Can You Contract out of Liability for Workplace Safety?

In the construction contracting world, there are many standard clauses used in contracts to transfer liability from one party to another. Many contracts provide that the party being hired to do the construction (often a general contractor or construction manager) is responsible for ensuring all required rules and regulations under the Occupational Health and Safety Act (“OHSA”) are followed, and that the property owner is exempt from liability for workplace safety. However, last fall, in the case of R. v. Greater Sudbury (2023 SCC 28), we learned that liability under the OHSA can not be simply handed over to another party via contract.

This case involved City of Greater Sudbury (the “City”) hiring a general contractor (“GC”) for road and water main repairs. The GC assumed day-to-day management of the project, though the City did upon occasion dispatch quality control inspectors. The contract itself indicated that all trades and subtrades were under the GC’s control and that the GC would be responsible for compliance with the OHSA during the project.

Unfortunately, during the project, a pedestrian was killed. While crossing a street adjacent to the project, the pedestrian was struck by a reversing road grading machine run by one of the GC’s employees. The Ministry of Labour attended the site and determined there were multiple violations of the OHSA and proceeded to lay charges against the City as the “Constructor” and the “Employer.” Two specific roles under the OHSA that are required to ensure appropriate safety measures are followed. The City appealed these charges on the basis that it was not a “Constructor” or “Employer” under the OHSA.
At the Ontario Superior Court of Justice, the court found the GC was the Constructor and not the City. However, a series of appeals led to the Supreme Court of Canada (“SCC”) ruling on whether or not the City was an Employer under the OHSA.

The SCC held:

1) The City was an Employer under the OHSA in 2 ways:
a. It employed the quality control inspectors that it dispatched to the project.
b. It employed the GC, who was contracted to undertake the project.

Importantly, the SCC noted that the definition of Employer under the OHSA did not require the person or entity to be in control of a workplace. Further, the OHSA specifically notes that an Employer may have “contracted” for services, and need not be an employer in a traditional legal sense. In most construction scenarios, this will mean that there are multiple Employers in a single project.

2) As the Employer of both the inspectors and of GC on the project, the OHSA conferred duties on the City itself to ensure health and safety procedures were carried out in the workplace.

3) When the pedestrian was struck, there were measures required under the regulations of the OHSA for construction sites that were not followed. Specifically:
a. A fence was not present between the job site and the public roadway; and
b. Signallers, who are required to assist those operating heavy equipment, were not present.

4) Therefore, the City had committed an offense under the OHSA.

Where does this leave those who are currently in a construction contract or intend to enter one in the future? Fundamentally, every owner in a construction contract should now consider themselves an Employer under the OHSA and recognize that they could be charged for failure to provide the appropriate safety measures on a construction site. Therefore, Owners should be seeking advise on how to protect themselves and prevent charges under OHSA legislation.

The SCC then went on to discuss that even though the City was an Employer and had committed an offense, they could use a due diligence defense. Offences under the OHSA are strict liability offences, meaning the entity that commits an offence does not need to do so intentionally. However, proof of due diligence can be used to either acquit an offender or reduce the penalty or sentence imposed. A due diligence defense occurs when an Employer establishes they took all reasonable and required precautions to prevent an incident.

This is where the challenge comes in with the SCC decision. The SCC stated they did not have all the facts related to what steps the City took to prevent the incident. Thus, they could not comment on whether the City could use the due diligence defense. The matter was sent back to trial so a trial judge can make findings of fact on the City’s due diligence.

The SCC did make several comments regarding the due diligence defense. Specifically, what factors the lower courts may take into consideration when determining whether an Employer performed appropriate due diligence. The following comments were noted:

1) It would be relevant as to the level of “control” the City had over the project. That is, a party with less control over the project may be less likely to be considered liable. However, the court should consider if the      Employer in question had the ability to be in control, and if there were other options available for control and supervision that were not taken.

2) A judge could determine that appropriate precaution was taken when an owner delegated control and responsibility to workplace safety to a constructor. The key question would be was due diligence exercised       when deciding to hand over control? A judge could review the due diligence the owners exercised pre-contract, such as researching a constructor’s expertise, if they had capacity for the project, and if there were    previous OHSA convictions.

3) After executing the contract, what did the owner do for continuing due diligence? Did the owner inform the constructor of any hazards the owner was aware of, and monitor the workplace?

4) Sophistication of the party hiring could be a key consideration. An owner hiring a builder for a single residential home for their own use is considerably different from a municipality with a building department       at its disposal. Inexperience might support a finding that an accident was unforeseeable.  At this time, whether the City of Greater Sudbury will be able to qualify for a due diligence defense is unknown. However, all individuals and entities engaging in construction contracts should be aware of their potential liability under the OHSA for workplace safety.