Policy in practice: Associated Employers

Below you will find more information and relevant examples covered by our Associated Employers policy (14-01-06).

This is not a policy. If there is a conflict between this document and the policy, the decision maker will rely on the policy. For complete information, see our Associated Employers policy.

Defining association

The WSIB may determine that two or more employers are associated and treat their operations as if carried out by a single employer for the purposes of classification and premium rate setting.

The underlying principle and intent of the association policy is to treat employers who effectively operate as one business on a day-to-day basis as a ‘single entity’ based on WSIB policy and evaluate them together for rate setting purposes. This is the most fair and equitable way to ensure that each employer pays their appropriate share of costs to maintain the system.

Criteria

The Associated Employers’ policy requires the application of a two-part test for determining association. If two or more employers meet both the test of affiliation and the test of cooperation, they are considered associated.

The test of affiliation considers business relationship factors such as ownership structure, profit sharing and control in corporations. The test of cooperation identifies whether or not there are any substantial connections, integration and/or dependencies between the operations of each organization’s business activities.

The WSIB will use an association questionnaire to gather information to assess employers’ business activities and working relationships with one another.

Test of affiliation

Two or more employers are affiliated if any of the following criteria apply:

Family members – the individuals are related to each other as any of the following:

1. spouses (as defined in Part III of the Family Law Act),
2. parents and children
3. grandparents and grandchildren
4. father-in-law or mother-in-law, and son and/or daughter in-law
5. sibling or a spouse’s sibling
6. a step or half relationship corresponding to one mentioned in clause b, c, d or e.

Partnerships – the employers are two or more partnerships, and there are persons who are general or limited partners of the partnerships and those persons are entitled to at least an equal share of the profits of each partnership.

Corporations – one employer is a corporation and another employer is:

• a person who controls the corporation, or
• a member of a related (family) group that controls the corporation, or
• an individual who is related (family member) to a person who controls the corporation, or to an individual who is related to a member of a related (family) group that controls the corporation, or
• a partnership that controls the corporation, or
• the employers are both corporations, and
  • the corporations are controlled by the same person or group of persons, or
  • the corporations are controlled by individuals who are related to each other, or
  • one corporation is controlled by an individual who is related to a member of a related group that controls the other corporation, or
  • the corporations are controlled by related groups and a member of one of the related groups is related to a member of the other related group

Examples of affiliation for each legal entity:

• Sole proprietor – Employer A and Employer B are spouses
• Partnership – Employers A and B have the same individual who is a partner in both companies and has an equal share of the profits for both partnerships
• Corporation – The same individual is the sole shareholder for both corporations

Partnerships

Persons are listed as either general or limited partners within a partnership agreement. The WSIB may request a copy of the partnership agreement to determine and evaluate the shares held by each partner. Partners, who are entitled to at least an equal share of the profits of each partnership, are considered to be affiliated.

Number of partners	Share of profits
2	At least 50%
3	At least 33.33%
4	At least 25%
5	At least 20%

Affiliation examples within partnerships:

Example 1:

• Partnership A (two partners): John Kale 50 % and Sam Jones 50%
• Partnership B (three partners): John Kale 60%, Susan Smith 20% and Tony Viscus 20%
• The same individual is a partner in both partnerships. John Kale has at least an equal share of the profits in both partnerships. Therefore, Partnership A and Partnership B are affiliated. 

Example 2:

• Partnership A (two partners): John Kale 50 % and Sam Jones 50%
• Partnership B (three partners): John Kale 20%, Susan Smith 40% and Tony Viscus 40%
• The same individual is a partner in both partnerships. John Kale does not have an equal share of the profits in both partnerships. Therefore, Partnership A and Partnership B are not affiliated. 

Corporations

Determining control

In order to determine affiliation between two or more corporations, the level of control possessed by individuals and/or groups of each of the corporations must be determined. The WSIB may request supporting documentation in order to assess control.

When assessing affiliation of corporations, control is determined by the shares (that provide voting privileges) held by a person or partnership in relation to other shareholders. The shareholder(s) who possess a relative majority of shares is identified as having control.

