Governance / Structure - New Brunswick€¦ · Official Names of Workers’ Compensation Boards ......

September 2007

Governance / Structure

Discussion Paper

TABLE OF CONTENTS

SUBJECT ....................................................................................................................... 1

INTRODUCTION............................................................................................................. 1

BACKGROUND.............................................................................................................. 2

NEW BRUNSWICK SITUATION .................................................................................... 3

Appointments and Terms..............................................................................................................3

Reporting Structure .......................................................................................................................5

Effectiveness / Functionality ........................................................................................................5

Policy Development and Foresight ..............................................................................................6

COMPARISON TO OTHER CANADIAN JURISDICTIONS ........................................... 7

Size of the Board of Directors ......................................................................................................7

Length of Board Member Appointments .....................................................................................8

Official Names of Workers’ Compensation Boards....................................................................8

Appeal Review Bodies...................................................................................................................8

CONCLUSION ................................................................................................................ 9

Independent Review Panel

Discussion Paper: Structure / Governance Page 1

Subject

This document discusses the governance of New Brunswick’s Workplace Health, Safety and Compensation Commission, the fourth question of Phase II of the Independent Review Panel’s Terms of Reference - How well does the Workplace Health, Safety and Compensation Commission (WHSCC) compare to other Canadian jurisdictions in terms of: the structure of the board of governance; policy development and foresight; and stakeholder input?

Introduction

The concept of modern workers' compensation had its origins in Germany, Great Britain and the United States between the late 1800's and early 1900's. In Canada, workers' compensation had its beginnings in the province of Ontario when Mr. Justice William Meredith was appointed to a Royal Commission to study workers' compensation in 1910.

His final report, known as the Meredith Report was produced in 1913. There were five basic cornerstones to the original workers' compensation laws known as the ‘Meredith Principles’; “cornerstones which have survived, to a greater or lesser extent, as follows:

1. No-fault compensation: Workplace injuries are compensated regardless of fault. The worker and employer waive the right to sue. There is no argument over responsibility or liability for an injury. Fault becomes irrelevant, and providing compensation becomes the focus.

2. Collective liability: The total cost of the compensation system is shared by all employers. All employers contribute to a common fund. Financial liability becomes their collective responsibility.

3. Security of payment: A fund is established to guarantee that compensation monies will be available. Injured workers are assured of prompt compensation and future benefits.

4. Exclusive jurisdiction: All compensation claims are directed solely to the compensation board. The board is the decision-maker and final authority for all claims. The board is not bound by legal precedent; it has the power and authority to judge each case on its individual merits.

5. Independent board: The governing board is both autonomous and non-political. The board is financially independent of government or any special interest group. The administration of the system is focused on the needs of its employer and worker clients, providing service with efficiency and impartiality.”1

“The word "governance" often refers to the Board's activities to oversee the purpose, plans and policies of the overall organization, such as establishing those overall plans and policies, supervision of the CEO, ensuring sufficient resources for the organization, ensuring compliance to rules and regulations, representing the organization to external stakeholders, etc.”2

Governance is about providing direction and vision. Boards of Directors govern and management manages. Good governance means better and more effective management. The structure of the Board of Directors is legislated under the Workplace Health, Safety and Compensation Commission Act of New Brunswick, 1994. The legislation established the commission

1 The Association of Workers’ Compensation Boards of Canada (AWCBC) website: http://www.awcbc.org/english/history.asp 2 Free Management Library: http://www.managementhelp.org/boards/boards.htm#anchor97797

Independent Review Panel Discussion Paper: Structure / Governance Page 2

and its responsibilities, the appointment and terms of the Board of Directors, roles and responsibilities and the reporting structure – in short, the governance of the Commission.

