1. hobbies and interests
2. paranormal phenomena

Assessment Manual: Practice Directive 1-37-2 (A)
Assignment within the Classification System
OBJECTIVE.................................................................................................................................................................................. 1
GLOSSARY .................................................................................................................................................................................. 1
INTERPRETATIVE GUIDELINES ................................................................................................................................................. 3
I CLASSIFICATION SYSTEM / THE THREE-LEVEL ASSIGNMENT HIERARCHY................................................................. 4
ADJUDICATIVE GUIDELINES...................................................................................................................................................... 5
I THE FIRM’S MAIN BUSINESS UNDERTAKING ................................................................................................................... 6
A Administrative activity .................................................................................................................................................. 10
II CLASSIFICATION UNIT WHICH BEST DESCRIBES THE FIRM’S MAIN BUSINESS UNDERTAKING .............................. 11
III DOES A POLICY EXCEPTION APPLY ............................................................................................................................... 12
A A strategic business undertaking ................................................................................................................................. 12
B An administrative business undertaking ....................................................................................................................... 13
C Multiple classification rules ........................................................................................................................................... 14
(1) AP1- 37-2(3.2.1): Criteria for multiple classifications ............................................................................................. 15
(2) AP1- 37-2(3.2.2): Specific cases .......................................................................................................................... 16
(a) The fishing industry ....................................................................................................................................... 16
(b) The non-industrial building construction exception ........................................................................................ 16
(c) The residential employer exception ............................................................................................................... 17
(d) Management companies ............................................................................................................................... 17
(e) Special hazard activities ................................................................................................................................ 18
(3) AP1- 37-2(3.2.3): A firm with business undertakings that do not qualify for multiple classifications ....................... 18
(a) A firm has more than one business undertaking which does not meet the criteria or a specific case ............. 18
(b) A firm with multiple classifications has additional business undertakings ....................................................... 19
(c) A firm in an enterprise has additional business undertakings ........................................................................ 19
D Consulting firms ........................................................................................................................................................... 20
E Labour supply firms...................................................................................................................................................... 22
F Firms in an enterprise .................................................................................................................................................. 22
(1) The firms are affiliated .......................................................................................................................................... 23
(2) A cooperative and coordinated relationship .......................................................................................................... 24
(3) The enterprise’s main business undertaking in British Columbia ........................................................................... 25
(4) The multiple classification rules ............................................................................................................................ 26
IV “FULL AND ACCURATE INITIAL INFORMATION” .............................................................................................................. 27
APPENDIX “A” ............................................................................................................................................................................ 28
OBJECTIVE
1.
This practice directive explains how a firm is assigned to one or more classification units
within the Classification System1 and aids in interpreting and administering Assessment
Manual Item: AP1-37-2.
GLOSSARY
2.
The following explanations complement definitions, descriptions, and terms in the
Workers Compensation Act and policy, and aid in understanding, interpreting, and
implementing the Act and policy.
Activity
A process that combines inputs, technology, skills, and labour to create a product or
service. Generally an activity is a task or a group of tasks. An activity may be a part
of another activity [AP1-37-1(1.4)].
Activity is the bottom level of the three-level assignment hierarchy.
1
See Assessment Manual Item: AP1-37-1 and Practice Directive 1-37-1(A).
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Practice Directive 1-37-2 (A)
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Administrative
activity
An activity for a firm’s own use which is primarily concerned with maintaining the firm
as an ongoing business entity; and which relates to the firm as a whole, does not
become an integral part of the firm’s usual and primary product or service (unlike raw
material or direct labour), and generally cannot be applied or traced to any specific
product or service. Examples include: human resources and infrastructure (e.g.,
management, accounting, legal).
Administrative
business
undertaking
An administrative activity undertaken by a firm for another firm or an enterprise [AP137-2(3.1)].
Administrative
or management
services
A management company’s services which aid other firms in achieving their strategic
goals. These entail the organization and coordination of a firm’s activities to achieve
its business goals within, and in accordance with, the firm’s policies.
Affiliated or
affiliation
Business
operations
Where one firm controls another firm; or both firms are controlled by the same
person or persons; or the firms are controlled by family members – immediate,