Relative majority is defined as having the greatest percentage of voting shares in comparison to the other shareholders. Employers are not required to have an absolute majority (holding more than 50 per cent of voting shares) in order to be affiliated.

Supporting documents

The WSIB may request supporting documents such as the following to confirm voting shares:

1. Shareholder's agreement
2. Shareholder's register
3. Resolutions of the shareholders
4. Corporate income tax return (Schedule 50 of the T2 Tax Return)
5. Other documents as appropriate

Related groups

A related group is defined as a group of individuals who are related (i.e. family members) to all the other members of the group. When assessing corporations, the combined voting shares of the related group are considered together and used to determine relative majority.

Example:

John is the sole shareholder in Corporation A and is therefore in control. Mike and Jane are husband and wife. Mike and Jane are in control of Corporation B as their combined voting shares provides them with a majority of 60 per cent voting shares; whereas John only holds 40 per cent of the voting shares. Therefore, there is no affiliation between Corporations A and B.

Corporation A

• John – 100% voting shares

Corporation B

• John - 40% voting shares
• Mike - 30% voting shares
• Jane - 30% voting shares

Group of persons

If the same individuals are involved in more than one corporation, they are identified as a group of persons who are not related to one another and their combined voting shares can be considered when determining relative majority.  

Example:

Cindy Rogers and Mark Wilson are not related to each other, but they have been identified as a group of persons and their shares (with voting privileges) are combined.

Corporation A: (Mark) 18% + (Cindy) 33% = 51%

Corporation B: (Mark) 20% + (Cindy) 20% = 40%

Corporation C: (Mark) 42% + (Cindy) 26% = 68%

As a group of persons, Cindy and Mark hold a relative majority of combined shares in Corporation A (51%), Corporation B (40%) and Corporation C (68%) and are considered to have control over their respective corporations. Therefore, the test of affiliation has been met. The test of cooperation must be applied to confirm association.

Affiliation of multiple employers

Employers are affiliated with all members of the group if one employer is affiliated with any other member of the group. The test of cooperation must be applied to confirm association

Scenario: Employer A is the father of Employer B. They both have companies that are separate legal entities. They are affiliated.

Employer B and Employer C are brothers in-law. They are affiliated.

By default, Employer A and Employer C are considered affiliated as they are both affiliated to Employer B.

Affiliation of mixed ownership types

An employer can be affiliated with organizations of any ownership type or combination of ownership types. Ownership types include sole proprietors, partnerships, corporations, including non-profit organizations.

Ownership type: Corporation

Company name:

• Corporation A

Shareholder name and share percentage:

• David Smith 40%
• Christian Henderson 30%
• Crista Chin 30%

Ownership type: Partnership

Shareholder name and share percentage:

• Susan Smith 60%
• Lawrence Henry 40%

Ownership type: Sole proprietorship

Shareholder name:

• David Smith

As David Smith controls Corporation A with a relative majority of shares of 40 per cent, this corporation is affiliated with David’s Smith’s sole proprietorship.

Susan Smith and David Smith are husband and wife. As Susan is in control of the partnership holding 60 per cent share of the profits, the partnership is affiliated with the corporation and sole proprietorship.

Test of cooperation

In applying the test of cooperation, decision-makers will consider whether the employers are in a cooperative business relationship based on providing ancillary services (as listed in our Classification Structure policy (14-01-01) to each other and/or whether they are in a cooperative business relationship based on the integration of the employers’ operations.

Note: temporary employment agencies automatically meet the test of cooperation if they are affiliated with an employer to which they supply workers.

The test of cooperation identifies circumstances where there is an integrated business activity or activities between two or more separate employers. Two or more affiliated employers are engaging in a cooperative business if they meet at least one of the following:

• Employer’s business activities primarily form an integrated operation with the other employer’s operation (and is therefore integral to the business of the affiliated employer)
• Employer conducts an operation that is primarily ancillary to the operation of the affiliated employer as if both operations were carried out by a single employer

If two or more employers meet both the test of affiliation and the test of cooperation, they are considered associated under the policy and will be required to declare the association to the WSIB.

