations choose a remuneration package comprised of dividends
- where executive officers of private corporations, with WSIB optional insurance, choose a remuneration package for themselves comprised of dividends
- Employment insurance (HRDC) Job Creation payments
- Gratuities (tips, verifiable by the employer)
- Honorariums greater than $500
- Income splitting between spouses when the amounts are included on the spouse’s T4
- Isolation, hardship/subsistence pay
- Legal service plan (workers), employer’s contribution to its workers
- Members of a religious order – the dollar value of services provided when these are recorded by a Schedule 1 employer as the amount earned by the members
- Merchandise awards
- Overtime pay
- Pay equity awards
- Pay in lieu of benefits - % of base pay
- Pay in lieu of notice as required under the Employment Standards Act
- Power saw rental
- Premium or discount on foreign funds if the worker is paid in foreign currency as posted by the Bank of Canada
- Profit sharing money paid to workers by the employer from a non-registered plan
- Room and board (i.e., the actual/fair market value of accommodation and meals). Exception: A value for free room and board is not included as earnings by farm employers, for foreign farm workers employed under the “Commonwealth Caribbean/Mexican Seasonal Agricultural Worker Program”
- Salary continuance payments (keeping terminated employees on their regular salary for a specified period of time during which the person continues to accrue benefits in the company’s pension plan and the employer is required to make deductions at source) made during the remainder of the year the person left employment. Payments in the following year are not insurable
- Shift pay: pay for working a period of hours outside the normal hours
- Sick pay
- Standby pay
- Statutory holiday pay
- Stock options when a taxable benefit the value of the employer’s contribution, in full or in part, towards the purchase of stocks
- Supplementary employee benefits plan contributions made by a worker.
- Taxable benefits
- Top-up amounts paid by the employer for absences due to non-work related injuries, which are included on the worker’s T4
- Vacation pay
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Non-insurable gross earnings
- Adoption: payments made by the employer to help a worker with legal fees that result from an adoption process
- Advances or partial advances, as paid by an employer to a worker who is being compensated under the WSIA for full loss of earnings
- Book or ledger credits recorded by the employer representing a portion of a worker’s wages but not paid in that year
- Christmas presents, for example turkey/ ham
- Directors’ Fees: the director is not an employee of the company, and the amount doesn’t exceed the basic personal amount
- Gratuities (tips paid directly to the employee by the customer being served)
- Earnings paid to an emergency worker by the regular Schedule 1 employer for the period the worker performed emergency duties
- Earnings (pro-rated) of workers of an Ontario-based employer while working temporarily out-of-province if reported to other Canadian compensation boards
- Earnings of workers of an Ontario based employer working outside Ontario for more than 6 months with no WSIB extension of coverage beyond the automatic coverage period of 6 months
- Employment benefits contributions from an employer for an injured worker, under s.25, for the first year after the worker is injured
- Employer payments to a worker who is receiving full WSIB benefits
- Honorarium up to $500
- Maternity benefits paid by the employer
- Pension plan benefits accrued and then paid by the employer upon termination and/or retirement
- Premium or discount on United States funds where a worker is paid in US funds
- Private health service plans (employer’s contribution) where it is not a taxable benefit to the employee
- Retiring allowance, whether paid in a lump sum or in installments. Such as wages in lieu of notice in excess of the Employment Standards Act minimum; damages awarded from a Court settlement; payment for unused accumulated sick pay credits; cash equivalent for benefits; severance pay as required by the Employment Standards Act and the Canada Labour Code
- Room and board value is not included as earnings by farm employers for foreign farm workers employed under the “Commonwealth Caribbean/Mexican Seasonal Agricultural Worker Program”, see 12-01-08, Foreign Agricultural Workers
- Salary continuance payments paid in the year following the year the person left employment
- Severance pay as required under the Employment Standards Act
- Sick benefits paid to a worker directly by a private insurance company
- Sick pay credits (accumulated unused) whether paid as a lump sum payment, or in installments upon ending employment
- Stock options, deferred
- Strike pay
- Supplement, by the employer, over and above a WSIB award to regular wages
- Supplementary Employment Benefits: neither the employer’s contribution nor the benefit paid to the worker
- Voluntary termination of employment plan payments that qualify as a retiring allowance
- Wage loss supplements paid directly by a third party (e.g., insurance or trust company)
- WSIB benefits
- Worker benefits payable by contractual agreement throughout a strike
For more examples of insurable gross earnings and the complete list of non-insurable gross earnings, see the Operational Policy Manual document 14-02-08, Determining Insurable Earnings, and 14-02-18, Insurable Earnings – Construction or contact a WSIB account representative.