extended, or equivalent [AP1-37-1(1.3)].
All of a firm’s activities, which may include one or more business undertakings [AP137-1(1.4)].
Business operations is the top level of the three-level assignment hierarchy.
Business
undertaking
One or more activities carried out by a firm’s or enterprise’s own workers, or by
contracting other firms, that produce a product or service for revenue. If generating
revenue is not the purpose of the activities, a business undertaking will advance the
firm’s or enterprise’s goals [AP1-37-1(1.4)].
Business undertaking is the middle level of the three-level assignment hierarchy.
Control (for
affiliation)
The “ability or power, actual or potential, direct or indirect through intermediaries, to
direct or cause the direction of the management of a firm’s business operations,
through the ownership of voting securities, by contract, or by other means” [AP1-371(1.3)].
Control entails the organization and coordination of the firm’s activities to achieve the
firm’s goals within, and in accordance with, the firm’s or an enterprise’s policies,
objectives, and overall direction. Accordingly, it does not entail operational, project,
or contract management.
“Cooperative
and coordinated
relationship”
Two or more firms intentionally and willingly acting in common in harmonious
combinations or interactions to synchronize the facilitation or accomplishment of the
transformation of inputs (resources, raw materials, services) into desired products,
services, or results.
Enterprise
Two or more affiliated firms engaged in a cooperative and coordinated relationship to
produce a product or service, not for the enterprise’s own use [AP1-37-1(1.3)].
Industry
Main business
undertaking
Principal
A specific branch of business, trade, or manufacture – public or private, for profit or
not – defined on the basis of the inputs (resources, raw materials, services) used;
the process of production (methodology of combining inputs, technology, skills, and
labour); and the type of products and services produced.
The business undertaking that produces a firm’s or enterprise’s usual and primary
product or service, which is not for its own use [AP1-37-1(1.4)].
An individual who has the direct or indirect power or ability to control or influence a
corporation or similar entity’s operations, through the ownership of voting securities,
by contract, or otherwise [AP1-1-1].
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Revenue
The amount generated from the sale of products or services, or any other use of
capital or assets, associated with a firm’s business operations, before any costs or
expenses are deducted.
Rule of
classification
The Board assigns a firm to the classification unit that the Board determines best
describes the firm’s main business undertaking in British Columbia, unless a policy
exception applies [AP1-37-2(2)].
Secondary
business
undertaking
A business undertaking that is subordinate to the main business undertaking
(generally measured by revenue).
The hierarchical analytical framework – activity, business undertaking, and business
operations – used by the Board to tier a firm’s business into defined levels in order to
ascertain the firm’s methodology of transforming inputs into a product or service for
either revenue or its business goal.
A process of combining
inputs, technology, skills,
and labour to create a
product or service.
Task
Three-level
assignment
hierarchy
Activity “A”
Activity “B”
Activity “C”
One or more activities carried
out by a firm’s own workers,
or by contracting other firms,
that produce a product or
service for revenue.
All of a firm's activities,
Business
operations
Activity “D”
(contracted out)
Activity “E”
which may make up
one or more business
undertakings.
Business
undertaking
A:D
Business
undertaking E
For these purposes,
“Usual and
primary”
Usual means that the product or service is habitual or customary.
Primary means that the product or service is first or foremost in rank or importance
for the purposes of the workers’ compensation system, as established in section
36(2) of the Act and AP1-37-2(1)’s principles.
INTERPRETATIVE GUIDELINES
3.
Section 37(1) of the Act establishes a system for classification of industries; section
37(2)(d) charges the Board to assign firms into one or more classes within that system;
and section 37(2)(f) dictates that the Board can withdraw firms from a class or subclass
and transfer firms to another class or subclass.
4.
The Classification System is an extension and refinement of section 37(1)’s system for
classification of industries; and the three-level assignment hierarchy is the analytical
framework the Board uses to effect section 37(2)’s charge to assign firms into the
Classification System and to administer, maintain, and regulate that system.
5.
The assignment of a firm into the Classification System is done within section 36(2) of
the Act’s mandate that the Board “manage [the accident fund] with a view to the best
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interests of the workers’ compensation system.” It involves a balancing of one or more
policy objectives and multiple interdependent interests simultaneously such that a
deliberate symmetry between various constituencies with different and competing
interests is maintained. Accordingly, in assigning a firm into a classification unit, the
department will consider and weigh the legitimate interests of the affected firm, of other
firms within impacted classification units, and of the Classification System as a whole.
6.
Several of AP1-37-2’s provisions grant the department discretion of a judicial nature.2
The intent of these grants of discretion is to effect a reasoned balance between “the best
interests of the workers’ compensation system” and the prevention of demonstrable
prejudice to a firm. Such balance requires that the department consider the purposes and
objects of the Act, the purposes and principles of classification policy, and the merits and
justice of the individual case.
I
CLASSIFICATION SYSTEM / THE THREE-LEVEL ASSIGNMENT HIERARCHY
7.
Each of the Classification System and the three-level assignment hierarchy’s business
undertaking level includes a methodology of transforming inputs into a product or
service for either revenue or a business goal (or, if revenue is not the firm’s business
goal, a product or service which achieves its business goal). That methodology is the link
between the Classification System and the three-level assignment hierarchy.
Classification System
Three level assignment hierarchy
Activity
CLASSIFICATION UNITS
1
British Columbia’s
collective economic
undertaking
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
f(x) = industry
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 90 94 95 96 97 98 99 10
0
10 10 10 10 10 10 10 10 10 11 11 11 11 11 11 11 11 11 11 12 12 12 12 12 12
1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5
12 12 12 12 13 13 13 13 13 13 13 13 13 13 14 14 14 14 14 14 14 14 14 14 15
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
15 15 15 15 15 15 15 15 15 16 16 16 16 16 16 16 16 16 16 17 17 17 17 17 17
1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5
17 17 17 17 18 18 18 18 18 18 18 18 18 18 19 19 19 19 19 19 19 19 19 19 20