Background

The first Workmen’s Compensation Act in New Brunswick received royal assent in 1918, the result of a report prepared by a Commission chaired by Frederick J.G. Knowlton “to enquire into and report upon the applicability…of the Ontario and Nova Scotia Compensation Acts.”3 The 1980 Boudreau report helped establish the current system based on wage loss security maintaining the individual’s income after injury in the same ratio to the Industrial Composite as the injured worker was receiving prior to the injury and/or subsequent re-occurrence. The Boudreau report made a number of recommendations to refine the roles of the then three-member Board including the need to provide for management succession with the opportunity for the replacement member to have a minimum of three months to understudy the position of the out-going Board member and to develop a public information program “designed to heighten awareness of its functions and services and to provide the reasoning behind its decisions”4. The Woods Gordon report of 1988 made a number of recommendations to address the organization of the WHSCC including the number of Directors reporting to the Executive Director, establishment of subcommittees of the Board to review certain critical areas such as audit committee, human resources committee, executive committee, and the need for “a mechanism whereby people can have investigations made and answers given without the perception of pressure being exerted”5, without political interference. In 1994, a committee was asked to bring forward recommendations for the merger of the Worker’s Compensation Board and the Occupational Health and Safety Commission with the intent these would be the foundation of the new corporate Board. The committee recommended a corporate Board of a part-time Chair, three part-time representatives of employees, as well as three for employers, a full-time President and Chief Executive Officer and a part-time “member representative of the general public, who shall be a medical doctor with experience in the field of work related injuries”6 with ability being the prime requirement for selection. A Vice-President of the Appeals Tribunal, also the Chair of the Tribunal, would report directly to the corporate Board on all appeal matters. Daryl Wilson made a number of recommendations in his 2006 governance review to improve the governance process. These included clearly setting out the roles and responsibilities (description of positions) of all members of the Board of Directors; identification and selection of candidates for the Board including a process for selecting the next President and CEO; training and orientation of new Board members; annual evaluation of Board members’ performances; clarifying and strengthening the role of the Internal Auditor and amending the terms of reference of the Financial Services Evaluation Committee to clearly articulate its responsibility for the “audit committee” functions. The Board of Directors adopted all the recommendations in the Wilson report, most of which were incorporated into a draft Memorandum of Understanding (MOU) with the Department of Post-

3 Boudreau Report “Report of the Workers’ Compensation Study Committee”, February 1980, p. 10. 4 Boudreau Report “Report of the Workers’ Compensation Study Committee”, February 1980, p. 38.

5 Woods Gordon Report “A Review of the New Brunswick Workers’ Compensation Board”, Phase II, Vol. I, February 1988, p. 32. 6 The Ministerial Report – Recommended Structure for the New Brunswick Health, Safety and Compensation Board, September 19, 1994,

p.4.



Secondary Education, Training and Labour (PETL). The MOU does not incorporate the recommended legislative changes from the Wilson Report which are:

1. In recognition that there may be agreement to recruit potential Board members with specific skills, the matter of remuneration may become an issue. Section 8(2) of the WHSCC Act gives government the authority to prescribe the remuneration. The Board may wish to have this authority.

2. There was probably no issue raised more often …than the need to have a good system of

staggered terms for Board members. Amendments would have to be made to Section 9 of the WHSCC Act to provide more flexibility than exists at present.

3. The Chairperson of the Appeals Tribunal is a non-voting member of the Board…the point has

been made that the arrangement really puts the Chairperson in a difficult conflict position. Section 8(1) would have to be amended to exclude the Chairperson as a Board member.

4. A number of Board members expressed concern over the length of their terms…Any extension

in terms…would require an amendment to Section 9(2).7

New Brunswick Situation

The Workplace Health, Safety and Compensation Commission of New Brunswick is a Crown Corporation that oversees the implementation and application of three Acts on behalf of the workers and employers of New Brunswick: the New Brunswick Occupational Health and Safety Act, the Workers’ Compensation Act of New Brunswick, and the Workplace Health, Safety and Compensation Commission Act of New Brunswick. The Commission administers no-fault workplace accident and disability insurance, as well as comprehensive accident prevention health and safety initiatives for employers and their workers. It is funded primarily through premiums paid by employers.

Appointments and Terms8

Under the legislation, the Lieutenant-Governor in Council (LGIC) on the recommendation of the Minister appoints the Board of Directors comprised of a Chairperson, three or more persons representative of workers and an equal number of persons representative of employers and one representative of the general public. The President and CEO of the Commission and the Chairperson of the Appeals Tribunal complete the Board. The Chairperson, as well as the Vice-Chairpersons of the Appeals Tribunal and all Occupational Health and Safety Officers are appointed by the Lieutenant-Governor in Council. Other members of the Appeals Tribunal, the representatives of workers and employers are appointed by the Board of Directors.

Board Members Appointments Terms Voting / Non-Voting

Chair Eligible for re-appointment Up to 4 years Voting

7 Governance Review for the Board of Directors of the Workplace Health, Safety and Compensation Commission, September 2006, p.26. 8 Workplace Health, Safety and Compensation Act, Sections 8(1), 9(1) -10(3);20(1) and Interpretation Act, Sect 21(1).