Criteria for integrated operations

The employer’s business activities primarily form an integrated operation.

In this context, operation refers to business activities that are essential and dependent on each other and is further defined in the Single and Multiple Premium Rates policy (14-01-07).
The criteria for integrated operations are met if any of the following apply:

• A substantial share of either staff, supplies, equipment, or processes of one business activity are combined with those of another business activity.
• The product or service of the business activity is primarily offered together to external unaffiliated clients with the product or service of the employer’s other operations.

Example of integrated operation

Association is determined if the affiliated employers’ business activities primarily form an integrated operation and is therefore integral to the business of the other affiliated employer.

• Employer A
  • Employer A manufactures automotive lighting fixtures and sells their product to unaffiliated customers
  • 336320: Motor vehicle electrical and electronic equipment manufacturing (Class E4)
  • Total insurable earnings = $575,000
  • Uses electric light bulbs and tubes from Employer B to manufacture lighting fixtures
• Employer B
  • Employer B manufactures electric lightbulbs and tubes which they primarily sell to Employer A as well as to other customers
  • 335110:  Electric lamp bulb and parts manufacturing (Class E5)
  • Total insurable earnings = $350,000 
  • Employer B also manufactures metal screws for non-affiliated employers
  • 332720: Turned product and screw, nut and bolt manufacturing (Class E4)
  • Total insurable earnings =  $200,000

• Association decision:

  • Employer A manufactures automotive lighting fixtures and sells their product to unaffiliated customers
  • Employer B manufactures electric lightbulbs and tubes and sells primarily to Employer A and also to other customers
  • Employer A requires the electric lightbulbs and tubes to manufacture their product. This business relationship is considered an integrated operation and meets the test of cooperation. Therefore they are associated
  • Each employer maintains their assigned NAICS codes on their respective accounts, however, their insurable earnings and claims experience will be combined to determine a single rate, paid by both employers
  • The associated business activity group is created on Employer A and Employer B accounts, which includes all their assigned NAICS codes. The integrated operations NAICS 336990 and NAICS 335910 are always placed in the same business activity group and the remaining NAICS 327214 is also included, as it does not meet criteria for a separate premium rate
  • Both Employer A and Employer B will each pay the same premium rate as their experience is now combined

Primarily ancillary

The operation of one employer is primarily ancillary to the operation of the other as if both operations were carried out by a single employer.

Ancillary means that the business activity is supportive in nature, such as administration related to an employer’s operations. This includes management, payroll, human resources, information technology, training and clerical services, janitorial operations carried on by the employer at the employer’s own premises, marketing, promotion, fundraising or communication related to goods sold or produced or services provided, or intended to be sold, produced, or provided by the employer. For a full list of what is considered ancillary, please refer to our Classification Structure policy (14-01-01).

The concept and understanding of primarily ancillary applies to both the employer and their affiliated businesses alike when considering the services being provided to one another.

The term primarily ancillary should be considered when attempting to determine how much of the employer’s operations are ancillary to the other affiliated employers, as well as from the perspective of the affiliated employers that are receiving the ancillary services. A question to consider is ‘do the affiliated employers perform or have the ability to perform the ancillary services themselves – either in part, or wholly?’

Example: A small business owner operates two separate car repair shops and hires one administrative employee who provides the accounting, payroll, HR and finance support services to both companies. This administrative employee is what makes the employers meet the primarily ancillary criteria. They are the sole person responsible for these activities and the employers completely depend on these services to operate their respective businesses. Therefore, both employers are considered to operate as though they are a single employer and are in a co-operative business relationship.

Determining integration between affiliated employers

In some cases where there are a number of affiliated businesses, with a ‘central employer’ providing ancillary services, not all of the employers under consideration may be directly co-operating with one another and the degree of cooperation may vary from one affiliated business to another.

A central employer is the connection and link to the other affiliated employers, which establishes a co-operative relationship amongst the group of employers.

