Document name
Employer Accounts – Clearances and Letters of Good Standing
Document number
POL 22/2014

Effective date: January 1, 2015

Application: All principals and contractors.

Policy subject: Employer payroll and premiums

Purpose:

To outline the process for issuing clearances and letters of good standing.

DEFINITION

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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.

BACKGROUND

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  1. 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.
  2. 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.
  3. 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.

POLICY

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  1. 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.
  2. A clearance letter must be obtained prior to a principal releasing any payment to a contractor, including any advance, progress, or final payment.
  3. 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.
  4. 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.
  5. A clearance letter is only valid for the date shown on the letter and only applies to work performed in Saskatchewan.
  6. Clearances are not required when a business is only supplying goods regardless of whether a delivery charge is included.
  7. 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.

Policy references

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Section heading

Act Sec #

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8, 20, 131, 132, 148, 159, 164; The Workers’ Compensation General Regulations 17; The Workers’ Compensation Miscellaneous Regulations 3 (e)(i-iii).

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Supersedes

Section detail

POL 25/95 Clearance, Letters of

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Complements

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