Board Members Appointments Terms Voting / Non-Voting

President / CEO number of re-

appointments not specified

number of terms not specified Non-voting

Worker Representatives – minimum 3 (same number as employer reps)

One additional term 3 years Voting

Employer Representatives – minimum 3

One additional term 3 years Voting

1 Public Representative One additional term 3 years Voting

Chair – Appeals Tribunal

number of re-appointments not

specified Up to 5 years Non-voting

Appeals Tribunal – not part of Board of Directors Vice-Chairs – Appeals Tribunal (currently 7)

As prescribed by LGIC

As prescribed by LGIC N/A

Members – Appeals Tribunal (currently 20 part-time members)

number of re-appointments not

specified

number of years not specified N/A

Although worker representatives on the Board of Directors in New Brunswick represent all workers, the members appear to be drawn mainly from the unionized workers. According to Statistics Canada, in 2006 there were 313,100 employees and of those 87,900 (28%) had union coverage while 225,300 (72%) did not have union coverage.

Percentage of Unionized and Non-Unionized workers found in Canada by Region9

Total employees

Union coverage

% with Union

CoverageNo union coverage

% with No Union

Coverage Canada 13986.3 4428.6 31.7% 9557.7 68.3%Newfoundland and Labrador 188.1 70.3 37.4% 117.8 62.6%Prince Edward Island 57.8 17.1 29.6% 40.7 70.4%Nova Scotia 388.6 109.8 28.3% 278.8 71.7%New Brunswick 313.1 87.9 28.1% 225.3 72.0%Quebec 3262.9 1312.3 40.2% 1950.7 59.8%Ontario 5557.8 1557.3 28.0% 4000.6 72.0%Manitoba 500.6 184.6 36.9% 316 63.1%Saskatchewan 395.6 142.3 36.0% 253.3 64.0%Alberta 1539.9 379 24.6% 1161 75.4%British Columbia 1781.8 568.1 31.9% 1213.6 68.1%

9 Statistics Canada Labour Force Survey: 2006 Annual Averages.



Reporting Structure

The Minister of Post-Secondary Education, Training and Labour is responsible for the WHSCC and as such makes the annual report to the Legislative Assembly on behalf of the WHSCC outlining its transactions during the preceding calendar year. The Minister also reports to the Lieutenant-Governor in Council on behalf of the WHSCC on other WHSCC matters such as administrative, financial, etc. The Board is the link between the Minister and the WHSCC. The President and CEO is responsible to the Board of Directors for the operations of the Commission as set out by the Board. The Commission is responsible to establish an Appeals Tribunal and to nominate / appoint members necessary to carry out the appeal responsibilities, with the exclusion of the Chairperson and Vice-Chairpersons of the Tribunal. These are appointed by the Lieutenant-Governor in Council. In addition to its legislated responsibilities, the Board of Directors has issued a governance statement describing the roles and responsibilities of the Board and the governance principles that the Board of Directors has chosen to use to meet these responsibilities. These were updated in May 2007. Although on a day-to-day basis the Appeals Tribunal operates separately from the WHSCC, it is administratively linked. The Chairperson is a non-voting member of the Board of Directors and reports to the Board of Directors on the administrative operation of the Appeals Tribunal. Section 20(1) of the WHSCC Act provides the authority for the Commission to establish the Appeals Tribunal which consists of (a) a Chairperson of the Appeals Tribunal appointed by the Lieutenant-Governor, (b) such number of Vice-Chairpersons of the Appeals Tribunal appointed by the Lieutenant-Governor in Council as deemed necessary by the Chairperson of the Appeals Tribunal in consultation with the Commission for such term or terms as prescribed by the Lieutenant-Governor in Council, and (c) such other members, representative of workers and employers, appointed by the board of directors.

Effectiveness / Functionality

The Board uses a consensus model for decision-making. The public member’s vote becomes the decision-making vote in the case of a tie. To effectively govern the Commission, the Board of Directors continuously reviews its risks, strategic direction, and policy responses. The Board has in place a large number of policies to direct the operations of the Commission which are reviewed on a regular schedule. The WHSCC sponsors the Injured Workers’ Advisory Committee, a forum for discussing issues relevant to injured workers in the Province of New Brunswick and to provide suggestions to improve the quality and type of services and programs offered by the Commission. The Committee may also be used to provide feedback and gauge reactions of injured workers concerning potential changes to or development of policies and programs. The Board’s Efficiency Goal “to hold assessment rates to employers at the lowest level possible, consistent with the best benefits possible to clients”10 is measured by the Commission’s ability to maintain at a minimum, a fully-funded liability. Under the Workers’ Compensation Act a minimum funding level of 100% is required with any shortfall to be covered over a period of five years. According to this measurement the Board is being effective.

