Workers’ compensation clearance when buying a business in Saskatchewan

A workers’ compensation account can carry a balance, a reporting gap or a premium history, and what happens to it depends on how the purchase is built. In Saskatchewan the Workers’ Compensation Board (WCB) publishes its own guidance for buyers and sellers, and it says it may treat a share sale and an asset sale differently. This guide covers Saskatchewan only. Other provinces run their own boards and their own rules, so do not carry these steps across a border. It explains the WCB’s two paths, the clearance certificate it describes under section 156 of The Workers’ Compensation Act, 2013, and the questions worth settling before money moves.

Two kinds of purchase, two kinds of exposure

The WCB says it may treat an account differently depending on whether a business sells its shares or its assets. In a share sale, it explains, the assets and liabilities stay with the corporation, and the new owners are responsible for the existing WCB account and its history. In an asset sale, the WCB describes a key advantage: the purchaser is not responsible for the seller’s liabilities, and a new account is set up for the purchaser. That advantage comes with a condition, covered next.

What the section 156 certificate does

The WCB tells a buyer to get a clearance certificate if there is a sale of any business, or if stock or equipment used in the business is sold. It says the certificate states that the purchaser has no claim with respect to the business, stock or equipment in bulk. The WCB says the certificate protects the purchaser from being held liable for any amount outstanding on the seller’s account. Its closing-business page puts the consequence plainly: without the certificate, if the previous owner owes the WCB money, the buyer becomes responsible for the outstanding balance.

Timing: the certificate comes before payment

The WCB’s guidance, citing section 156(1) of the Act, says the purchaser should have the certificate before paying any part of the purchase price to the seller or giving the vendor any security for the price. Read that against your closing mechanics. If the agreement releases a deposit or grants security early, the certificate may need to be in hand earlier than the closing date. The WCB also says that where a business sells its assets, the seller has not paid the final account balance and the purchaser did not obtain the certificate, it can apply a sale levy to the purchaser’s account. It adds that it can charge the levy back to the seller and/or withhold it from final payment in the transaction.

What the seller has to do on the WCB side

The WCB asks the seller to complete its Policy change form with all required information, so the sale can be processed quickly. It also warns that submitting the form does not necessarily mean the WCB will close the seller’s account, and that the WCB may determine account closure based on the information provided. For a buyer, the practical point is that the certificate depends on the seller’s paperwork. The WCB describes the certificate as confirming that the WCB has closed the seller’s account and/or the seller has completed all WCB sale-related obligations. Ask early whether the seller has filed (the due diligence documents list is a good place to track it), and treat the clearance step as a condition of closing rather than a favour.

Premium history can follow the business

The WCB describes the certificate as protection against amounts outstanding on the seller’s account. Whether the business’s premium history follows it is a separate question. Under its Transferring a Firm’s Experience policy, the WCB decides whether the original firm’s claims and premium history moves to the successor firm, and it names a change of ownership, a significant change in business activities and assets moving between firms as situations it considers. If it transfers the experience, it uses the combined experience to set the successor’s premiums. The policy says that in most cases the WCB will not transfer experience when the firms are not affiliated, and in most cases will transfer it if the firms are affiliated or the change in ownership results from a share purchase.

Do not confuse it with a contractor clearance

The WCB also issues clearance letters in a different setting: a principal paying a contractor. Its policy describes that letter as authorizing payment to a contractor for work completed to a stated date, and says it is valid only for the date shown. That is a separate tool from the section 156 certificate for a business purchase. If a seller hands you a contractor-style letter or a general letter of good standing, ask the WCB whether it is the certificate the sale calls for.

Questions to settle before closing

• Is the deal a share sale or an asset sale, and has the WCB confirmed how it will treat the seller’s account on that basis?
• For a share sale, has the seller provided a credit check letter from the WCB confirming whether the account is currently in good standing, which the WCB says a purchaser may wish to request?
• For an asset sale, will the section 156 clearance certificate be a condition of closing and be in your hands before the first payment or security is given?
• Has the seller filed the Policy change form, and does the agreement let you hold back or withhold if the WCB assesses a sale levy afterwards?
• Have you asked the WCB whether the seller’s claims and premium history will carry over to your account, and what that means for your first premium rate?