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
20 20 20 20 20 20 20 20 20 21 21 21 21 21 21 21 21 21 21 22 22 22 22 22 22
1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5
22 22 22 22 23 23 23 23 23 23 23 23 23 23 24 24 24 24 24 24 24 24 24 24 25
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
25 25 25 25 25 25 25 25 25 26 26 26 26 26 26 26 26 26 26 27 27 27 27 27 27
1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5
27 27 27 27 28 28 28 28 28 28 28 28 28 28 29 29 29 29 29 29 29 29 29 29 30
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
30 30 30 30 30 30 30 30 30 31 31 31 31 31 31 31 31 31 31 32 32 32 32 32 32
1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5
32 32 32 32 33 33 33 33 33 33 33 33 33 33 34 34 34 34 34 34 34 34 34 34 35
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
35 35 35 35 35 35 35 35 35 36 36 36 36 36 36 36 36 36 36 37 37 37 37 37 37
1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5
37 37 37 37 38 38 38 38 38 38 38 38 38 38 39 39 39 39 39 39 39 39 39 39 40
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
40 40 40 40 40 40 40 40 40 41 41 41 41 41 41 41 41 41 41 42 42 42 42 42 42
1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5
42 42 42 42 43 43 43 43 43 43 43 43 43 43 44 44 44 44 44 44 44 44 44 44 45
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
45 45 45 45 45 45 45 45 45 46 46 46 46 46 46 46 46 46 46 47 47 47 47 47 47
1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5
47 47 47 47 48 48 48 48 48 48 48 48 48 48 49 49 49 49 49 49 49 49 49 49 50
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
50 50 50 50 50 50 50 50 50 51 51 51 51 51 51 51 51 51 51 52 52 52 52 52 52
1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5
52 52 52 52 53 53 53 53 53 53 53 53 53 53 54 54 54 54 54 54 54 54 54 54 55
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
55 55 55 55 55 55 55 55 55 56 56 56 56 56 56 56 56 56 56 57 57 57 57 57 57
1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5
Activity
Business
undertaking
Activity
Type of products
or services
produced
Inputs
Process of production
Business
operations
Activity
Activity
Business
undertaking
Process of production (the methodology of
combining inputs, technology, skills, & labour)
A methodology of transforming inputs into
a product or service for revenue or a goal
One or more activities (processes of combining
inputs, technology, skills, and labour)
(a) In the Classification System, the methodology is represented at the classification unit
level. A classification unit is comprised of one or more industries, each of which is a
specific branch of business, trade, or manufacture delineated on the basis of the
2
A degree of freedom conferred on a decision-maker to act or determine according to the dictates of the decisionmaker’s own judgment of the facts and circumstances, but in accordance with the law, policy, and the principles
of natural justice.
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inputs used; the process of production (the methodology of combining inputs,
technology, skills, and labour); and the type of products and services produced.
Industry
CLASSIFICATION UNITS
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
British Columbia’s
collective economic
undertaking
Inputs
Activity
“A”
Activity
“B”
Activity
“C”
Type of
products
or
services
produced
Activity
“D”
76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 90 94 95 96 97 98 99 100
101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125
126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150
151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175
176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200
201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225
226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250
251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275
276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300
301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325
326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350
351 352 353 354 355 356 357 358 359 360 361 362 363 364 365 366 367 368 369 370 371 372 373 374 375
376 377 378 379 380 381 382 383 384 385 386 387 388 389 390 391 392 393 394 395 396 397 398 399 400
401 402 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 421 422 423 424 425
Process of production (methodology of
combining inputs, technology, skills, & labour)
426 427 428 429 430 431 432 433 434 435 436 437 438 439 440 441 442 443 444 445 446 447 448 449 450
451 452 453 454 455 456 457 458 459 460 461 462 463 464 465 466 467 468 469 470 471 472 473 474 475
476 477 478 479 480 481 482 483 484 485 486 487 488 489 490 491 492 493 494 495 496 497 498 499 500
501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525
526 527 528 529 530 531 532 533 534 535 536 537 538 539 540 541 542 543 544 545 546 547 548 549 550
551 552 553 554 555 556 557 558 559 560 561 562 563 564 565 566 567 568 569 570 571 572 573 574 575
(b) In the three-level assignment hierarchy, the methodology is represented at the
business undertaking level; for a business undertaking is one or more activities –
processes of combining inputs, technology, skills, and labour – that produce a product
or service for revenue or a business goal.
Business undertaking
Activity
“A”
Inputs
Activity
“B”
Activity
“C”
Product
or service
Activity
“D”
One or more activities (processes of combining inputs, technology,
skills, and labour) that produce a product or service for revenue
8.
Therefore, the three-level assignment hierarchy’s business undertaking level is
used in assigning firms into the Classification System. This ensures consistency,
equity, and a degree of certainty in the assignment of firms into the Classification System.
The business undertaking level
is used in assigning a firm into
the Classification System
Activity “A”
Activity “B”
Activity “C”
Business
undertaking
A:D
Business
operations
Activity “D”
(contracted out)
Activity “E”
Business
undertaking E
ADJUDICATIVE GUIDELINES
9.
AP1-37-2(2)’s rule of classification – the Board assigns a firm to the classification
unit that the Board determines best describes the firm’s main business
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Practice Directive 1-37-2 (A)
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undertaking in British Columbia, unless a policy exception applies – entails the
following three findings of fact3:
(a) The firm’s main business undertaking in British Columbia (ascertained by way of the
three-level assignment hierarchy).
(b) The classification unit which best describes the firm’s main business undertaking in
British Columbia.
(c) Whether a policy exception applies.
Strategic business undertaking
The classification unit
which best describes
the firm’s main
business undertaking
in British Columbia
The firm’s main
business undertaking
in British Columbia
Whether
a policy
exception
applies
I
Multiple classification rules
Specific exceptions
Firms in an enterprise
Yes
(see Appendix “A”)
No
The firm is assigned to the classification
unit which best describes its main business
undertaking in British Columbia
Administrative business undertaking
The firm is classified, at least
