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1.1 Program Description

1.1.1 Workers' Compensation in the Federal Public Service

Under the Government Employees Compensation Act (GECA), federal employees who suffer a work-related illness or injury are eligible for compensation. The responsibility for adjudicating claims and making the compensation payments rests with the provincial workers' compensation boards. The costs, including an administration fee, are charged back to the federal government by the provincial and territorial workers' compensation boards.

To be eligible for Workers' Compensation Benefits, the employee must be employed by a federal department or agency that has coverage for its employees under the GECA, the injury must be work-related and the claim for benefits must be approved by the provincial or territorial workers' compensation board. Compensation is provided for loss of wages where there is an approved lay-off or to reimburse medical expenses such as hospital, doctor or rehabilitation costs. Permanent disability may result in a pension being awarded, the size of which depends on the extent of the disability and the pre-injury earnings of the employee.

A study conducted by the Treasury Board's National Joint Council (NJC), Special Committee on Benefits for Work-Related Illness or Injury in the Public Service (1995) recommended that federal departments become responsible for payment of their workers' compensation benefits.

Prior to the implementation of the Worker' Compensation Cost Recovery Program, HRDC-Labour administered the compensation program on behalf of federal departments and agencies (with the exception of some Crown corporations and agencies). Costs for workers' compensation were paid out of a Statutory Appropriation.

1.1.2 The Cost Recovery Program for Workers' Compensation

In June of 1998, the Treasury Board authorized HRDC-Labour to recover workers' compensation costs from federal departments and agencies. HRDC-Labour was allocated $1.33 million in order to implement the new program. Total allocations for workers' compensation costs to both funded and unfunded departments and agencies amounted to $12.61 million over the first three years of the program.

All federal departments and agencies under GECA were included in the cost recovery initiative as of April 1, 1998. Twenty-five departments where claims were forecast to be in excess of $10,000 in 1998-99 were funded while the remaining were unfunded as their costs were not significant. Unfunded departments were not required to pay their compensation costs from their departmental budget until their costs exceeded the pre-established threshold of $10,000 for 1998-99, $12,000 for 1999-2000 and $15,000 for 2000-01.

An important component of the implementation process was a series of presentations given by HRDC-Labour staff to federal departments on the Cost Recovery Program and the importance of increased vigilance with regard to controlling the costs associated with workers' compensation. A training manual, Managing Workplace Accidents and Injuries, was developed by the Treasury Board Secretariat, with input from departments and HRDC Labour, and copies were given to departmental claims and case managers.

1.1.3 Program Objectives

The short-term objectives for the Workers' Compensation Cost Recovery Program include:

• Improving employer accountability;
• Increasing the incentive to establish good safety and health prevention programs, particularly return to work programs, that will lower costs;
• Increasing awareness on the part of senior and front line managers of the consequences of work-related injuries and illnesses.

The long-term objective of the program is to decrease the costs related to workers' compensation claims of departments under GECA.

1.1.4 Recent Changes to the Canada Labour Code (2000)

The Canada Labour Code, Part II was amended effective September 30, 2000. The objective of the amendments was to strengthen the internal responsibility system. This is expected to provide workplace partners with the tools they require to resolve their health and safety concerns rapidly, effectively and on their own.

One of the key changes relates to increased employer and manager responsibility. Employers and managers must exercise due diligence in preventing workplace accidents or illnesses, otherwise they will be held responsible.

Other important changes resulting from the amendments to the Canada Labour Code (2000) include a strengthening in an employee's right to refuse unsafe work. Health and safety committees are now responsible for the investigation and resolution of complaints and the employer may take action if an employee abuses their right to refuse.

1.2 Funding to Departments

Cost recovery allocations for funded departments were calculated as the average cost of new claims for 1995 and 1996 plus 20 percent for provincial and territorial Workers' Compensation Board administration costs. Total funding provided to departments by Treasury Board for the Cost Recovery Program was $3.532 million in 1998-99, $4.057 in 1999-2000 and $5.021 million in 2000-01 and beyond.

