A value-for-money audit found the WWII-era program offers little benefit to Ontario employers today
The Workplace Safety and Insurance Board (WSIB) has closed the Second Injury and Enhancement Fund (SIEF), after a value-for-money audit concluded the 80-year-old program delivers "no or little value" to the businesses it was designed to help, according to WSIB's policy update and a Q&A the organization plans to post.
Aaron Lazarus, vice-president of communications at WSIB, said the fund had quietly outlived its purpose long before the audit made the case for closing it. "It was created in 1945 to support veterans coming back from World War II who were injured and to combat discrimination that they were facing trying to get employment," Lazarus said. "This was put in place 20 years before Ontario had a human rights code." WSIB's focus today, he said, is on returning injured workers to work and preventing injuries in the first place, objectives the fund never supported.
Why the fund became obsolete
For decades, SIEF let employers transfer part of a claim's cost to the fund when a pre-existing condition contributed to or prolonged an injury. That changed when WSIB moved to a prospective rate-setting model in 2020. "Previously to 2020, it was what I would call a retrospective type of model," Lazarus said. "People would go through the program, and then early into the next calendar year there would be an assessment through our experience rating... and the secondary injury and enhancement fund was one of the elements that went into whether they would get a rebate or be assessed a further payment."
Under the new model, WSIB sets premiums using six years of an employer's individual and class-level experience, Lazarus said, leaving no place for SIEF in the calculation. He described the credits the fund still generates as "mirage money": "it shows up on a statement of account... and it'll show up as a credit line there. But it doesn't necessarily mean that that business is paying any more or less in their premium rate assessment." Administering the program, he added, remains "a significant use of our own resources every year... for something that isn't delivering any value." Any apparent savings for one business were effectively covered by others in the same rate class, an equity problem the audit flagged. "For some businesses who may feel that they were seeing some kind of benefit from it, it means that the people in their class were picking up that cost, which also is not fair," Lazarus said.
Years of warnings before the closure
WSIB's decision follows a long paper trail of expert criticism. "Since then there has been report after report after report of expert panels looking at it and saying it doesn't make any sense," Lazarus said. A 2008 report from consulting firm Morneau Sobeco first recommended the fund be removed, followed by Harry Arthurs' 2012 Funding Fairness report, which recommended abolishing SIEF outright, and a Douglas Stanley report two years later reaching the same conclusion. WSIB kept the program running through the transition, Lazarus said, "for people's comfort level, to test to make sure that all of the experts were correct in their assessment" — and the recent audit, he said, "shows that they were." It found the program consumed roughly 25,000 hours of staff time a year to assign credits that "don't actually give any kind of credit money either."
Only about 2,400 businesses, roughly 0.75 per cent of the 318,000-plus employers WSIB covers, applied for SIEF cost relief in 2024, according to WSIB. A cottage industry of SIEF consultants grew up around the program's complexity. "The reality is... the WSIB is coming from a place where we used to be extremely complicated, and processes were set up that were not designed for the end user," Lazarus said. "A whole cottage industry starts up of people who hang out their shingle and say, I know how this complicated system works and I can help you get through it... It was a legitimate business model based on how this organization was running. We have a strategic plan that is literally titled Better, Easier, Faster." Firms built around SIEF's complexity, he said, "might have to rethink what their model is going to be going forward."
What employers should do now
The wind-down includes a clear cutoff. "Any application that was already in our system by July 16th is still going to continue to be processed, and if approved, it will show up on their claim statements in the same way as before," Lazarus said. "So there's no actual impact for businesses in that respect." For businesses that relied on SIEF, Lazarus pointed instead to the Health and Safety Excellence Program and faster return-to-work practices: "There are better, more productive ways to improve health and safety in your company." Employers with active or planned SIEF applications should confirm filing dates with WSIB and review the wind-down provisions in its updated Operational Policy Manual.