in part, through application of the
applicable policy exception
THE FIRM’S MAIN BUSINESS UNDERTAKING
10. Every firm engages in more than one activity, for a firm must produce a product or
service for revenue (or, if revenue is not the firm’s business goal, a product or service
which advances its business goal) and must perform administrative activities.
11. A firm’s business operations encompass all of its activities. However, only those
activities that produce a product or service for revenue (or, if revenue is not the
firm’s business goal, a product or service which achieves its business goal) are business
undertakings.
Business
operations
All of a
firm’s activities
Business
undertaking(s)
Activities
for revenue
or goal
3
A conclusion about evidence made during the process of determining a person’s rights or obligations under
Division 4 of Part 1 of the Act. A finding of fact does not confer or impose a right or obligation, and no
immediate consequence to a person arises from a finding of fact (i.e., it is neither final nor operative). Generally,
a finding of fact is part of the process which goes towards making a decision – either an administrative
application or action, or a requisite stage leading to a decision. See also, Compensation Services’ Practice
Directive # C14-4 – Findings of Fact.
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12. A firm’s main business undertaking is the business undertaking which produces
the firm’s usual and primary product or service, which is not for its own use [AP137-1(1.4)]. The majority of firms produce only one product or service for revenue; and
that one product or service is the firm’s usual and primary product or service and
establishes the firm’s main business undertaking. A firm which engages in more than
one business undertaking can have only one main business undertaking.
Business
operations
All of a
firm’s activities
Business
undertakings
Activities
for revenue
or goal
The main
business
undertaking
13. AP1-37-1(1.2)’s description of main business undertaking as the business undertaking that
produces a firm’s or enterprise’s usual and primary product or service, which is not for its
own use is a “rigid rule”4; which, unless a policy exception applies, is binding on the
Board’s decision-makers. AP1-37-2(2)’s direction that “[i]n determining the main
business undertaking, the Board first considers revenue [but] may also consider payroll,
units of production, and/or any other measure which the Board determines best describes
the firm’s main business undertaking” is a guideline,5 which requires the use of reasoned
discretion to find the pith of AP1-37-1(1.4)’s rigid rule – a “firm or enterprise’s…usual
and primary product or service”:
(a) The word “primary” is used in its ordinary sense – first or foremost in rank or
importance – and the evaluation of rank or importance is for the purposes of the
workers’ compensation system, as established in section 36(2) of the Act and by AP137-2(1)’s principles. Thus, “primary” is not synonymous with either “plurality” or
“majority”; and therefore a firm’s primary product or service does not necessarily
refer to the product or service which generates the plurality or majority of the firm’s
revenue. However, policy and practice recognize that revenue is a fair, practical, and
consistent measure of a firm’s usual and primary product or service, and therefore a
firm’s main business undertaking in British Columbia can almost always be
ascertained through its revenue.
(b) In those few atypical cases where revenue may not, in and of itself, establish a
firm’s usual and primary product or service, the Board considers revenue, the
following listed measures, and any other relevant measure, to find the firm’s
main business undertaking. The relevance and relative weight of any such
measure will depend on the particular facts and circumstances of the case.
4
5
WCAT Decision Number: WCAT-2012-02569, paragraphs 69 to 75.
Ibid.
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Always
Revenue
MEASURES
Methodology of transforming inputs into a product or service for revenue
Close substitutes to the firm’s usual and primary product or service, which
serve or satisfy the same basic customer needs
Classifications of the firm’s competitors
Listed
Occupations of the firm’s workers
Units of production
Assessable payroll
Market perception
Other relevant measures
Revenue typically
establishes a firm’s
“primary and usual
product or service.”
The firm’s main
business
undertaking in
British Columbia
The classification unit
which best describes
the firm’s main
business undertaking
in British Columbia
Typical
case
No
The firm is assigned to the classification
unit which best describes its main business
undertaking in British Columbia
Atypical
case
Always
Strategic business undertaking
Whether
a policy
exception
applies
Administrative business undertaking
Multiple classification rules
Specific exceptions
Firms in an enterprise
Yes
The firm is classified, at least
in part, through application of the
applicable policy exception
Revenue
Methodology of transforming inputs into a product or service for revenue
MEASURES
A firm’s “primary and
usual product or
service” establishes
its main business
undertaking in
British Columbia.
Close substitutes to the firm’s usual and primary product or service
Classification of the firm’s competitors
Listed
Occupations of the firm’s workers
Units of production
Assessable payroll
Market perception
Other relevant measures
EXAMPLE 1:6 PecanCo bakes pecan pies and receives 100% of its revenue from the sale of
those pies. Revenue establishes that its main business undertaking is pecan pie manufacturing.
14. Generally, an uncustomary and isolated transaction does not relate to a firm’s usual and
primary product or service (and hence the firm’s main business undertaking); for “usual”
means that the product or service is habitual or customary.
EXAMPLE 2: UndMinCo is a mining company. Generally, its revenue is generated from mining;
but every few years it generates revenue from the sale of its older equipment. In those years, a
large portion of its revenue comes from the sale of equipment (e.g., the sale of a single machine
can generate $2,500,000 in revenue). The sale of such expensive equipment represents an
atypical case and requires that the Board consider UndMinCo’s revenue plus other measures in
finding that its main business undertaking is underground mining.
6
Practice Directive 1-1-0: “In these practice directives, examples are intended to be illustrative; and the
conclusions drawn in each example are based solely on the facts included in the example.”
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Practice Directive 1-37-2 (A)
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More indicative of:
All of the listed non-exhaustive measures are used in this
example for illustrative purposes only, for many clearly do
not distinguish between the two candidate business undertakings.
Mining
Machine
sales
–
Revenue
In most years, 100% of revenue comes from mining.
In some years, over 50% of its revenue comes from
sale of its equipment
–
Methodology
Includes acquiring expensive mining machinery,
using that machinery for mining, and selling the
used machinery