10 2006 WHSCC Stakeholder Report, p. 18


“Assets held to meet future benefit obligations for past injuries reached $1.035 billion at the end of 2006, representing a 111.0% funded liability. The WHSCC investment portfolio produced an annual return of 13.3%. The provisional assessment rate decreased by $0.05 from 2005, to $2.14. This represents the second consecutive year that the assessment rate decreased. In 2006, New Brunswick’s rates continued to remain the lowest in Atlantic Canada”.11

For the past eight years, an independent WHSCC Client Satisfaction Survey has been conducted by Omnifacts Bristol Research. The following taken from WHSCC Client Satisfaction Survey, Omnifacts Bristol Research, December 2006 portrays the results of “satisfaction” and the “effectiveness” portions of the survey: Satisfaction with the WHSCC among injured workers and registered employers as expressed by the Client Satisfaction Index has been at approximately the same levels since 2000.

Client Satisfaction Index (Weighted) 2000 2001 2002 2003 2004 2005 2006 Injured Workers 82% 83% 81% 81% 87% 82% 81% Registered Employers 86% 86% 85% 86% 85% 84% 84%

WHSCC’s overall effectiveness was one of the questions that surveyed groups were less likely to agree with. No major trend can be reported as the perception has slightly improved among non-registered employers, slightly declined among injured workers and remained stable between the two other groups.

Tell me whether you completely agree, mostly agree, mostly disagree or completely disagree that the WHSCC is effectively run: Summary Results: % indicating 'Completely Agree or Mostly Agree' 2005 2006 Registered employers 70% 68% Non-registered employers 51% 56% Injured workers 74% 70% General workers population 62% 59%

Policy Development and Foresight

The WHSCC Board of Directors has complete responsibility for the Commission’s policies and direction. As such, the Board approves policies, which provides their interpretation of the legislation and regulations. Policies also provide staff with the guiding principles required to fulfill their responsibilities, i.e., case managers follow policy when making decisions. As well, policies communicate to stakeholders how the Commission conducts its business. About 75% of the Board’s work is policy development. For example, improvement to benefits is through policy discussion. Policy is reviewed by the Board every two months.

11 Ibid



The policy document on developing policy (Policy No, 43-001) clearly articulates the need to consult internal and external stakeholders’ input as part of the process when developing policy-related documents. All Boards or Commissions have a policy manual and most have a formal process in place for engaging stakeholders in their policy development. New Brunswick is one of the few jurisdictions where there is no written process on how the stakeholders are identified or should be engaged.

Comparison to Other Canadian Jurisdictions

Size of the Board of Directors

Currently, the time commitment for Board members in New Brunswick is estimated to be 30-45 days. The size of the Board of Directors ensures there is an appropriate mix and level of expertise both at the Board table, the maintenance of institutional memory and also to populate the various Board committees. Excellent corporate governance depends on having a Board of Directors with the appropriate personal attributes and mix of competencies that will support and advance the organization’s mission. A number of jurisdictions have several members representing the general public. Other jurisdictions’ legislation does not make any reference to a public representative and New Brunswick has one. In 2006, Board membership across Canada ranged from 5 to 16 members. In New Brunswick there are nine Board members. The current Board of Directors in Nova Scotia also includes a Deputy Chair for a total of 11 members.

Summary of Composition of Board – As stated in legislation12

Chairman Chairperson

or Chair

Worker Reps

Employer Reps

General Public

President and / or

CEO

Chief Appeal Commissioner

/ Chair of Appeals Tribunal

Other ex-

officio

Observers

AB Chair 3* 3* 3* Yes - - - BC Chair 1 1 4 Yes Yes - - MB Chairperson 3 3 3 Yes No - NB Chairperson 3** 3** 1 Yes Yes - - NL Chairperson 3** 3** 3 Yes - Yes - NT/NU Chairperson 2 2 2 Yes - - - NS Chair 4** 4** - Yes - - - ON Chair - - - Yes No - - PE Chairperson 3** 3** - - - - - QC Chairman 7 7 - - - - 1 SK Chairperson 2** 2** - - - - - YT Chair 2 to 3 2 to 3 Yes Yes - -

* Up to, or not to exceed ** Act states must be equal number of person representing employers and employees

12 Association of Worker’s Compensation Boards of Canada (AWCBC) - 2006


Length of Board Member Appointments

Chair appointments vary from three to five years and are four years in New Brunswick. Member appointments vary from two to four years and is three years in New Brunswick.

Term: Number of years (up to)13:

Chairman

Chairperson or Chair

Vice Chair

Members President and / or Chief

Executive Officer

Members can be re-

appointed for additional

term?