In applying the test of cooperation, decision-makers should consider both whether the employers are in a cooperative relationship based on employers providing ancillary services to each other and based on the integration of the employers’ operations.

Example: Organizations A, B and C own and operate restaurants and are all affiliated. Organization A provides the administrative services to B and C; however, the restaurants do not provide services to each other and do not cooperate together. Organization A is considered the central employer and the test of cooperation is determined to have been met between all corporations.

Partly Ancillary

An employer may carry on an operation that is partly ancillary to the employer's principal business activity and partly a business activity in its own right.

If the payroll of the part of the operation carrying on as a business in its own right is properly segregated, it is considered a separate business activity and classified accordingly.

However, if the payroll for the two parts of the operation is aggregated (i.e. the employer records the insurable earnings of all workers with no regard to the business activity in which each worker is engaged), the entire operation is classified in either the six-digit NAICS code of the business activity that the ancillary part supports, or the six-digit NAICS code of the part that is carrying on as a business activity in its own right, whichever corresponds to the class or subclass that has the higher class average premium rate.

Classification of Ancillary Operations

Our Classification Structure policy (14-01-01) provides rules to classify an employer with ancillary operations depending on the amount of payroll, which defines them as a small or large employer and whether they have segregated payroll or aggregated payroll.

• Large employer (total insurable earnings is more than five times the current annual maximum ceiling for the year): if a large employer cannot segregate payroll, the ancillary business activity is classified entirely in the business activity with the higher premium rate.
• Small employer (total insurable earnings is less than five times the current annual maximum ceiling for the year): if a small employer cannot segregate payroll, the ancillary business activity is classified entirely in the primary business activity which it supports, regardless of whether it has a higher or lower premium rate.

Examples

Example of an associated employer

Taryn Manufacturing Inc. has one business activity, producing eco-friendly clothing. Alison Retail Inc. has one business activity; she is the sole retailer of Taryn’s clothing. The two individuals are sisters. The chart below outlines if the criteria is met for association:

Associated criteria	Description
Test of affiliation	Yes - family member criteria met
Test of cooperation	Yes - they produce and sell a common end product and have operations that are primarily integrated
Decision	Both employers are considered associated. As a result, they are assigned to one predominant class and one premium rate

Example of an associated employers providing ancillary services

Scenario #1– ancillary operations

Janice owns a janitorial company. She has hired one worker and exclusively provides janitorial services to her husband Steve’s property maintenance company. Janice does not have any contracts to provide janitorial services to other companies. Steve has an account with the WSIB and is classified as NAICS code 531111 - Lessors of residential buildings and dwellings.

1. Do they meet test of affiliation?

   Yes, Janice and Steve are spouses and therefore meet the test of affiliation.

2. Do they meet test of cooperation?

   Yes, Janice only provides janitorial services to Steve’s company, which makes her operations primarily ancillary to Steve’s property maintenance operations. Therefore, they meet the test of cooperation.

   These two companies are associated and as Janice’s business activity primarily supports Steve’s business, it is considered that both operations are carried out as if performed by a single employer. Therefore, Janice’s business is classified under NAICS 531111 Lessors of residential buildings and dwellings and not janitorial services.

Scenario #2 – partly ancillary operations

Following scenario #1, Janice has been successfully operating her janitorial business and obtained a new contract to clean office buildings and has hired an additional employee. She continues to primarily provide janitorial services to her husband Steve’s property maintenance company.

1. Are these two businesses associated?

   Yes, the association is maintained as Janice continues to primarily provide an ancillary service to Steve.

2. Does Janice’s classification change?

   Yes, a new NAICS code will be added to Janice’s account so she will have NAICS 561722 Janitorial services and NAICS 531111 Lessors of residential buildings and dwellings. Janice will pay a single premium rate for both business activities and must keep segregated payroll and report the insurable earnings separately for each business activity. The premium rate will be based on the predominant class/subclass of the account.

Scenario #3 – material change to business

Following scenario #2, Janice is no longer providing janitorial services to her husband Steve’s company and is only providing janitorial services to non-affiliated customers.

