To calculate your income replacement properly, we need accurate and complete information from you.
First, we classify your employment status, based on your employment situation at the time of the accident:
- full-time earner
- part-time earner
- temporary earner
- non-earner
- minor
- student
- someone who couldn’t work at the time of the accident because of a physical or mental condition
This classification relates to the amount of income replacement you’ll receive and the need to reclassify your employment status in certain cases.
The law distinguishes between full-time earners, part-time, temporary and non-earners.
It would be unfair to lock in the amount of income replacement paid to people who were employable and could have held full-time work but did not happen to be working when the accident happened.
We reassess the employment status of non-earners, part-time earners and temporary earners if they are still unable to work because of the accident 180 days (six months) after it occurred.
Next, we establish your gross yearly employment income – also known as the total of gross yearly income from salaried employment and self-employment. We consider all employment income that you lose (because of injuries sustained in the accident) for the income replacement calculation, including Employment Insurance benefits or National Training Allowance benefits.
Many other factors are used to calculate gross yearly employment income. These include considerations such as shift premiums, periodic overtime, seasonal fluctuations in income, sick credits and vacation time. Your case manager can explain how these factors contribute to establishing gross yearly employment income.
Income replacement calculations
Income replacement is 90 per cent of your net income.
This amount will be paid to you every two weeks, until:
- you return to work
- your income replacement is adjusted
- you’re eligible for a Retirement Income Benefit
- you’re no longer eligible for income replacement
However, there are certain situations in which funding you receive through other programs will be subtracted from your income replacement. For example, if you receive a disability benefit from the Canada Pension Plan because of the accident, your income replacement will be reduced accordingly.
We’ll never use an amount higher than the maximum insurable Gross Yearly Employment Income amount when calculating your income replacement. PIPP Benefits provides more information on this year’s maximum and other basic PIPP benefits.
Salaried employment
We consider all these sources as income from salaried employment:
- wages or salary, including vacation pay
- overtime
- declared tips
- commissions
- bonuses
- cash value of your personal use of a company vehicle
- value of the employer’s contribution to your pension plan
- cash value of your share of a profit-sharing plan
- other benefits that are part of your employment compensation package
Examples of other benefits include:
- employer contributions to a health plan
- a reduced interest rate on a loan
- the payment of professional fees
- housing provided by your employer
- remote location bonuses
Remember, PIPP replaces income that you lost because of injuries you sustained in the accident. For example, if your company continues to pay into your pension plan while you’re off work, you won’t receive income replacement for that portion of your income.
To establish your salaried employment income, we need a completed Employer’s Verification of Earnings (EVE) form to pay you income replacement. Please ask your employer to complete the form and return it to us as quickly as possible. Your case manager can help if you’re having trouble obtaining the necessary employment income information.
We may also ask you for other documents to verify your employment income, especially if your employer fails to return a properly completed EVE form to us.
Self-employment
Self-employed people work for themselves, not for someone else. Independent contractors, sole proprietors, unincorporated farmers and members of unincorporated partnerships are all self-employed. People who work for their own incorporated company are not self-employed. They are employees of their privately-owned company.
Because self-employment income can vary greatly from year to year, the gross yearly employment income of a self-employed person is determined by whichever of these amounts is the highest:
- your most recent business year
- your most recent fiscal year
- an average of your income from two or three business years
- the pro-rated average gross income for your class of employment
For businesses that are only a few months old, a statement listing income sources may be sufficient to establish your self-employment income. For businesses that have been operating for more than a few months, we need to see income tax returns, financial statements or tax assessments.
Net income
Your net income is your gross yearly employment income minus certain deductions. Net income approximates your actual “take-home” pay before the accident.
Here are the deductions from gross yearly employment income that establish taxable income.
Some of these may not apply to you:
- the basic personal credit
- the age credit (for people over 65)
- the married person’s credit (regardless of your spouse’s income)
- the equivalent to married credit (when you have a dependant and no spouse)
- the dependant’s credit (regardless of the dependant’s income)
- employment insurance premiums
- Canada Pension Plan contributions
- child and spousal support payments
A case manager will complete a worksheet with information on your age, marital status, number of dependants and other tax information. We follow income tax rules that applied during the year prior to the year in which we are making the calculations.