Close substitutes to
product or service
Similar ores

Classification of its
competitors
Underground mining

Occupations of
UMinCo’s workers
Engineers, miners, and support staff

Units of production
Tonnage of ores; equipment sales every few years

Assessable payroll
100% to mining

Market perception
Underground mining

EXAMPLE 3: WidgetCo manufactures widgets and owns a parcel of undeveloped land. In each of
2011, 2012, and 2013, its revenue from widget sales was $4,000,000. In 2013 WidgetCo sold its
parcel of land for $6,000,000. Although 60% of its 2013 revenue was from the sale of land, the
sale of land was an uncustomary and isolated transaction and did not relate to WidgetCo’s usual
and primary product – widgets (and hence its main business undertaking of widget
manufacturing).
15. Although each of a firm’s usual and primary product or service and its main business
undertaking can be described in various ways, as a finding of a firm’s main business
undertaking is undertaken within the context of the Classification System, the descriptions
must reflect the manner in which classification units are defined and described in that
system.
EXAMPLE 4: WindoCo manufactures windows with wooden casings and aluminum grilles. On
first blush, revenue suggests that WindoCo’s main business undertaking can be described as
window manufacture. However, as the Classification System includes separate classification
units for aluminum window manufacture and wood window manufacture, the description of
WindoCo’s usual and primary product or service must be refined to reflect the composition of the
Classification System. This requires consideration of WindoCo’s revenue plus other measures in
finding its main business undertaking. On such consideration, the distinguishing measures of
methodology, occupations, and assessable payroll establish WindoCo’s main business
undertaking to be wooden window manufacture.
More indicative of:
All of the listed non-exhaustive measures are used in this
example for illustrative purposes only, for many clearly do
not distinguish between the two candidate business undertakings.
Al.
Wood
–
–
Revenue
100% of revenue is from the sale of windows
Methodology
The bulk of the processing relates to the manufacture
and finishing of the windows’ wooden casings
Close substitutes to
WindoCo’s product
Aluminum, vinyl, or wooden windows
–
–
Classification of its
competitors
Aluminum window manufacture, vinyl window
manufacture, and wooden window manufacture
–
–
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Occupations of
WindoCo’s workers
The majority of workers are engaged in the
manufacture and finishing of the wooden casings
Units of production
Windows
Assessable payroll
40% related to millwork and other manual fabrication
and 10% related to computer assisted automation
respecting the aluminum grilles
Market perception
Window manufacture

–
–

–
–
16. A firm’s main business undertaking is established through the activities carried out by the
firm, either through the efforts of its own workers or vicariously through the efforts of
others with whom it contracts [AP1-37-2(1)(d)].
EXAMPLE 5: Call&HaulCo operates a call centre in British Columbia. It receives phone calls from
the public – e.g., homeowners, campgrounds – in need of garbage pick-up services and arranges
for independent firms to do the actual garbage pick-up. The independent firms are sometimes
paid directly by a client and they then remit a portion of the payment to Call&HaulCo. Such
outsourcing represents an atypical case and requires that the Board consider Call&HaulCo’s
revenue plus other measures in finding that its main business undertaking is garbage pick-up.
More indicative of:
Call
centre
Revenue
100% of Call&HaulCo’s revenue is from the public who
are paying for the service of garbage pick-up
Methodology
Includes receiving a request for pick-up, dispatching an
independent firm to undertake the pick-up, and garbage
pick-up (although it contracts out the actual garbage
pickup)
Classification of its
competitors
Garbage pick-up
Occupations of its
workers
Call centre staff
Units of production
Garbage pick-ups
Assessable payroll
100% related to a call centre
Market perception
A garbage pick-up firm
Garbage
pick-up