How to determine gross earnings of contractors/subcontractors
If you contract work to a contractor/subcontractor who is considered your worker, include the worker’s insurable gross earnings as part of the premium calculation, in the same way as the earnings of workers who are not contractors/subcontractors. The insurable gross earnings are based on the labour portion of the contract for work performed during the reconciliation period.
If the contractor’s/subcontractor’s service to you involves only labour, without money spent by the contractor/subcontractor on materials, equipment and/or installation supplies or any other expenses, then the total price of the contract counts as insurable gross earnings. This is true no matter what the contractor/subcontractor does - construction, transportation or any other kind of activity.
Labour, materials and equipment
The simplest way to determine the labour portion of the contract is for the contractor/subcontractor to keep adequate records of all expenses on materials or equipment. Once these acceptable expenses are deducted from the total contract price, the remainder is the labour portion of the contract.
For the above, apply the annual maximum insurable earnings ceiling to eliminate any possible excess earnings ($83,200 for 2013 $84,100 for 2014).
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What are adequate records?
The WSIB considers records adequate if they can verify and separately show amounts paid for labour, from materials, equipment and/or installation supplies. The most common adequate record is a receipt of purchase. When business records, contractor’s invoices or written contracts accurately identify the actual labour portion of the contract by identifying the amounts allocated and billed for labour and for materials, equipment and/or installation supplies, the labour portion is treated as the contractor’s gross insurable earnings. The WSIB may verify accuracy through an audit.
What happens if records are inadequate?
The WSIB considers records inadequate if they do not accurately verify the labour portion of the contract. In addition, if there is no evidence that the contractor/ subcontractor supplies major materials or heavy equipment used in the direct performance of the contractor’s/ subcontractor’s work the WSIB considers the entire contract value (100%) as the contractor’s gross insurable earnings.
If your records are inadequate and you are in the landscaping, logging, construction, or transportation industry, the WSIB uses different contract values. For details see:
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Excess earnings are any earnings above the annual maximum insurable earnings set by the WSIB. These earnings are not insurable and premiums are not paid on them. Employers pay premiums on gross insurable earnings until the earnings of the worker reaches the annual maximum insurable earnings amount.
Do not prorate the annual maximum for workers who are employed less than a year, regardless of the period of employment.
If a person works for more than one employer during the year, the annual maximum insurable earnings applies to the insurable gross earnings with each employer. Employers are not responsible for tracking a worker’s earnings with other employers. (Refer to Executive officers in a Corporation or Partners in a Partnership , if you are engaged in a construction business activity.)
- For 2013 year-end reconciliation, use the 2013 annual maximum of $83,200 to calculate each worker’s and deemed worker’s annual insurable earnings.
- When closing an account in 2014, or when completing a reconciliation upon request, use the 2014 annual maximum of $84,100 to calculate each worker’s and deemed worker’s annual insurable earnings.
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Assigning insurable earnings
For accounts with only one CU, all earnings are direct earnings.
Direct earnings are earnings that can be assigned to a CU directly from records that clearly show the earnings by business activity. There are two types of direct earnings:
- Those that relate only to the business activity of the CU, and
- Those from ancillary operations (defined below) or optional insurance amounts that can be directly assigned to a CU.
If a CU preprinted on your Form has no direct earnings, please contact a WSIB account representative for assistance.
To assign insurable earnings when the account has more than one CU, you must maintain segregated earnings records for each CU (see details below). The segregation of earnings must be based on the direct labour time spent on each business activity and must be verifiable through adequate records.
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Multiple classification units (CUs)
The WSIB may assign more than one classification unit to your account. This happens if you:
- Carry on two or more distinct business activities listed in different CUs, and
- Keep segregated earnings records for each CU.
If the classification units are in different rate groups then each activity is assigned the appropriate premium rate.
When you have multiple CUs you have to report earnings in a more detailed way to assign the earnings properly.
An ancillary operation supports one or more business activities but is not itself classified separately: for example, administration related to the employer’s business activity, such as administrative staff, payroll and human resources. For more details contact a WSIB account representative.
If you have optional insurance, and no workers, your optional insurance amount is considered direct earnings.
For more details contact a WSIB account representative.
Earnings that relate only to the business activity of the CU
An employer carries on four different business activities and is classified in four different CUs. Some workers do work only related to one CU. Others do work related to more than one CU. The employer keeps segregated records that show how much direct earnings each worker has for each CU. Therefore, the employer is able to directly assign the insurable earnings of each worker to the appropriate CU.
- For workers who work solely in one business activity, all earnings are assigned to the CU for that business activity.
- For workers who divide their time among two or more CUs, the employer uses their segregated records to assign the earnings to the appropriate CUs according to the direct labour time spent in each CU.
