A cautionary tale in contracting out compliance with the Occupational Health and Safety Act

The Ontario Court of Appeal recently rendered a decision in which the City of Sudbury was found to have potentially attracted liability under the Occupational Health and Safety Act (OHSA or the “Act”) after supposedly assigning all aspects of a project to a contractor. This decision provides an interesting analysis of the role different parties play in construction projects, as well as the subsequent responsibilities and potential liabilities that follow.

Overview of Ontario (Labour) v Sudbury (City)

In Ontario (Labour) v Sudbury (City), the City of Sudbury contracted with a paving company to complete a road and water main repair project. The contract stated that the company would assume control over all aspects of the project and take on the role of “constructor” under the OHSA. Under the Act, the constructor is responsible for ensuring compliance with the OHSA and its regulations.

The city also employed two inspectors to oversee the work and confirm that the contract was being fulfilled as agreed to.

During the course of the project, a woman was fatally struck by a road grader being operated by one of the company’s employees. Though the company was charged, the Ministry of Labour also charged the city as both a “constructor” and an “employer” for violating the Construction Projects Regulation under the OHSA.

At trial, it was determined that the Construction Projects Regulation was contravened on the day of the fatal accident because the grade operator was working without the assistance of a signaler and there was no fence separating the worksite from the public way. Despite these errors, the trial judge ultimately found that the city was not properly characterized as an employer or a constructor, and therefore was not obligated to comply with any duties under the Act.

Though this decision was upheld by a lower court, the Ontario Court of Appeal overturned the decision and ultimately concluded that the city was indeed an employer. In effect, this ruling opens the city up to potential liability for the aforementioned violations unless it can establish that due diligence was exercised. This matter was not determined, and is thus out of the scope of this article.

Who is an “employer” under the OHSA?

Before delving into why the court determined that the city was an employer, it is useful to consider what the Act is designed to do. The OHSA can best be described a public welfare legislation, meaning that it “should be read liberally and broadly in a manner consistent with its purpose.” Stated differently, Ontario courts have consistently held that the legislation should not be interpreted narrowly or technically, but should instead be given a generous interpretation so as to fulfill the purpose of protecting health and safety in the workplace.

With this in mind, the court’s assessment of how to best characterize the city’s role in the project largely turned on how the term “employer” is defined under the OHSA. The Act states that an “employer” is “a person who employs one or more workers or contracts for the services of one or more workers […]” This illustrates that the Act contemplates situations where one project will have multiple employers who will be liable for a workplace incident in which there is a failure to comply with the OHSA and its regulations.

Why the city was deemed to be an employer under the OHSA

As was mentioned at the outset, the city employed two inspectors who provided quality control by monitoring the work being done and ensuring that the project was progressing as planned.

As a consequence of the inspector’s involvement with the project, the court had little hesitation in finding that the city was indeed an employer under the OHSA. As a consequence, the city was additionally responsible for ensuring compliance with the Act and potentially liable for breaches taking place on the project. This decision is important, as it suggests that the contract which appeared to assign all health and safety responsibilities solely to the company was not fully determinative of each party’s duties in the court’s eyes.

Important lessons for construction companies

As large projects with interconnected entities are a staple of the construction industry, Sudbury’s predicament in this case provides important lessons for companies moving forward.

First, the fact that a contract stipulates that another party will be solely responsible for a project and subsequent compliance with the health and safety requirements of the OHSA may not exonerate all other parties from liability under the Act. Rather, the conduct of the parties appears to be the deciding factor. For example, it appears likely that a company who employs individuals to perform some function on a project will be classified as an “employer,” thus becoming responsible for OHSA compliance.

As well, there is nothing stopping a single person or entity from being simultaneously defined as a different workplace party (owner, employer or constructor) and subsequently needing to fulfill the duties associated with each of those roles on the same project. For example, a party cannot escape the responsibilities associated with being an employer by simply stating that they are an owner. Once more, the party’s conduct in relation to the project will be the deciding factor.

In closing, the case of Ontario (Labour) v Sudbury (City) illustrates how parties involved in construction projects are ultimately defined under the OHSA and the potential ramifications that follow. For more information on how to protect your construction company, please contact a lawyer at Hyde HR Law.

John Hyde is the managing partner at Hyde HR Law in Toronto. He advises management on all aspects of employment and labour law, including representation before administrative tribunals, collective agreement negotiation, arbitrations, wrongful dismissal defence and human rights.

He also assists clients in providing strategic legal and human resources advice on labour and employment matters arising out of complex mergers, acquisitions and the sale of businesses.