–
–





17. As the Board only has to make a finding of fact as to the firm’s main business
undertaking; absent exceptional circumstances, the Board does not have to ascertain all
of the firm’s business undertakings.
A
Administrative activity
18. As an administrative activity does not produce a product or service for revenue (or, if
revenue is not the firm’s business goal, a product or service which achieves its business
goal), it cannot be a business undertaking; and as AP1-37-2(2)’s rule of classification
dictates that a firm is assigned to a classification unit on the basis of business undertaking
– not activity – a firm’s administrative activities are not relevant to its assignment to a
classification unit.
EXAMPLE 6: General office administration is an administrative activity: it is for the firm’s own use;
is primarily concerned with maintaining the firm as an ongoing business entity; relates to the firm
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as a whole; does not become an integral part of the firm’s usual and primary product or service;
and it cannot be applied or traced to any specific product or service. It therefore cannot qualify for
its own classification.
19. An administrative activity is for a firm’s own use. A firm engaging in such an activity for
another firm is engaged in a business undertaking which may qualify for its own
classification or which may be an administrative business undertaking (see paragraphs 24
to 26).
II
CLASSIFICATION UNIT WHICH BEST DESCRIBES THE FIRM’S MAIN
BUSINESS UNDERTAKING
20. In finding the classification unit which best describes a firm’s main business undertaking
in British Columbia, the Board considers the criteria in the likely classification units and
compares those criteria across the classification units.
EXAMPLE 7: MatsCo’s main business undertaking is transporting oilfield rig mats from a
warehouse to oilfield sites and from one oilfield site to another. Three classification units may
likely include the industry which best describes that business undertaking.
CLASSIFICATION UNIT DESCRIPTIONS
(A classification unit description provides information about business activities covered in the classification.
Items listed are EXAMPLES only and do not apply to every employer)
Sector
Primary Resources
Primary Resources
Transportation and
Warehousing
Subsector
Oil and Gas or Mineral
Resources
Oil and Gas or Mineral
Resources
Transportation and Related
Services
Classification
Unit
704002 [Oil or Gas Drilling]
704003 [Oil or Gas Field
Servicing (by means other
than service rigs)]
732019 [General Trucking
(not elsewhere specified)]
Transport
This criterion is not included in
the classification unit description
This criterion is not included in
the classification unit description
“Commercial goods,”
“Industrial equipment,”
“Building materials”
Services
Drilling; Oilfield supervision
Generally, the services relate
to the maintenance, repair,
and continuance of a well
Hauling; Trucking
Materials
Drilling mud; Lubricants
This criterion is not included in
the classification unit description
This criterion is not included in
the classification unit description
Equipment
Derrick; Drill bits; Hydraulic
jack; Substructure
Various
Various vehicles, including
trucks and trailers
Processes
“Set up equipment at a
predetermined location; level
the oil derrick; commence
drilling; complete drilling;
dismantle the oil derrick”
This criterion is not included in
the classification unit description
This criterion is not included in
the classification unit description
Occupations
Derrickhand; Driller;
Floorhand; Leasehand;
Motorhand; Rig manager
This criterion is not included in
the classification unit description
This criterion is not included in
the classification unit description
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Consideration of the applicable policy – sector, sub-sector, and title – and practice components of
the three likely classification units establishes that Classification Unit 732019 [General Trucking
(not elsewhere specified)] best describes MatsCo’s main business undertaking in British
Columbia.
III DOES A POLICY EXCEPTION APPLY
21. If more than one exception applies or if there is a conflict between exceptions, the firm
will be assigned the classification unit(s) on the basis of the principles set out AP1-37-2(1)
in order to best achieve the Board’s mandate to “manage [the accident fund] with a view
to the best interests of the workers’ compensation system” [section 36(2) of the Act].
A
A strategic business undertaking
22. A strategic business undertaking is one which provides corporate direction to another firm
or an enterprise, that is integral to the other firm’s or the enterprise’s achievement of goals
and critical to the other firm’s or the enterprise’s current and future business direction.
23. A firm’s business undertaking may be considered along a continuum which includes the
following indistinct regions: strategic, tactical, and operational.
Integral to achievement
of goals and critical to
its existing and future
business direction
Day-to-day logistics and oversight
that achieve tactical objectives within
the boundaries of infrastructures,
resources, and processes
Endeavors that trend
toward achieving
strategic goals
STRATEGIC
Decided by a firm’s directing mind
(e.g., a company’s board of directors or
its senior executives)
TACTICAL
OPERATIONAL
Decided by
departmental heads
Operationalized by
subordinate staff
24. AP1-37-2(3.1) directs that where a firm’s main business undertaking is a strategic
business undertaking of one other firm or an enterprise, it will be assigned to the same
classification unit(s) as the other firm or the enterprise. This does not mean that the
service providing firm cannot provide service to more than one other firm; it means that
the service providing firm’s main business undertaking can only be a strategic business
undertaking of one other firm or an enterprise. The multiple classification rules may be
applied.
EXAMPLE 8: OpCo outsources all of its finance and accounting functions to an unaffiliated firm,
FinCo. The functions of OpCo’s former workers were as follows:
Chief Financial Officer
Strategic
Comptroller
Tactical
Accounts receivable clerk
Operational
Integral to OpCo’s achievement of goals and
critical to its existing and future business direction
The financial analysis and cost control necessary
to achieve OpCo’s key and long-term policy and
management goals
Day-to-day bookkeeping operations
As the functions of OpCo’s former chief financial officer were strategic, FinCo performs a strategic
business undertaking for OpCo and will be assigned to the same classification unit(s) as OpCo.
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EXAMPLE 9: FinCo provides a strategic business undertaking for OpCo (96% of FinCo’s revenue)
and provides some minor services – neither strategic nor administrative – to two other persons
(4% of FinCo’s revenue). Although FinCo is providing service to more than one other firm, its
services are a strategic or administrative business undertaking to only OpCo; and therefore FinCo
will be assigned the same classification unit(s) as OpCo.
B
An administrative business undertaking
25. An administrative business undertaking is an administrative activity undertaken by a firm
for another firm or an enterprise.
26. The question of whether a firm’s main business undertaking is an administrative business
undertaking of another firm or an enterprise involves both a qualitative and quantitative
aspect.
Qualitative
Quantitative
Whether the service providing firm’s main business undertaking,
 is primarily concerned with maintaining the other firm as an ongoing business entity,
 relates to the other firm as a whole,
 does not become an integral part of the other firm’s usual and primary product or
service, and
 generally cannot be applied or traced to any specific product or service.
The degree of the service
providing firm’s
attachment to the service
recipient(s)’ business
operations
 Percentage of revenue from the service recipient(s)
 Percentage of service to the service recipient(s)
 A principal’s prior employment by, or affiliation with, the
service recipient(s)
 Common premises, equipment, or identity
 Capital investment – e.g., in technology, information
systems, market identity – which relates specifically to
the service recipient(s)
 Processes and equipment specific to the service
recipient(s)
 Contractual constraints
EXAMPLE 10: OpCo outsources all of its accounts receivable function to Paye & Mee, an
unaffiliated firm. Paye & Mee provides appreciably all of its services to OpCo and receives
appreciably all of its revenue from OpCo.
Qualitative
Paye & Mee’s main business undertaking is a facet of accounting, which is a
major administrative activity common to most business operations
Quantitative
There is a high degree of attachment, through both revenue and percentage of
service
As each of the qualitative and quantitative aspect of whether Paye & Mee’s main business
undertaking is an administrative business undertaking of OpCo is established, Paye & Mee will be
assigned to the same classification unit(s) as OpCo.
EXAMPLE 11: OpCo retains the two-person law firm of Barr & Ister to represent it in a momentous
patent case. OpCo deals with its other legal issues either in-house or by retaining other outside
counsel. The preparation for trial and attendance at trial consumes most of Barr & Ister’s
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Page 13 of 28
resources for 29 months. Although, Barr & Ister continues to serve the general public – it has
premises, pays professional liability insurance in its own name, and retains other client files – it
provides most of its services to OpCo and receives appreciably all of its revenue from OpCo in that
span.
Qualitative
Barr & Ister’s main business undertaking of legal services is a major
administrative activity common to most business operations. However, Barr &
Ister’s retainer on the patent issue is related to its specialized expertise and not to
OpCo’s outsourcing of an administrative activity
Quantitative
Although Barr & Ister receives a high percentage of its revenue from OpCo and
provides a high percentage of its service to OpCo, there is not a sufficient degree
of attachment
As the quantitative aspect of whether Barr & Ister’s main business undertaking is an
administrative business undertaking of OpCo is not established, Barr & Ister will not be assigned
to the same classification unit(s) as OpCo.
27. AP1-37-2(3.1) directs that where a firm’s main business undertaking is an administrative
business undertaking of another firm or an enterprise, it will be assigned to the same
classification unit(s) as the other firm or the enterprise. This does not mean that the
service providing firm cannot provide service to more than one other firm; it means that
the service providing firm’s main business undertaking can only be an administrative
business undertaking of one other firm or an enterprise. The multiple classification rules
may be applied.
C
Multiple classification rules
28. AP1- 37-2(3.2)’s multiple classification rules comprise,