1. Are these two businesses associated?

   No, Janice and Steve remain affiliated as they are spouses, however, they are no longer associated as Janice’s operations are no longer considered to be a primarily ancillary service to Steve’s business. Janice and Steve’s businesses do not primarily form an integrated operation.

2. Does this material change impact Janice’s classification?

   Yes, Janice’s account will be reclassified to remove NAICS 531111 Lessors of residential buildings and dwellings and her premium rate will be recalculated based on NAICS 561722 Janitorial Services.

Note: Employers with aggregated records who cannot determine the percentage of revenue for the integrated activities may be required to provide supporting documentation in order to determine if association is applicable (i.e. invoices, financial statements, purchase orders, etc.).

Associated groups

An employer belonging to more than one association brings all associated companies into a single associated group.

Example 1: Associated group of employers

This group of employers are all siblings and are affiliated to one another. They carry on business activities with separate WSIB accounts. Employer A manufactures shirts, Employer B exclusively retails the product and Employer C provides accounting services to their affiliated employers A and B as well as other customers.

Why are they associated?

Employer B provides an integrated operation of retailing the t-shirts for Employer A; Employer C provides accounting services, which is a primarily ancillary service, to both Employer A and B. Their business relationship meets the test of cooperation and they are considered associated.

Example 2: Associated group of employers

This group of employers are spouses and individually own their respective companies and WSIB accounts. Employer D provides transportation services of frozen food products and Employer E operates a warehouse facility. Employer E primarily provides warehousing for the food products transported by Employer D and to other customers.

Why are they associated?

These employers are associated as Employer E primarily provides warehousing to Employer D, which is considered a primarily integrated operation and therefore meets the test of cooperation.

Associated employers and multiple premium rates

An associated employer that has multiple business activities (NAICS codes) can request a separate premium rate if one or more business activities do not form part of an integrated operation with the other business activities of the employer and are not part of the ‘associated relationship’. The business activity must meet significance at the association level, which refers to the total insurable earnings for the entire association. The test of significance is referred to in our Single and Multiple Premium Rates policy (14-01-07) and is described as follows:

The business activity is significant if it meets one of the following conditions:

1. generates an annual insurable earnings of at least five times the maximum insurable earnings ceiling for the premium year, or
2. generates at least 20 per cent of the employer’s total annual insurable earnings

If the above criteria is met, a separate premium rate is calculated for the business activity and it is only based on the employer’s individual experience (claims experience and total insurable earnings) and it is not evaluated within the association.

Scenario: Corporations A, B and C are associated as their operations are integrated. Their experience (i.e. insurable earnings and claims costs) are evaluated together and a ‘common’ premium rate is calculated and each employer pays the same premium rate.

Corporation C has a separate manufacturing business activity that is not integrated with the associated relationship with Corporations A and B. The total insurable earnings for the separate business activity meets significance (see definition above) at the association level. A separate premium rate is provided to Corporation C for this business activity.

Corporation C pays two separate premium rates: $1.79 with the associated employers and $2.24 for the separate business activity.

Disassociation

Associated businesses may no longer be associated due to changes in their legal structure and/or business relationship which results in a disassociation of employers. In these cases, businesses are required to contact the WSIB to advise of the effective date of disassociation within 10 days of the material change, in order to update the respective accounts.

Transfer of experience

If an employer closes and then opens a new business within a 12-month period, the WSIB will transfer the insurable earnings and claims experience to the new business. The transfer of experience will occur regardless of whether the employer registers the business under a new name, produces new articles of incorporation, or obtains a new WSIB account number.

In addition, if an account is closed due to bankruptcy or receivership and a new account is opened, the experience will transfer to the newly registered business. Under certain circumstances, the transfer of experience may be applicable to employers who purchase a business and open a new account with the WSIB.

This policy ensures that an employer’s past experience is applied when they re-open their business and continue to pay their fair share in premiums to support the ongoing claims costs.

The WSIB will look at two factors when determining if transfer of experience should be applied, connection and continuity.

