Workers’ Compensation and Payroll – A Complete Guide by a Montreal CPA Firm Near You

Introduction

Every employer in Canada—whether operating in Quebec, Ontario, British Columbia, Alberta, Manitoba, or any other province—must comply with workers’ compensation laws. These laws require employers to register with their provincial workers’ compensation board, pay premiums based on risk classification, and report payroll accurately. Workers’ compensation is not optional. Failure to register, underreporting payroll, or misclassifying industry risk can result in major penalties, backdated premiums, and even criminal liability. Understanding workers’ compensation obligations is essential for small businesses, corporations, contractors, health clinics, trades, retail stores, and any employer with staff performing physical or administrative work.

Legal and Regulatory Framework

Workers’ compensation systems operate at the provincial level, with each province governed by its own legislation and agency:

• Québec – CNESST (Commission des normes, de l'équité, de la santé et de la sécurité du travail)
• Ontario – WSIB (Workplace Safety and Insurance Board)
• British Columbia – WorkSafeBC
• Alberta – WCB-Alberta
• Manitoba – WCB Manitoba
• Saskatchewan – WCB Saskatchewan

Common legal requirements across provinces include:

• Mandatory employer registration when hiring employees
• Assignment of an industry classification code
• Workers’ compensation premiums based on payroll and industry risk
• Annual payroll reporting (premiums may adjust annually)
• Obligation to report workplace injuries or accidents immediately
• Return-to-work compliance obligations
• Maintaining safety standards under provincial legislation

Workers’ compensation premiums protect both employees and employers. Employees receive wage-loss benefits and medical coverage, while employers receive protection from personal injury lawsuits.

Key Court Decisions

Courts across Canada have upheld strict enforcement of workers’ compensation laws.

1. CNESST v. Asphalte Desjardins

A Quebec employer was penalized for misclassifying workers into a lower-risk category. The court confirmed CNESST’s authority to reclassify and reassess.

2. WSIB v. 674130 Ontario Ltd.

The employer failed to register and was ordered to pay backdated premiums and penalties. The court ruled that ignorance of the law is not a defence.

**3. WorkSafeBC v. 0975351 BC Ltd.

The company used subcontractors who were deemed workers under BC law. The court held the employer liable for workers’ compensation premiums.

4. CNESST v. Entreprises Bigras

A Quebec employer underreported payroll to reduce premiums. CNESST reassessed several years and added interest and penalties, upheld by the court.

These cases show that provincial agencies enforce strict compliance and punish noncompliance harshly.

Why Workers’ Compensation Boards Target This Issue

Workers’ compensation audits are common because payroll errors can significantly reduce premium revenue. Boards target businesses that:

• fail to register when hiring staff
• incorrectly classify industry risk category
• underreport payroll numbers
• use subcontractors who should be classified as employees
• report inconsistent payroll across T4s, RL-1s, and WSIB/WCB/CNESST filings
• experience workplace injuries without prior registration
• operate in high-risk sectors (construction, manufacturing, trucking, healthcare, salons, landscaping)

Red flags include:
• payroll growth with stagnant WCB premiums
• contractors performing employee-like duties
• repeated injuries on file
• mismatched numbers between provincial and CRA filings

Provincial agencies share information with CRA, increasing audit risk.

Mackisen Strategy

At Mackisen CPA Montreal, we help employers stay compliant with provincial workers’ compensation rules through a structured approach:

1. Registration & Classification

• registering your business with CNESST, WSIB, WorkSafeBC, or other WCB agencies
• determining the correct industry classification code
• verifying whether subcontractors must be covered

2. Payroll Reporting & Premium Calculation

• calculating insurable payroll accurately
• identifying taxable, non-taxable, and assessable earnings
• reconciling payroll records with WCB reports
• ensuring correct annual reporting

3. Safety & Compliance Documentation

• preparing accident reporting procedures
• ensuring return-to-work obligations are met
• avoiding penalties for failure to report incidents

4. Audit Defence

• responding to WCB/CNESST/WSIB review letters
• providing payroll evidence and classification documentation
• correcting misclassifications and negotiating penalties
• preparing voluntary disclosures for late registration

5. Long-Term Strategic Planning

• reducing premiums through appropriate classification
• advising employers expanding to new provinces
• managing subcontractor compliance to avoid unexpected liability

This ensures your business remains fully compliant, protected, and properly registered.

Real Client Experience

A Montreal construction company failed to register with CNESST for two years while hiring workers. When an injury occurred, CNESST opened an investigation. We registered the company retroactively, prepared payroll documentation, and negotiated reduced penalties.

A beauty salon underreported payroll amounts to reduce premiums. CNESST conducted an audit and reassessed several years. We rebuilt payroll records and implemented compliant reporting.

A logistics company treated subcontracted drivers as independent contractors. WSIB determined the workers were employees for workers’ comp purposes. We corrected classification and resolved outstanding premiums.

A BC technology business incorrectly classified its industry as low-risk. WorkSafeBC reclassified it and issued arrears. We recalculated premiums and set up correct filing systems.

Common Questions

Employers often ask whether they need to register if they only hire part-time workers. Yes—registration is mandatory.

Others ask whether subcontractors must be covered. If subcontractors work under your direction or without their own workers’ compensation coverage, you may be liable.

Some ask whether payroll software automatically calculates WCB premiums. No—premiums must be calculated manually or through provincial portals.

Another question: Can employers be sued if registered? Workers’ compensation protects employers from most lawsuits related to workplace injury.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps employers manage workers’ compensation obligations across all provinces. Whether you are hiring your first employee or managing a complex workforce, our experts ensure compliance, accurate payroll reporting, and full protection from CNESST, WSIB, and WCB audits.