Much like automobile and property insurance companies, workers’ compensation boards across Canada use experience rating systems to measure a company’s level of success in health and safety. Generally, organizations are measured against other similar employers. Those organizations that fail to prevent accidents or manage claims effectively are penalized through higher premium rates or premium surcharges. Unlike insurance companies, however, the compensation boards may also grant premium rebates as an incentive for good performance.

Many organizations look at a company’s workers’ compensation experience rating when considering whether to conduct business with them. Therefore, your company’s experience rating may be a factor in winning contracts.

This may also be a factor in corporate transactions. During contract tendering, for example, principal contractors will often request that employers provide copies of their workers’ compensation experience rating. Principals look at these as one method to ensure that the organizations they contract with have effective health and safety practices. Failure to demonstrate effectiveness in this area of your business may cost you money through lost contracts. 

Although experience rating is only one factor used when making these contracting decisions, it can be an important consideration. Employers often get frustrated with this criteria as they do not agree that experience rating is an indicator of their business performance. A number of accidents in any given year can result from any number of causes, be it worker error, third party negligence or, unfortunately, even poor health and safety practices.

However, it remains important for employers to do everything possible to protect their experience rating in order to manage that aspect of their business. Once again, it comes back to claims management.

Take a look at the example above, where an injury is caused by the negligence of a third party, be it a worker from another company or a third party motor vehicle driver. In such cases, it is important for the employer to try to have the costs of that potentially very expensive claim transferred to the responsible party and taken off your record.

The same would apply to appealing questionable decisions made by the compensation board. The end result of a successful appeal is having the costs and/or claim removed from your experience rating, thus moving you closer to a rebate and a cleaner accident record.

Claims management is always good for business. Protecting your experience rating through good health and safety practices, preventing injuries and managing those that do occur can have positive effects on your business’s bottom-line, both in terms of helping you obtain more business and by decreasing workers’ compensation costs.

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David Marchione is an OHS consultant and paralegal with Toronto-based law firm Gowlings. You can contact him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or visit www.gowlings.com/ohslaw.