Connection

Connection can be confirmed if the owner(s), group of persons, or the corporate entities have a majority ownership in both the previous business and the new business. If there is majority ownership in both businesses (51 per cent or more) then connection is confirmed.

In certain instances, connection can be confirmed if there is a minority ownership (owning less than 51 per cent) between the previous business and the new business. In this situation, we must explore the duties of the owners to determine if connection is met.

Duties associated with an owner include (but are not limited to):

• delegation of authority to act independently on behalf of the organization
• being wholly or partially responsible for the overall direction and control of the organization’s operations or financial affairs
• exercising a broad scope of authority to make decisions and formulate policies for the organization as a whole the ability to bind the organization

Connection can be confirmed if the person/group/entity that has a minority ownership also exercise significant duties associated with an owner in both the previous and new business.

Continuity

The transfer of experience will occur if the new employer substantially retains the same of any two of the following:

• employees
• clients
• suppliers
• management team
• business processes and equipment
• health, safety and disability management programs

For the purposes of this policy, the term substantial means important enough that it shows demonstrable continuity from the pre-existing business. What is considered ‘substantial’ may vary depending on the circumstances of each case.

The employer may be performing a different business activity, or may be performing the same business activity. The term “business” is used rather than “business activity,” therefore, the policy does not require the re-opened employer to continue the same business activities in order for the policy to apply.

Scenario #1 – transfer of Experience with minority ownership

John and Mark are grandfather and grandson. John owns a hardware store. Mark has a 40 per cent ownership stake in the hardware store. Mark has no day-to-day role in the business but all major strategic decisions (contracts, sponsorships, advertising, etc.) require Mark’s approval.

John retires and sells the Hardware store to Mark for $25,000. Mark changes the name of the hardware store and moves it across town. Mark continues to employ most (75 per cent) of the staff, and retains all of the major customers and clients.

Mark registers the hardware store with the WSIB under a new account number.

1. Is there connection met with the sale of the business?

Yes. The evidence supports the same person (Mark) who controlled the business being sold, also controls the purchasing business. Mark’s 40% ownership stake by itself does not indicate that he has control, however, when taken with his decision-making and approvals authority, it suggests that Mark has substantial interest and control in the business being sold. 

2. Is there continuity of the business?

Yes. Despite Mark changing the name of the business he purchased and moving it to a different location, substantial continuity of his grandfather John’s business is demonstrated by Mark retaining the same staff and 75 per cent (a substantial amount) of the clients of his grandfather John’s business.

Is the transfer of experience applicable? 

As both connection and continuity have been met, transfer of experience would apply. Mark would retain the experience of the previous hardware store which would be applied to his new account for rate setting purposes.

Scenario #2 – transfer of experience with majority ownership

Keysha Charles, a sole proprietor, closes her business and immediately reopens as a corporation named Smart Homes Inc. Keysha Charles and James Henderson are listed as the owners of the corporation. Keysha Charles owns the majority of the shares in the new corporation.

A new account is registered for Smart Homes Inc.  Smart Homes Inc. retained all the employees, suppliers and business processes of Keysha Charles’ sole proprietorship.

Is the transfer of experience applicable?
Yes, transfer of experience does apply as Keysha Charles had majority ownership in her sole proprietorship as well as in the new corporation, Smart Homes Inc. and has retained all staff, suppliers and business processes.

Scenario #3 – transfer of experience with change from sole proprietorship to corporation

Ahmed is the sole proprietor of Chez Hooray, a grocery store. Ahmed decides to incorporate his business and adds his wife Latifa as a shareholder. The ownership structure is 50/50.

Ahmed also changes the name of the business to Chez Touche and registers the business under a new account number with the WSIB. Ahmed is able to act independently on behalf of Chez Touche and is able to bind the organization.

The business activities remain unchanged, all staff are retained and the store continues to serve the same clients.

Is the transfer of experience applicable?

