Policy
A principal who directly retains a contractor or subcontractor to perform construction work must obtain a clearance certificate before the contractor or sub-contractor undertakes the construction work. A certificate must be in effect for the entire time the contractor or sub- contractor is performing the work. Starting the work without a clearance certificate is an offence.
The WSIB issues a clearance certificate to relieve a principal of liability for payment obligations to the WSIB that a contractor or sub-contractor may incur with respect to a contract entered into between the principal and the contractor or subcontractor during the validity period of the certificate.
Purpose
This policy describes the obligation of a principal and a contractor or subcontractor to ensure that a clearance certificate is in effect when a principal directly retains a contractor or subcontractor to perform construction work.
Guidelines
NOTE
For information on obtaining clearance certificates in industries other than construction, see 14-02-04, Clearance Certificate.
Definitions
Principal - A person awarding or letting a contract to a contractor or a sub-contractor.
Construction work - means work performed in any of the industries listed in Class G - Construction of Schedule 1 (O.Reg. 175/98) and/or business activities included in Class 'G’ in the WSIB’s Employer Classification Manual (ECM).
Contractor and sub-contractor - A person providing contractual services to a principal. Contractors may themselves retain sub-contractors, in which case the contractor becomes the principal in relation to the sub-contractors.
General
This policy applies to all principals who let a contract to carry out construction work. It does not apply to householders who purchase services from a contractor.
This policy also applies to contractors or subcontractors performing construction work, with certain exceptions. For certain exceptions, see 12-01-06, Expanded Compulsory Coverage in Construction.
The business relationship between a principal and a contractor includes the relationship between a contractor (acting as a principal) and a sub-contractor. In this policy therefore, unless otherwise indicated, the term “contractor” includes “sub-contractor”.
A clearance certificate confirms that the contractor or subcontractor is registered with the WSIB and is in good standing.
Accounts in good standing
A clearance certificate is issued if the following requirements are met. If the contractor has more than one account, each account must meet these requirements before a certificate is issued for any of the accounts.
- the contractor has an open account with the WSIB
- the contractor has completed and provided all required registration information and documents
- the contractor’s declared business activities are classified in the proper classification units; see 14-01-01, The Classification Scheme
- the contractor has reported appropriate premiums based on actual or estimated insurable earnings for all past reporting periods
- all required Premium Remittance and Reconciliation forms are filed
- all premiums and other amounts owing to the WSIB are paid up-to-date at the time the clearance certificate is requested. In addition to premiums on insurable earnings, other amounts owing include interest, service charges, experience rating surcharges and other non-compliance charges
Advance payment
Before a clearance is issued for a newly registered contractor, or to a principal for a newly registered contractor, the contractor must make an advance payment for the amount determined by the WSIB.
Principal’s liability
By issuing a clearance certificate, the WSIB waives its right to hold a principal liable for unpaid premiums and other amounts the contractor owes the WSIB, for the validity period of the certificate.
Limits to liability
If the contractor has payment obligations owing to the WSIB, the principal may be liable for the unpaid premiums and other outstanding amounts, up to the value of the labour portion of the contract(s) between the contractor and the principal.
Contractor’s obligations
A contractor must meet its registration, reporting and payment obligations to have its account in good standing.
A contractor may not perform construction work for a principal without a valid certificate of clearance in effect.
Offences and penalties
A principal who fails to comply with sections 141.2 (2), (6), (9) or contravenes (8) of the WSIA is guilty of an offence. For more information, see 22-01-05, Offences and Penalties - General.
A contractor or sub-contractor who fails to comply with sections 141.2 (5) or contravenes (7) of the WSIA is guilty of an offence. For more information, see 22-01-05, Offences and Penalties - General.
For the purposes of enforcement, where non-compliance pursuant to section 151.2 continues beyond December 31, 2013, the WSIB may include the period of January 1, 2013 to December 31, 2013 when determining the period and extent of the identified non- compliance.
Validity period
A clearance certificate is valid for up to 90 calendar days, depending on the date that it is issued, and is renewable.
Exceptions
Contractor’s account not in good standing
When a contractor’s account is not in good standing a clearance certificate may be issued if
- the principal pays the amount owing, as determined by the WSIB, or
- an approved payment plan is in place and payments are made, as determined by the WSIB. See 14-04-04, Collections Based on Financial Hardship.
Contractor’s account closed
Even though a contractor’s account is closed the contractor or the principal may request a clearance certificate throughout the time period of the contract. In these cases the WSIB may issue a letter relieving the principal of liability if
- the contractor owes no premiums and/or other amounts to the WSIB, or
- premiums and/or other amounts are owing; and the principal pays the amount due, up to the value of the premiums for the labour portion of the contract(s) between that principal and the contractor.
If a clearance certificate is issued for an overdue account, or a letter waiving liability is issued for a closed account, the validity period is determined by the WSIB taking into account the circumstances of the case.
Letter of credit
A contractor is permitted to post a letter of credit representing a disputed amount being appealed. A clearance certificate is issued when the contractor has complied with all the requirements listed in “Accounts in good standing” and the letter of credit for the disputed amount is posted to the account. For more information, see 14-04-05, Alternative Payment Arrangements.
Retaining a clearance
Principals and contractors must keep clearance certificates or copies of certificates for at least three years from the date they obtained them.
Application date
This policy applies to all decisions made on or after January 1, 2014, for all accounts.
Document history
This document replaces 14-02-19, dated January 2, 2013.
References
Legislative authority
Workplace Safety and Insurance Act, 1997, as amended
Section 141.1, 141.2, 151.2
Minute
Administrative
#3, December 2, 2013, Page 513