Legislative Framework of Injury Prevention and Compensation

After reading this chapter, you will be able to:

• ➤ Identify the occupational health and safety (OHS) rights and obligations of workers and employers.
• ➤ Explain the internal responsibility system and identify the challenges that exist to its operation.
• ➤ Assess the effectiveness of state OHS enforcement and recommend improvements.
• ➤ Identify and explain the Meredith principles and relate them to the historic trade-off embodied in workers’ compensation.
• ➤ Explain how experience rating reintroduces the concept of fault to workers’ compensation and assess the impact of this change.

Toronto gas station attendant Jayesh Prajapati, 44, was killed on September 15, 2012 trying to stop a customer who drove off without paying for his $112 fill-up. Prajapati’s widow claimed that her late husband’s employer previously required him to pay for gas-and-dash losses and that this is why he tried to stop the driver.

Only months before Prajapati’s death, Deborah Pommer was told by a gas station operator in southwestern Ontario that she’d have to cover a $65 gas-and-dash or she would be fired. With only five weeks on the job, this was the second gas-and-dash Pommer was expected to pay.

“I felt very manipulated,” said Pommer. “I felt fearful. I was shaking. To be put on the spot like that it’s very difficult especially when it’s your livelihood. You rely on your income. I felt really intimidated.” Pommer quit and filed a complaint with the provincial labour standards branch.1

While docking workers’ pay for customer theft is illegal in Ontario, the practice is commonplace in gas stations and restaurants.

That employers can routinely (and illegally) force workers to cover the cost of customer theft reflects that workplace laws are often unenforced. Workers are reluctant to complain about violations for fear of employer retribution, says Deena Ladd of the Worker’s Action Centre. “People are desperate to hold on to jobs. Many workers only make complaints to the ministry after they’ve lost their job because if they make a complaint while they’re in the job, there’s no way to do it anonymously.”2

In 2007, British Columbia passed a law requiring motorists to pay before pumping, following the 2005 death of Grant De Patie in Maple Ridge, BC. De Patie was dragged several kilometres under a vehicle after he tried to stop a $12.30 gas-and-dash. De Patie’s parents fought hard for this law, which eliminates the circumstances that give rise to this workplace hazard.

Historically, employers resisted laws requiring prepayment, citing the cost of the technology and its negative impact on in-store shopping.3 More recently, employers have begun supporting such laws in order to reduce rates of gasoline theft.4 It is interesting that employers—who could voluntarily implement the technology—seem to be content to wait for the government to compel action. This might reflect a desire to avoid being the target of consumer backlash or to ensure that no station can gain a competitive advantage by opting out of paying before pumping fuel.

The ongoing debate about pay-before-you-pump laws highlights how the law mediates conflicting demands between workers, who prioritize safety, and employers, who are generally most concerned about profitability. This example also reveals that the way in which laws are enforced affects the degree of protection they provide to workers. The reluctance of governments to impose new regulations or enforce existing ones also suggests that the state takes action on safety issues only when, and to the degree that, it must.

This chapter engages these topics by introducing the legal framework that regulates injury prevention and compensation. We begin by examining occupational health and safety legislation—laws that grant rights to and impose duties upon workers and employers to reduce the level of workplace injury—in Canada’s 14 different jurisdictions. Box 2.1 provides a primer on the seemingly complicated issue of jurisdiction and legislation. We then discuss other laws that affect workplace safety and highlight the overlap between workplace hazards and environmental hazards. Finally, we turn our attention to the compensation of workplace injuries and assess the workers’ compensation system.

Canadian OHS is based upon the belief that injuries are preventable and that the optimal approach is through the internal responsibility system (IRS). The IRS assumes that workers and employers have a shared interest in safe workplaces and are jointly responsible for achieving that goal. Employers are obligated by law to take steps to ensure that workplaces are as safe as reasonably practicable.5 Employers are also required to advise workers of hazards and to require workers to use mandated safety equipment. The decision by governments to give employers the power to determine how to address workplace hazards bolsters employers’ broader management rights to control and direct work.