Yes, transfer of experience does apply as the available evidence supports that the same person (Ahmed) who controlled Chez Hooray also controls Chez Touche due to the following:

• Ahmed holds an equal stake in Chez Touche, and
• despite his wife now holding an equal amount of shares, Ahmed continues to exclusively perform duties typically associated with an executive officer (i.e., he is able to act independently on behalf of the business and is able to bind the business)

In addition, Chez Touche demonstrates substantial continuity of Chez Hooray’s business by continuing its business activities, retaining all staff and continuing to serve the same clients.

Scenario #4 – transfer of experience with new business activity 
John Ford owns Sunny’s Packaging Incorporated and operates a packaging facility for various products, employing 12 people.  John is the sole owner of Sunny Packaging Incorporated.

The company closed their facility due to a business restructure.

John opens a new business eight months later in a new location and retained the same equipment, suppliers, and rehired eight employees. He is now operating under John’s Packaging Incorporated and is performing box manufacturing.

Is the transfer of experience applicable?

Yes, the transfer of experience is applicable based on the fact that John is the sole owner in both companies and he has retained the same equipment, suppliers and employees.

Although John is not performing the same business activity as before, the re-opened employer does not need to continue the same business activity in order for transfer of experience to be applied, as long as they meet the criteria for continuity.

Scenario #5 – transfer of experience with new ownership structure
Mark Armstrong owns Wise Produce Store with his two business partners Jason Smith and Randy Whyte, as a registered partnership.

The partners close the store, dissolve their partnership and reopen within 10 months as Wise Produce Inc. A new WSIB account is registered for Wise Produce Inc.

Mark Armstrong, Jason Smith and Randy Whyte each hold 25 per cent of voting shares. Susan Jones is also an owner of Wise Produce Inc. and owns 25 per cent of voting shares.

Wise Produce Inc. retains the same customers, staff, suppliers and business equipment as Wise Produce Store.

Is the transfer of experience applicable?

Yes, the transfer of experience applies as Wise Produce Inc. is majority owned by the same group of persons of the dissolved partnership and maintains the same staff and business equipment.

Scenario #6 – transfer of experience to arm’s length employer 
Jordan Waters and Raymond Ellis own Ruff and Stuff Inc. pet store. They have decided to sell their business as they are both looking to retire.

The sale includes all assets of the business and the new owners have opened a new corporation for the pet store. They are retaining all staff previously employed by Ruff and Stuff Inc., using the same suppliers and will be operating at the same location.

The owners of 154235 Canada Inc. are John and Mary Hart who are not related to Jordan or Raymond.

Is the transfer of experience applicable?

No, the transfer of experience would not be applied. Although there is continuity of the predecessor business as they are retaining the same employees and suppliers, 154235 Canada Inc. are considered an arm’s length employer so the connection criteria is not met.

Application Dates

Transfer of experience is applicable to accounts registered on or after January 1, 2020. The transfer can be applied if the closure of an account occurred in 2019, provided the WSIB was notified on or after January 1, 2020.

The retroactive application of a transfer of experience follows the employer premium adjustment rules set out in our Employer Premium Adjustments policy (14-02-06). Accordingly, adjustments may generally be made as far back as January 1 of the third prior year. However, Workplace Safety and Insurance Appeals Tribunal (WSIAT) decisions may result in a transfer of experience beyond the third prior year.

Material Change in Circumstances

Employers and individuals are responsible for reporting any material change in circumstances related to their obligations under the WSIA and our Material Change in Circumstances - Employer policy (22-01-01). They must contact the WSIB within 10 days of the material change. Some examples of material change are:

• change in business activity
• change in ownership structure

Verification

The workplace health and safety system relies on workplace parties to accurately report and meet their obligations—anything less undermines the integrity of the system. The WSIB has a duty to ensure that workplace parties meet their obligation – and when they do not, to apply the applicable compliance mechanisms to ensure obligations are fairly met.

The WSIB has the right to verify information. For example:

• the WSIB may request ownership or corporate information and documentation to verify that an individual is a partner or executive officer and holds voting shares
• The WSIB may request proof of reporting to another government agency, copies of invoices or other financial records, including copies of contracts, as supporting evidence to determine the integration of business activities amongst employers