Letters of good standing and clearances

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Learn the difference between a letter of good standing and a clearance and how to request them.

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Important definitions

Principal: A person or business that hires a contractor to do work or services.

Contractor: A person or business that is hired under contract by a person or business to perform work or services. A contractor is also called a subcontractor. Learn more about reporting contractors to the WCB.

Frequently asked questions

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A: A letter of good standing tells the principal if a contractor has a WCB account and if all the contractor’s premiums are paid. It is only valid on the day it is requested. Once a contract has been awarded and before work begins, a principal can request a letter of good standing from the WCB. The status of a contractor can change at any time.

A: If a contractor is not registered with us, they are considered a worker of the principal. The principal is then responsible for paying premiums on the labour part of the contract. If the worker is injured at work, any costs for that claim will be charged to the principal’s WCB account.

A: A clearance is a letter from the WCB that tells the principal they can make a payment to a contractor for completed work. Clearances are obtained after the work is completed, but before payment is made. You must get a clearance before paying any contractors. It releases you from having to pay for any amounts not paid on a contractors’ account.

All contract situations require clearances. By requesting clearances, principals protect themselves from having to pay any overdue premiums the contractor owes the WCB. They also help the WCB identify new employers and ensure that all employers are being treated fairly.

After you request a clearance, you will be advised of your status and how to proceed:

  • Cleared — pay the contractor
  • Deemed — no account; considered your worker
  • Hold — do not pay the contractor; wait for more information
  • Demand — pay the WCB the requested sum from the amount you owe the contractor
  • Pending — a review of the contractor’s account is required; wait for more information

A: You can request clearances and letters of good standing:

Your secure WCB online account also gives you access to the Automatic Clearance Verification (ACV) system. This system provides automatic email notification of any changes in the clearance status of any contractors you list. The system allows you to maintain a list of frequently used contractors and update the contract amounts as you pay the contractor. With the ACV system, you don’t have to get individual clearances. It is useful for firms that hire the same contractors on a regular basis. If a status changes, you can log in to see what the WCB is advising you to do.

A: You need:

  • name of the principal
  • name of the contractor
  • a description of the work
  • the total amount payable to the contractor
  • the year the work was performed

If the account is in good standing, we will tell you to pay the contractor. If the account is not in good standing, we will request that payment not be given.

A: Do not pay the contractor. Advise them to contact our office. They will get instructions from our office on what to do. Do not pay until you are told by us it is okay to pay.

A: This does not necessarily mean that anything is wrong with the account. Certain accounts need to be verified by our staff. You will be contacted with more information once we have finished checking the account.

A: Yes. This means the contractor is not registered. You will be responsible to pay the premiums for them. You cannot pass the charges on to the contractor in any way, unless they are hired to provide and operate equipment (e.g. a bobcat).

A: Yes. When you are asked to send outstanding amounts owed to us for a contractor, you can give the rest of the money to the contractor.

A: If the contractor’s account is not in good standing, a principal that does not get clearance may be responsible for the WCB premiums owed.

A: Contractors need a clearance when working on a contract with an employer or another contractor. Having a term clearance removes the need for an employer to contact us to get a clearance for every job within a certain time period. A term clearance makes the process simpler and faster between the principals, the contractors and us.

A: To get a term clearance, you must be an ongoing, high-volume clearance user, and be in good standing with us during the last three years.

The term clearance letter:

  • can be copied when needed
  • is good for three months from the date it was issued.

If you stay in good standing with us, the term clearance is renewed four times a year (quarterly).

Most employers that receive term clearances are in the construction, roadwork, trucking and delivery businesses.

If a current and valid term clearance is not available, the principal will have to get a clearance for the work before paying the contractor. A clearance can be requested online through a WCB online account.

Please note: You cannot apply for term clearances. You will automatically get them if you are eligible.

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Request a letter of good standing or clearance

You can request clearances and letters of good standing:

Contact

For specific inquiries

If you are:

  • ready to register your business
  • requesting a clearance or a letter of good standing
  • revising or updating your payroll
  • discussing your statement of account and/or making a payment

Employer services department

Contact us

For general inquiries, contact us.

    Employer Resource Centre