It can be difficult for employers to know when they have met their duty to make work as safe as reasonably practicable. Meeting the reasonably practicable standard means taking precautions “that are not only possible but that are also suitable or rational, given the particular situation.”6 The generally accepted test is that of due diligence. Due diligence is taking reasonable precautions and steps to prevent injury, given the circumstances. It is assessed using a three-part test:

1. Foreseeability: Reasonable employers are expected to know about the hazards of their business. Injuries that arise from events that other operators in the industry expect might occur are foreseeable events.
2. Preventability: Reasonable employers are expected to take steps to prevent injury. The normal steps include identifying hazards, preparing and enforcing safe working procedures, training and monitoring worker safety, and ensuring compliance with safety procedures. Injuries that arise because an employer did not take these steps are preventable injuries.
3. Control: Reasonable employers are expected to take action on hazards that they can control. Injuries that arise from such hazards suggest the employer failed to control these hazards.7

Employers who have taken the steps to address the hazards within their control to prevent foreseeable injuries have exercised their due diligence. This matters for two reasons. First, due diligence prevents injuries by controlling hazards. Second, if an injury occurs, employers who have completed the steps can use this due diligence as a defense to avoid penalties under OHS legislation.

To offset the power of employers under the IRS, governments have granted workers three safety rights:

1. Right to know: Workers have a right to know about the hazards they face in their workplace. While many hazards are readily apparent, chemical and biological hazards may not be. The right to know has given rise to systems such as the Workplace Hazardous Materials Information System discussed below, which provides workers with information about hazards materials and their safe handling.
2. Right to participate: Workers have the right to participate in workplace health and safety activities. Participation most often occurs through joint health and safety committees (JHSCs) but can be through other means. Box 2.2 discusses the effectiveness of JHSCs.
3. Right to refuse: Workers have the right to refuse unsafe work. The right to refuse represents one of the few instances where workers can disobey their employer. A refusal may require employers to investigate and remedy unsafe work. As we’ll see in Chapter 12, although the right to refuse sounds like a powerful right, it is one that workers rarely use.

The role of the state in the IRS is primarily one of education and enforcement. Governments often run safety awareness campaigns aimed at workers (see Chapter 9). Governments also employ OHS officers who perform worksite inspectionsto identify health and safety violations and ensure their remediation. Inspections may be random or targeted (e.g., focusing on high-injury industries, such as residential construction). Inspections may also be triggered by worker complaints. Inspectors will also investigate serious workplace injuries and fatalities. Where inspectors find violations of OHS rules, they may order employers to remedy the situation. This is the most common response of OHS inspectors and can sometimes include issuing a stop-work order, which halts operations at the worksite until an unsafe situation is resolved. Some jurisdictions also give OHS inspectors the discretion to issue tickets or other financial penalties to workers and employers who are in contravention of OHS rules. The government can also seek to prosecute those who violate the law. This most often occurs when there has been a serious injury or fatality or a pattern of non-compliance with the law. Conviction can result in fines, jail time, or other penalties. Prosecutions are relatively rare in Canada.

Finally, Canada’s Criminal Code was amended in 2004 to allow for the criminal prosecution of individuals and organizations that direct the work of others when a worker is injured and fail to meet their due diligence requirements. Criminal prosecution is designed to address cases of profound moral failings, such as the wanton disregard for safety that cost 26 workers their lives in 1992 at the Westray Mine in Nova Scotia. Only a handful of prosecutions under the Criminal Code have occurred, with few resulting in convictions.11 As set out in Box 2.3, governments’ tendency to educate and remediate OHS violators (rather than prosecute them) reflects the view that injuries are regulatory offences, not crimes.

While it is broadly accepted that the IRS has improved workplace safety, there are a number of criticisms of the system:

1. Declining employee participation: The IRS is premised upon workers being willing to speak up about health and safety issues. The right to refuse requires workers to speak out. Government inspections of workplaces—which are often based upon worker complaints—require workers to give voice to their concerns. As shown in Box 2.2, workers also must be willing to speak out if JHSCs are to be effective. Yet workers are often reluctant to speak out because they fear employer retribution—retribution that is illegal but commonplace. The growth in precarious employment has also decreased the willingness of the growing number of insecurely employed workers to speak out.14 Decreasing employee participation fundamentally undermines the effectiveness of the system at identifying hazards and compelling employers to remediate them.
2. Inadequate enforcement: The role of the state in the IRS is to ensure employers follow the OHS rules via inspections and penalties. There is significant variation in enforcement activity between jurisdictions. For example, Alberta workplaces are inspected, on average, once every 14 years and it can take inspectors up to 18 days to respond to a complaint.15 Further, the rate of prosecution in Alberta is very low. This means employers face little risk of being caught violating OHS rules and no penalty if they are caught. Not surprisingly, Alberta has an abnormally high rate of workplace injury.16 While Alberta may be a stark example, all jurisdictions provide inadequate resources to allow effective enforcement. The dominant approach to OHS enforcement in Canada is to respond to complaints with occasional targeted “spot checks” on poor-performing employers or industries. Despite the high rates of injury, prosecutions of employers who operate unsafely are rare.
3. Fracturing of employment: The growth in small and medium enterprises (SMEs) is problematic from a safety perspective. In 2024, there were 1,704,939 small enterprises (1–99 employees) and 16,966 medium-sized enterprises (100–499 employees) in Canada. The majority of small enterprises had only 1–4 employees, and all SMEs together comprised 99.7% of all enterprises.17 The sheer number of SMEs compounds the problems of under-inspection by the state.18 Further, SMEs are frequently part of complex subcontracting chains where it is unclear who is responsible for OHS. SMEs also have a higher injury rate than larger firms.19

