On January 1, 2013, new legislation amending the Workplace
Safety and Insurance Act, 1997 ("WSIA") to impose
additional coverage requirements upon construction industry
participants will come into force. Among the new requirements,
subject to very limited exemptions, all executive officers in a
construction corporation will be "deemed workers"
and will be required to be covered by workplace safety insurance
("WSI") pursuant to the WSIA.
These WSIA changes, which can be divided into four general categories, are outlined in further detail below.
1. Expanded Compulsory Coverage in Construction
Effective January 1, 2013, and subject to certain exemptions,
every person who is an independent operator,1 sole
proprietor, partner or executive officer of a corporation carrying
on business in construction2 will be a "deemed
worker" pursuant to the WSIA and must be covered by
WSI. The sole proprietor, partnership, or corporation those
individuals work for or carry on business under, will be deemed
employers for the purposes of the WSIA.
It is the deemed employer's responsibility to ensure that insurable earnings are properly reported and that premiums are paid.
- The first exemption applies to those working exclusively in home renovation work. Home renovation work refers to work on an existing private residence that is occupied or to be occupied by the person who directly retains the relevant workers.
- The second exemption applies to partners and executive officers. While one might hope that this provision would be used to create regulations that broadly exempt executive officers from WSI, the exemption currently set to come into effect only allows a partnership or corporation to designate one partner or executive officer as exempt from WSI where that partner or executive officer (i) does not perform any construction work and (ii) a declaration is filed with the Board, providing certain information relating to the exempt person.
It is important to note that, for the purposes of this exemption available to executives and partners:
- The status of the executive officer must be demonstrated by documents such as resolutions, corporate by-laws or public records filed with government authorities, and must be recorded in the corporation's minute book. The Board retains discretion to determine whether or not someone is an executive officer.
- "Construction work" means any manual work of a skilled or unskilled nature, operation of equipment or machinery, or direct on-site supervision of workers. Periodic site visits that involve no construction work may be permitted under this exemption.
- A material change in circumstances must be reported to the Board within 10 days if the change renders the exemption criteria inapplicable to the designated individual.
- This exemption does not apply to executive officers of corporations with one executive officer and no employees.
2. Clearance Certificate in Construction
A principal (or "owner") is required to obtain a
clearance certificate from the Board prior to the commencement of
work by any contractor or sub-contractor it hires to perform
construction work. The certificate must cover the entire period of
work to be done by that contractor or
Before the Board can issue a clearance certificate, the contractor's WSI premiums and account must be up to date. Where the Board issues a clearance certificate, it waives its right to hold a principal liable for unpaid premiums and other amounts the contractor may owe to the Board for the validity period of the certificate.
If the principal does not or cannot obtain a clearance certificate and the contractor proceeds with the work, the Board may hold the principal liable for the contractor's unpaid premiums and other amounts up to the value of the labour portion of the applicable contract.
The clearance certificate requirement does not apply to householders who purchase services from a contractor.
3. Insurable Earnings – Construction
An employer, or principal, is responsible for determining the
insurable earnings of workers as well as individual contractors who
are not independent operators in construction and are therefore
For workers, insurable earnings are determined based on: pay by hourly rate; piecework; salary; commission; vacation pay; room and board; bonuses; and the value of most other allowances and taxable benefits.
For an individual contractor, the insurable earnings are determined based on the labour portion of the contract they have entered into.
An employer, or deemed employer, is also responsible for reporting insurable earnings of a deemed worker who is a sole proprietor with workers, a partner in a partnership, an executive officer in a single officer corporation with workers, or an executive officer in a multi-officer corporation with or without workers.
With respect to executive officers, the insurable earnings upon which WSI premiums will be based are as follows:
- Employment income reported on a T4 Statement of Remuneration Paid;
- Other insurable employment income reported on a T4A, Statement of Pension, Retirement, Annuity, and Other Income;
- Dividends reported on a T5 Statement of Investment Income; and
- Director fees issued by the corporation to the executive officer.
Independent operators,4 whether or not incorporated, are responsible for reporting their own insurable earnings. Insurable earnings are based on the labour portion of the applicable contract.
4. Offences and penalties
The Board will waive penalties and/or refrain from investigating and/or laying applicable offence charges with respect to compliance with the expanded compulsory construction requirements until December 31, 2013, to the exception of the following:
- To begin, the Board will pursue employers and individuals who knowingly make false or misleading representations to the Board or who wilfully fail to notify the Board of material changes.
- Further, if an industry participant's non-compliance with the new provisions of the WSIA continues after the offence and penalties policy expires on December 31, 2013, the Board will pursue offences and may include the period between January 1, 2013 and December 31, 2013, when determining the period and extent of non-compliance.
- In addition, while certain offences will not be pursued, individuals and employers are still required to comply with the WSIA beginning January 1, 2013, and will be liable for unpaid premiums as well as interest that may result if they fail to do so. Similarly, liability for unpaid premiums will exist if clearance certificates are not properly obtained beginning on January 1, 2013.
Given the fast approaching deadline, construction industry participants are advised to take note of the new requirements and make efforts to come into compliance as soon as possible. It is possible to take advantage of pre-registration5 which will help ensure that businesses are in compliance from the outset, but will not force any premiums to be paid until January 1, 2013.
1 Note that an independent operator is defined as: An individual who does not employ any workers; reports himself or herself as self-employed for the purposes of an Act or regulation of Ontario, Canada or another province or territory of Canada (e.g., Canada Revenue Agency); and, is retained as a contractor or subcontractor by more than one person during an eighteen (18) month period OR An individual who is an executive officer of a corporation; the corporation does not employ any workers other than the individual; and, is retained as a contractor or subcontractor by more than one person during an eighteen (18) month period.
2 For the purposes of these requirements, "construction" means any of the industries listed in Class 'G' of Schedule 1 of Ontario Reg. 175/98 and/or business activities included in Class 'G' in the Board's Employer Classification Manual. In brief, the definition is broad and encompassing.
3 As will be discussed below, if an individual contractor is not considered independent, then it will be a deemed worker and the principal will be required to remit applicable insurance premiums. Thus, in this circumstance, the clearance certificate obligations would be inapplicable.
4 Recall the definition of "independent operator" at note 1 above.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.