If so, number of years stated in Act

AB 3 - 3 Open Yes 3 BC 5 - 3 Open Yes 6/10* MB 4 - 4 Open Yes 4 NB 4 - 3 3 Yes 3

NL - - Determined by LG - - -

NT/NU 3 3 3 - Yes 3 NS 5 5 4 - Yes - ON 3 - - 3 Yes - PE 3 - 3 - Yes - QC 5 5 2 - Yes - SK 5 - 4 - Yes - YT 3 3 3 - Yes 3 years by implication * Chair may not be appointed for continuous period of more than 10 years. Director may not be appointed for continuous period of more than

6 years.

Official Names of Workers’ Compensation Boards

A report in 1917 by Frederick J.G. Knowles advocated that New Brunswick adopt Workmen’s Compensation legislation (1918). Over the years, the scope and coverage gradually expanded to include a greater percentage of the labour force. The 1980 Boudreau report recommended that government establish an Occupational, Health and Safety Commission to reflect the concern with safety in the workplace. The report also suggested a change in the name of the Act be changed to Workers’ Compensation Act to reflect the growing number of women in the workforce. In 1994, a Ministerial Committee was asked to bring forward recommendations for the merger of the Workers’ Compensation Board and the Occupational Health and Safety Commission with the intent these would be the foundation for a new corporate Board – the current Workers’ Compensation, Health and Safety Commission. The following table shows the legal names of the WCBs in Canada. In 2005, the Workers' Compensation Board of British Columbia became WorkSafeBC — a name that more accurately reflects the focus on prevention, customer service, and return to work. While Workers’ Compensation Board of British Columbia remains the legal name, WorkSafeBC is now the name used on a daily basis.

13 Association of Worker’s Compensation Boards of Canada (AWCBC) - 2006



Name of Worker’s Compensation Board AB Workers’ Compensation Board Alberta

BC Workers’ Compensation Board of British Columbia WorkSafeBC – operational name

MB Workers Compensation Board of Manitoba

NB Workplace Health, Safety and Compensation Commission of New Brunswick

NL Workplace Health, Safety and Compensation Commission

NT/NU Workers’ Compensation Board Northwest Territories and Nunavut

NS Workers’ Compensation Board of Nova Scotia ON Workplace Safety and Insurance Board PE Workers’ Compensation Board of Prince Edward Island QC Commission de la santé et de la sécurité du travail SK Saskatchewan’s Workers’ Compensation Board YT Yukon Workers’ Compensation Health and Safety Board

Source: Annual Reports, jurisdictional websites

Appeal Review Bodies

New Brunswick’s Appeal Tribunal system is unique in Canada. The Appeals Tribunal operates separately from the Commission on a day-to-day basis, yet the administration component is linked to the WHSCC. Only two other jurisdictions are legislated to have the Chair of the appeal review body as part of the Board of Directors’ composition - British Columbia and Yukon. In several jurisdictions there is a legislated second and final level of appeal. In New Brunswick, the Appeals Tribunal is the first and final level of appeal for claims under the WC Act and the second level of appeal after the Chief Compliance Officer for claims under the Occupational Health and Safety Act.

Conclusion

This discussion paper is one component resulting from the research undertaken by the Independent Review Panel as it strives to meet its mandate in determining whether the WHSCC is functioning appropriately and to its fullest potential. The panel held an initial meeting in June with employer and worker stakeholder organizations. The Panel also met with various members of the Board of Directors, staff of the WHSCC, staff of the Appeals Tribunal, the actuary of the WHSCC and various individuals within the Department of Post-Secondary Education, Training and Labour. The Independent Review Panel has met a number of times to discuss strategy, research required, the consultation process, etc. Extensive research has been undertaken through the Internet, contact with various Workers’ Compensation Boards across Canada, and unconditional support by the Board of Directors, Appeals Tribunal and staff of New Brunswick’s Workplace Health, Safety and Compensation Commission.


This discussion paper is one of the consultation tools being used by the Independent Review Panel to complete Phase III of its mandate:

The Review Panel will develop and execute a targeted consultation to engage key stakeholders and obtain feedback on the findings from Phases I and II. Stakeholder perspectives and recommendations will be sought.

To this end, the Independent Review Panel would like to invite your comments / briefs in writing on how well the Workplace Health, Safety and Compensation Commission compares to other Canadian jurisdictions in terms of:

the structure of the board of governance, policy development and foresight, stakeholder input, and other topic areas addressed in the document.

Please submit your comments / briefs by Wednesday, October 31, 2007 to:

Mail: Independent Review Panel

New Brunswick Workplace Health, Safety and Compensation System 535 Beaverbrook Court Suite 105 Fredericton, NB E3B 1X6

Fax: 506 444-2054

E-mail: [email protected]

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