Highlights of Noteworthy Decisions

Decision 1554 16
M. Crystal
  • Class of employer (electrical work)
  • Class of employer (maintenance and repair contracting)
  • Class of employer (subcontracting)

As a result of an audit of the employer, the Board changed the employer's classifications by adding Rate Group 707 for maintenance and repair contracting, and deleting Rate Group 704 for electrical work. The employer appealed.

The Board focused primarily on four contracts to determine the classification for the employer business activities. A review of those contracts showed that the work involved in them included work that was not exclusively electrical work. They involved significant amounts of civil labour, carpentry, roofing, ducting and work performed by sub-trades. The Vice-Chair found that those contracts reflected a scope of business activity that extended beyond the exclusive provision of electrical work. These were not ancillary operations in relation to electrical work and should not be assigned the classification for electrical work.
The employer submitted that, with a few exceptions, where non-electrical work was performed, the work was subcontracted to another arms-length employer and that, accordingly, such work should not be considered to be a business activity of the employer. The Vice-Chair stated that the employer's position was inconsistent with s. 10 of O. Reg. 175/98, which provides that, if an employer contracts with another person to have that person carry out an operation that would be a business activity if the employer carried it out, the employer is deemed, for the purpose of determining premium rates, to be directly carrying out the activity. Applying the plain meaning of s. 10, it follows that, even where the work has been contracted out, the non-electrical work activities must be considered as part of the employer's business activity.
The Board found that the employer had not demonstrated that it undertook contracts specific to electrical work. However, the Vice-Chair noted that a breakdown of labour costs showed that the employer had 20 electricians and four labourers/carpenters. The majority of the work performed by the employer's own employees was electrical work. Further, the employer did enter into some contracts exclusively for electrical work. The Vice-Chair that, although it was appropriate to add Rate Group 707, the Board should not have removed Rate Group 704.
When the employer performs work on a contract that extends beyond the scope of electrical work, the payroll, including electrical work performed on the contract, should be attributed to Rate Group 707, subject to the employer's ability to maintain segregated payroll for the electrical work.
The appeal was allowed in part.