1.3 Objectives for the Evaluation

The objectives of the Evaluation of the Workers' Compensation Cost Recovery Program were to review:

• The impact of the program on accident rates and costs;³
• The adequacy of the departmental funding allocation formula;
• The extent to which departments and agencies have developed and implemented prevention programs and other initiatives aimed at reducing workplace accidents and illnesses;
• The impact of reduced workplace accidents and illnesses on days lost.⁴

1.4 Data Sources for this Evaluation

Key Informant Interviews

ARC Applied Research Consultants conducted interviews with a total of 44 representatives from each of the 25 funded departments and agencies. Interviews focussed on the claims and case management approaches of each department, workplace health and safety policies and programs, impacts on average days lost, and opinions on the overall impact of cost recovery on the key informant's department. Responses relating to key informants are treated on a per department basis. In all cases where more than one departmental representative was interviewed, there was agreement with regard to the issues addressed in the interview.

One interviewee was new to the department and three department representatives stated that theirs were relatively new departments and they had not yet received a separate allocation.

The interview protocol and the names of departmental representatives interviewed may be found in Appendix A.

Survey of Funded and Unfunded Departments

Survey questionnaires were sent by facsimile to a total of 60 federal departments and agencies. The sample, based on contact names provided by program staff at HRDC Labour, included all 25 funded departments and 35 unfunded departments. Responses were received from 26 departments, for a total response rate of 43 percent. The purpose of the survey was to obtain information on the occupational health and safety programs and policies in place prior to the implementation of cost recovery (April 1, 1998) as well as programs and policies implemented since April 1, 1998 for funded and unfunded departments. The data collected was used to identify any possible increase in the number of occupational health and safety programs and policies resulting from the implementation of cost recovery, as well as to identify possible explanations for changes in the number of accidents.

The questionnaire and list of responding departments may be found in Appendix B.

Program Data

Program staff provided detailed data on the cost and number of reported work-related accidents and illnesses in the federal government for fiscal years 1995-96 to 1999-2000. Additional data on the number of Full-time Equivalents (FTEs) in most of the 25 funded departments were provided by Treasury Board, again for fiscal years 1995-96 to 1999-2000. Some funded departments do not report FTEs to Treasury Board and so data on FTEs for these departments were obtained from annual Departmental Performance Reports.

Comparison Data

In order to assess the impact of the Cost Recovery Program on funded departments a comparison group is required. The choice of comparison group for this evaluation was determined based on information collected during key informant interviews. The determining factors in choosing the comparison group were;

• Employees must be covered by the Canada Labour Code since, according to departmental representatives from funded departments, changes to the Code have had a significant impact on how occupational health and safety issues are approached.
• The availability of data on the number of employees or FTEs.

Based on this consideration the comparison group for this evaluation was selected to be employees in the Federal Public Service, excluding the 25 funded departments. Data for the comparison group were obtained from HRDC Labour Research and Analysis Section and included the number of fatalities and disabling injuries and FTEs, for 1995 to 1999 (inclusive). We note that data for 1999 are preliminary. No data have been released for 2000 and so this evaluation addresses data from 1995 to 1999 only. Further, all federal departments governed by the Canada Labour Code may be subject to cost recovery for their workers' compensation costs if these costs surpass the threshold ($15,000 for 2000-01). The comparison group may have a partial effect due to cost recovery. There is thus an incentive for them to keep costs down so as not to cross the $15,000 threshold.

Footnotes

3	The lack of a comparison group for which FTE and cost data were available and which were under the Canada Labour Code limited the analysis to accident rates only.
4	Although initially the intent was to look at workplace productivity, it became evident that this analysis could not be performed due to lack of supporting data. The impact on days lost, however, could be evaluated and thus seemed an appropriate measure for this evaluation.