AP1- 37-2(3.2.1)’s “criteria for multiple classifications,”
AP1- 37-2(3.2.2)’s “specific cases of business undertakings in multiple industries,”
and
AP1- 37-2(3.2.3)’s standards for “a firm with one or more business undertakings that
does not qualify for multiple classifications.”
29. In formulating the multiple classification rules, the Board recognized


that a firm may have significant financial incentive to structure its business operations
to meet the criteria for multiple classifications or a specific case when its main
business undertaking has a higher base rate than its other business undertakings (and
vice versa), and
that the firm has the ability to structure its business operations,
and therefore the department administers the rules in a manner that best achieves the
purposes of the workers’ compensation system, as established in section 36(2) of the Act
and AP1-37-2(1)’s principles. Accordingly, a factor in interpreting and administering the
multiple classification rules is the recognition that the system is premised on each firm
paying assessments which reflect the real likelihoods of a claim and cost of the claim.
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(1)
AP1- 37-2(3.2.1): Criteria for multiple classifications
30. AP1-37-2(3.2.1)’s test for multiple classification is whether the firm’s main and
secondary business undertakings are “distinct and independent,” as
demonstrated by application of the four listed criteria. The test entails the following
findings of fact and decision:
(a) The firm’s main business undertaking in British Columbia.
(b) Whether the firm has a secondary business undertaking.
(c) Whether the firm’s main and secondary business undertakings are “distinct and
independent” as demonstrated by application of the four listed criteria. As these
four criteria are conjunctive, each criterion must be satisfied in order for a firm
to qualify for multiple classifications.
The firm’s
main business
undertaking
The firm has a
secondary
business
undertaking
Single
classification
No
Yes
The business
undertakings
are distinct and
independent
Separation of risk
Yes
and endevour
The secondary
business
undertaking is
not a strategic or
an administrative
business
undertaking
50% of the
secondary
business
undertaking’s
output is sold to
unaffiliated
customers
Yes
Yes
The secondary
business
undertaking is
significant (per
one of the listed
conditions)
Yes
Multiple
classifications
EXAMPLE 12: PMC Corp. operates a pub, a marina, and a campground. Each business
undertaking has specific personnel and provides more than 50% of its product or service to the
general public. PMC Corp.’s total revenue is $1,650,000, and its total annual assessable payroll
for these three business undertakings is $825,000.
Revenue
BUSINESS UNDERTAKING
Payroll
Amount
% of
total
Assessment
rate ($ per $100
of payroll)
55%
$450,000
55%
2.35
$500,000
30%
$250,000
30%
1.43
$250,000
$1,650,000
15%
100%
$125,000
$825,000
15%
100%
.85
Amount
% of
total
Pub
$900,000
Marina
Campground
Total:
What is PMC Corp.’s
main business
undertaking?
The pub. It is the business undertaking which results in the production or
provision of PMC Corp.’s usual and primary product or service (as
determined by revenue).
What is PMC Corp.’s
secondary business
undertaking?
Each of the marina and campground business undertakings is a secondary
business undertaking.
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Marina
Does PMC Corp.
meet AP1-372(3.2.1)’s criteria for
multiple
classifications?
Campground
Is there is a clear temporal and spatial
separation of risk and endeavor?