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Optional insurance amounts or earnings from ancillary operations that can be directly assigned to a CU
Assign these earnings directly to the appropriate CU if:
- They support more than one CU, and
- Their earnings records are segregated by CU.
The employer in the previous example has three office staff whose work supports all four business activities. The employer keeps segregated earnings records for each office worker. The employer allocates their earnings to all the CUs according to the direct labour time spent supporting the business activity in each CU. All the earnings of the ancillary operation in this case are direct earnings and can be directly assigned to a CU.
If you have earnings (including optional insurance) that you cannot assign directly to a CU, continue with the common earnings information that follows.
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For a list of acceptable earnings records for segregation, please contact a WSIB account representative.
For accounts with more than one CU, common earnings are any earnings from ancillary operations or optional insurance amounts that cannot be directly assigned to a single CU and supported by segregated earnings records. These are called common earnings as they support more than one business activity and must be assigned to the relevant CUs on a prorated basis.
Common earnings must not be assigned to RG 755 (if applicable). This separate rate group is only to be used for eligible partners or executive officers in construction.
If the employer in Example 2 had the same three office staff performing work supporting the four business activities but did not keep segregated earnings records that show their time spent performing the work supporting each CU, then the insurable earnings for all three office workers are considered common earnings. The employer must prorate the common earnings then assign the appropriate prorated amount to each CU.
Separate rate group for Construction
The separate construction rate group for non-exempt partners or executive officers is distinct from other construction rate groups, and is to be used only for reporting the insurable earnings of non-exempt partners or executive officers who are eligible. See Calculating Insurable Earnings - Construction.
Reconciliation Form: Additional Instructions for Construction (273.7kb, PDF)
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Prorating common earnings
For firms with multiple CUs and common earnings, the total insurable earnings for a CU equals the CU’s direct earnings plus the prorated common earnings for the CU.
Here is how to determine how much to assign to each CU. Use the blank worksheet below to calculate and assign common earnings. For each step, the corresponding calculation in the example is explained in the chart below.
In the example account, there are four CUs with both direct and common earnings: 1921-000, 1931-000, 1993-000, and 1999-000.
- Determine the direct earnings for each CU. Write the amounts in column 1 beside the CU description.
|See column 1.
- Total the direct earnings from all CUs. Write the total in box 1.
|Total direct earnings is $500,000 (see box 1).
- Determine the total common earnings. Write the total in box 2.
|Total common earnings is $48,000 (see box 2).
- Divide the direct earnings for each CU by the total direct earnings for ALL CUs. This results in the proportion of common earnings to use for each CU. Then multiply each amount by 100 to get the percentage. Write the percentages in column 2 beside the applicable CU description. (Do this calculation for each CU.)
|For CU 1921-000, the direct earnings ($100,000) in column 1 is divided by the total direct earnings ($500,000) in box 1 and multiplied by 100. This gives the percentage (20%) in column 2, which is used to determine the amount of common
earnings to assign to each CU.
- Multiply the percentage for each CU by the
total common earnings box 2. This gives the amount of common earnings to assign to each CU. Write the amounts in column 3 beside the applicable CU description. (Do this calculation for each CU.)
|For CU 1921-000, multiply the percentage (20%) in column 2 by the total common earnings of $48,000 in box 2. This gives the amount of common earnings of $9,600 in column 3.
- Total the common earnings entered in column 3. Write the total in box 3.
|Total prorated common earnings is $48,000 (see box 3). The amounts in box 2 and 3 should match.
- Add the common earnings amount in column 3 PLUS the direct earnings in column 1 for each CU. Write the totals in column 4 beside the applicable CU. (Do this calculation for each CU.)
|For CU 1921-000, the common earnings ($9,600) in column 3 plus direct earnings ($100,000) in column 1 equals insurable earnings of $109,600 in column 4.
- Total the insurable earnings in column 4 for each CU. Write the total in box 4. This total equals the total direct box 1 plus common earnings box 2.
|Total insurable earnings is $548,000 (see box 4). This total equals the direct earnings ($500,000) in box 1 plus the common earnings ($48,000) in box 3.
- Transfer your calculations from the worksheet to your Reconciliation Form.
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CHART: Calculating and Assigning Common Earnings*
||% of Total
||Column 1 ÷ Box 1
|Box 2 x Column 2
|Column 1 + Column 3
||Carpet, Mat, and Rug Operations
||Canvas and Related Products
||Household Products of textile Materials
||Other Processed Textile Products
|Total Common Earnings
Worksheets used in preparing the Reconciliation Form must be kept for audit purposes.
WORKSHEET: Calculating and Assigning Common Earnings
blank worksheet (108.0kb, PDF)
construction industry worksheet
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