Employer Accounts – Clearances and Letters of Good Standing
Effective date: January 1, 2015
Application: All principals and contractors.
Policy subject: Employer payroll and premiums
To outline the process for issuing clearances and letters of good standing.
Principal means a person or business who hires a contractor to perform work or services.
Contractor means a person or business that is hired under contract by another person or business to perform work or services. A contractor is also referred to as a subcontractor.
Clearance means a letter from the Workers’ Compensation Board (WCB) that authorizes a principal to make payment to a contractor for work completed as of the date of the clearance. A clearance protects the principal from having to pay any overdue premiums the contractor owes.
Letter of good standing means a letter requested before a contract begins which indicates whether a contractor has a WCB account and whether their premiums are paid.
- In accordance with Section 131 of The Workers’ Compensation Act, 2013 (the “Act”), a contractor is considered to be a worker of the principal unless they are eligible for and choose to purchase optional personal coverage.
- Where a principal has not obtained a clearance from the WCB prior to making payment to a contractor, Section 132 of the Act allows the WCB to hold the principal liable for outstanding premiums owing to the WCB with respect to that work.
- Under Section 17 of The Workers’ Compensation General Regulations, 1985 (the “General Regulations”), the principal shall withhold any payment to a contractor until the WCB confirms that the contractor has fulfilled all obligations under the Act.
- A principal may request a letter of good standing prior to hiring a contractor to inquire about the contractor’s WCB status. The letter of good standing does not replace the need for a clearance letter prior to releasing payment.
- A clearance letter must be obtained prior to a principal releasing any payment to a contractor, including any advance, progress, or final payment.
- If a clearance letter is not obtained prior to making payment to a contractor and that contractor has not paid their WCB premiums, the principal will be liable to the WCB for the premiums relating to the labour portion of the contract.
- If a contractor is not registered with the WCB, they will be considered a worker of the principal and the principal will be responsible for paying premiums on behalf of the contractor.
- A clearance letter is only valid for the date shown on the letter and only applies to work performed in Saskatchewan.
- Clearances are not required when a business is only supplying goods regardless of whether a delivery charge is included.
- Clearances are not required when a homeowner, who has not applied for voluntary coverage, hires contractors for the purpose of construction or renovations to their residence.
Act Sec #
Act Sec #
8, 20, 131, 132, 148, 159, 164; The Workers’ Compensation General Regulations 17; The Workers’ Compensation Miscellaneous Regulations 3 (e)(i-iii).
POL 25/95 Clearance, Letters of
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