These concerns about the effectiveness of the IRS suggest that the state has attempted to mediate the conflicting demands of workers (who want safety) and employers (who want flexibility to organize work in maximally profitable way). The result is a system that somewhat reduces, but does not eliminate, workplace injuries. Further, this system tends to benefit the decreasing proportion of workers in stable, full-time employment in large organizations more than the growing number of workers in SMEs and those who are employed precariously. In practice, it also means that workers represented by a union are more likely to experience the benefits of the system, for reasons explained in Box 2.4.

IRS is built on an assumption that there is a mutual interest in safety. From that logic an interesting (but likely false) axiom that has developed over the past 20 years is that safety somehow pays. This idea sits uneasily with the millions of work-related injuries experienced by Canadian workers each year. Box 2.5 takes up the question of whether (and for whom) safety pays.

Occupational health and safety laws are part of a broader web of rules that regulate employment. Other laws passed by legislatures that impact OHS include fire and building codes, occupational-specific regulations, laws regulating hazardous materials (both in the workplace and the broader environment), employment (or labour) standards, human rights, and workers’ compensation schemes.

Fire and building codes were among the earliest forms of occupational health and safety, many following from the deaths of 146 workers in New York’s Triangle Shirtwaist Factory fire of 1911.25 Governments subsequently required employers to provide for basic sanitation on worksites (e.g., sinks and toilets). More recently, the federal Hazardous Products Act established the Workplace Hazardous Materials Information System (WHMIS). WHMIS protects workers by requiring employers to label hazardous materials and provide material safety data sheets (MSDS) which outline the hazards of the substance. This information assists workers in exercising their right to know about workplace hazards. Each of Canada’s 14 jurisdictions have included aspects of WHMIS in their own OHS systems.26

Governments also regulate aspects of certain occupations. For example, workers whose job requires them to handle or use explosives may be required to undertake specific training and hold a permit. Governments have also enacted environmental laws that regulate air, water, and soil pollution, waste management, and climate change. While environmental regulations are not normally considered a part of occupational health and safety, there is no clear boundary between environmental hazards and workplace hazards. As set out in Box 2.6, workers are often the first group exposed to so-called environmental hazards, and their exposures are often the most intense.

How governments choose to regulate (or not) occupations can have significant safety impacts on workers. For example, governments restrict long-haul truck drivers to no more than 13 hours on the road in a day. These regulations are not only designed to protect public safety but also have a direct impact on the drivers, preventing excessive exhaustion. These rules also create a dilemma for drivers, often paid by the load (rather than hourly). The economic incentive that drivers face (given how employers design their compensation systems) to arrive at the delivery destination early to maximize earnings means that drivers must trade off compliance with these safety rules against their income. Box 2.7 looks at another example of how government rules regarding an occupation shape workers’ exposure to hazards.

All Canadian jurisdictions have enacted laws setting out the minimum terms and conditions of work. These employment standards (or labour standards) acts often outline maximum hours of work and required rest breaks. As we’ll see in Chapter 8, these requirements prevent workers from becoming overly tired, which increases the risk of injury. Employment standards legislation also usually contains limits on the employment of minors, reflecting their greater vulnerability to occupational injury due to their physical and intellectual immaturity. Finally, such laws preclude employers from recovering the cost of customer theft from workers’ wages. As the vignette at the beginning of this chapter suggests, though, employment standards laws are unevenly enforced, thereby reducing their contribution to injury prevention.

Finally, it is necessary to consider the impact of human rights legislation on OHS. Human rights acts preclude discrimination on various grounds, such as gender, family status, age, sexual orientation, and disability. In Chapter 11, we will explore the duty to accommodate injured workers that flows from human rights legislation. In short, employers are expected to modify work and workplaces, up to the point of undue hardship for the employer, so as not to discriminate against workers with temporary or permanent disabilities.

In addition to the duty to accommodate workers, employers must also be mindful of the potential for OHS activities to discriminate against women on the basis of their gender. In theory, women face the same workplace hazards as men. In practice, occupational segregation by gender means women and men often face different hazards. Further, the male norm often means that equipment, work process, workplace norms, and safety standards are designed for male workers. Women’s physiology and the greater role women typically shoulder in social reproduction are often ignored.34

The one exception to this is reproductive hazards. There is significant research about how workplace hazards can affect fetuses. The most common response to such risks is to remove the female worker from the workplace (to control exposure), rather than removing the hazard from the workplace (which would likely benefit all workers). This response is likely economically efficient for employers: redeploying pregnant workers is less costly than redesigning work. Yet reassignment effectively penalizes women for bearing children.35

Being injured on the job affects workers in many ways. Historically, injury has often meant poverty, because injured workers frequently can’t work. At the beginning of the 20th century, provincial governments enacted workers’ compensation systems to provide injured workers with wage-loss benefits, medical treatment, and vocational rehabilitation. Prior to the creation of workers’ compensation, workers injured on the job were forced to sue their employers for compensation. Workers often could not afford to sue, and if they did sue they rarely won, which meant injured workers often ended up financially dependent upon their families or charity. The unfairness of this system was a source of significant social instability, and governments enacted workers’ compensation laws to partly address workers’ needs and thereby stave off industrial and social conflict.36 In exchange for immediate, predictable, and stable compensation, injured workers gave up their right to sue their employer for workplace injuries. This exchange is often called the historic compromise.

The Ontario workers’ compensation system, which was Canada’s first, was based upon the recommendations of a 1913 Royal Commission on Workers’ Compensation headed by William Meredith.37 The Meredith principles underlying workers’ compensation remain the basis for workers’ compensation in Canada:

1. No fault: How the injury occurred is irrelevant. Compensation is paid on a no-fault basis and workers cannot sue their employer.
2. Accident fund: The WCB maintains an accident fund to guarantee the availability of benefits over time.
3. Collective liability: All employers pay premiums and thereby share the cost of injuries collectively.
4. Independent administration: The WCB—which operates independently of employers, workers, and the state—administers the workers’ compensation system.
5. Exclusivity: The WCB is the only provider of workers’ compensation. This differs from arrangements in some US states where multiple private insurers offer compensation. The WCB is also the final arbiter of all claims.

Every province and territory has established a WCB that operates under these principles. When workers experience a serious work-related injury (e.g., the worker requires medical aid or can’t go to work the next day), the worker, employer, and doctor are all required to report the injury to the WCB. In assessing whether an injured worker is eligible for benefits, the WCB uses the two-part “arises-and-occurs” test. To be compensable, an injury must be caused by an event arising out of, and occurring during the course of, employment. As noted in Chapter 1, it is easier to determine if some injuries arose and occurred than others. Box 2.8 unpacks the arises-and-occurs test.

Once an injury has been found to be compensable, workers are eligible to receive wage-loss, medical, and vocational rehabilitation benefits. Wage-loss benefits provide financial compensation to workers whose income is reduced by an injury. The level of wage-loss benefit and when wage-loss benefits commence varies by jurisdiction, although rates are set so that workers ordinarily receive less than their regular wage. Injured workers can also receive medical and vocational rehabilitation benefits. Medical benefits cover the costs of treating an injury, thereby relieving workers and the taxpayer-funded health-care system of these costs. Public health-care systems in fact bill the jurisdictional WCB for the costs of treatment for workplace injuries and diseases when they are properly notified. Vocational rehabilitation benefits include programs designed to increase the probability of a worker returning to employment. When a worker dies as the result of a workplace injury, the worker’s dependents are eligible to receive fatality benefits, including funeral costs and wage-loss benefits.

While workers’ compensation entails significant benefits to injured workers, the administration of these benefits has come under heavy criticism. Injured workers often report that their interactions with the WCB—wherein workers’ claims are often met with skepticism and workers are sometimes surveilled—can be psychologically damaging.39 Injured workers are also more likely to live in poverty.40 In some jurisdictions, workers face having their wage-loss benefits reduced because the WCB deems them to be employable, even though they have been unable to find a job.41 These concerns are often related to the way workers’ compensation is funded and, in particular, to the operation of experience-rating systems.

Employers fund workers’ compensation by paying premiums. Typically, premiums are based upon an employer’s payroll multiplied by the assessment rate the WCB has set for the industry in which the employer operates. Typically premiums are expressed in the form of X dollars per $100 of payroll. Some provinces further modify individual employer’s premiums based upon the employer’s claims record. These experience-rating systems reward employers that have low claim costs and penalize employers that have high claim costs. As we saw in Chapter 1, experience rating is a controversial system. Linking claim costs to premium rebates does reduce the number and duration of claims, but it is unclear if this means an actual reduction in the number or severity of injuries or reflects employer gaming of the experience-rating system.42 Gaming may include suppressing claims as well as disputing worker claims, thereby undermining the no-fault basis of workers’ compensation.

Many injured workers are able to perform productive work while they are recovering from injuries. Providing workers with an opportunity to return to work (RTW) by, for example, modifying their duties may help workers recover. The idea that return-to-work is rehabilitative is hotly contested, and we will read more about this controversy in Chapter 11.43 Less controversial is that RTW programs help employers minimize their claims costs.44 Such programs also ensure that employers meet the duty to accommodate workers found in human rights legislation.

This chapter outlined the legal framework the state has enacted to prevent and compensate work-related injuries. The 2012 death of Jayesh Prajapati shows us that the state does not necessarily act to prevent every workplace injury or enforce every workplace law. To date, Ontario has not required gas station owners to adopt pay-before-you-pump systems (although a bill to do so is before the legislature at the time of writing), and wage theft remains an endemic issue. This example suggests that to fully appreciate how injury prevention and compensation laws operate we have to be prepared to understand both the technical requirements of the laws and the political economy of their enforcement.

Canadian governments have made employers and workers jointly, but not equally, responsible for OHS via the IRS. Growing precarity and a shift toward SMEs have undermined workers’ ability and willingness to effectively exercise their rights—rights that are designed to act as a check on management rights in the workplace. In addition to OHS laws, governments have passed other legislation that makes workplaces safer, including fire and building codes and hazardous materials and environment protection regulations. These laws have mostly been enacted after harm has occurred—when there is scientific certainty—instead of beforehand. Again, we see how politics and the conflicting imperatives of production and legitimacy affect state regulation of OHS.

It is interesting to note that the Canadian government’s first major foray into OHS was around injury compensation rather than injury prevention. Governments acted to address injury compensation to avoid the social instability that was caused by injury-related poverty. Workers’ compensation alleviated much of the poverty wrought by workplace injury while shielding employers from liability. The benefits accrued by workers (compensation), employers (liability protection), and the state (social stability) likely play an important role in the long-term stability of the workers’ compensation system. That said, workers’ compensation has been marred by various employer efforts to roll back the benefits to workers and cost to employers.

Write a definition for each bold italic word in this chapter.

Go online and find your jurisdiction’s OHS legislation. Answer the following questions:

1. Outline the steps that must be undertaken when a worker initiates a work refusal.
2. Which test is applied to determine if a worker can refuse to perform work?
3. Which employers are required to establish a joint OHS committee?
4. What are the requirements for the structure of the joint committee?
5. Which functions can the joint committee perform?
6. Which penalties can an employer face for violations of the OHS act?

Briefly discuss with a partner or write 250-word responses to the following questions:

1. What are the tests for the reasonably practicable standard, and how might they affect an employer’s response to a hazard?
2. What are the strengths and weaknesses of the internal responsibility system?
3. What role does the state play in occupational health and safety? How effectively does it perform that role?
4. Why do some safety advocates talk about “safety pays,” and which factors might undermine that argument?
5. What are the principles of Canada’s workers’ compensation system, and who benefits the most from the WCB system?

Think of a danger that you or someone you know experienced at work. Write 250-word responses to the following questions about that incident:

1. Describe the nature of the danger that you experienced and the reasons that it was present.
2. Under the provisions of your jurisdiction’s OHS Act, would you have the right to refuse to perform work in that situation?
3. Did the employer take any steps to eliminate or mitigate the danger? What were those steps?
4. Did you or anyone else at the workplace take steps to eliminate or mitigate the danger? What were those steps?
5. Was the danger effectively eliminated? If not, then what did you and other workers do?