The secondary business undertaking is not a
strategic or administrative business undertaking.


Is at least 50% of the product or service of the
secondary business undertaking sold to
unaffiliated customers?


Is each business undertaking demonstrably
significant as determined by policy?


PMC Corp. qualifies for multiple classifications and will have classification units reflecting each of
the pub and marina business undertakings assigned to its account. Payroll related to
campground will be added to that of the pub as the pub’s business undertaking has the higher
assessment rate and makes up at least 25% of the firm’s business operations (see example 17).
(2)
AP1- 37-2(3.2.2): Specific cases
31. The policy exceptions in AP1- 37-2(3.2.2) are discretionary: “[t]he Board may assign a
firm’s business operations to more than one classification unit.”
(a) The fishing industry
32. Section 4 of the Act, the Fishing Industry Regulations,7 and Assessment Manual Item:
AP1-4-1 contain special provisions for the “fishing industry” which reflect the unique
characteristics of that industry.
33. If the Board determines a firm to be the employer of a commercial fisher (as defined in
the Fishing Industry Regulations) for the purposes of Part 1 of the Act and is harvesting
fish by means of a business undertaking best reflected in one of the following six
classification units, the firm will also be assigned that classification unit:
Classification Unit 702005
Classification Unit 702006
Classification Unit 702007
Classification Unit 702008
Classification Unit 702009
Classification Unit 702010
Dive Fishing
Gillnet or Troll Fishing
Longline or Trap Fishing
Seine Fishing
Trawl Fishing
Fish Packing
(b) The non-industrial building construction exception
34. Non-industrial building construction refers to building construction not associated with
the industry of a firm’s main or other classified business undertaking.
7
British Columbia Regulation 674/76, 22 December 1976, available at
http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/12_674_76.
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35. Where a firm engages in non-industrial building construction, the criteria for multiple
classifications in AP1-37-2(3.2.1)(a), (b), and (d)8 are applied to determine if a
construction classification is to be added to the firm’s account.
EXAMPLE 13: DineCo will be opening a restaurant. It hires workers to renovate its premises prior
to the opening. While the premises are under renovation, DineCo must register as an employer
to cover the workers engaged in construction; and it will be classified in Classification Unit 721027
[House or Other Wood Frame Construction or Renovation Work]. Once the renovation is
complete and the restaurant begins to operate, DineCo must contact the Assessment Department
to have its classification changed to Classification Unit 761035 [Restaurant or Other Dining
Establishment].
EXAMPLE 14: DineCo operates a successful restaurant and hires workers to expand its
premises. While the expansion of its premises is ongoing, DineCo will be assigned to each of
Classification Unit 761035 [Restaurant or Other Dining Establishment] and Classification Unit
721027 [House or Other Wood Frame Construction or Renovation Work] if the construction
business undertaking meets the multiple classification criteria in AP1-37-2(3.2.1)(a), (b), and (d).
(c) The residential employer exception
36. A residential employer is one or more individuals who employ a worker to work in or
about the individual(s)’ private residence, other than for the owner(s)’ or occupier(s)’
trade or business, or who employ a worker to serve the owner(s)’ or occupier(s)’ personal
needs or those of the owner(s)’ or occupier(s)’ family [AP1-2-1(b)(1)].
37. Where the Board registers one or more individuals to cover a business undertaking and
the same individual(s) operate as a residential employer, the Board may add an additional
classification to the existing account to cover a worker employed by the residential
employer(s).
EXAMPLE 15: A proprietor operates a retail store located in a commercial mall. The proprietor is
registered with the Board for that business and is assigned Classification Unit 741013 [General
Retail (not elsewhere specified)]. The proprietor then hires a worker to provide full-time in-home
care to the proprietor’s children in the proprietor’s home. Classification Unit 764029 [Hiring or
Providing Domestic Childcare] will be added to the proprietor’s business account, effective the
date the proprietor first employed the caregiver.
(d) Management companies
38. A management company is a “separate limited company, that provides some degree of
administrative or management services to one or more firms, a group of affiliated firms,
or an enterprise” [AP1-37-2(3.2.2)].
39. The phrase “administrative or management services” is a term-of-art which refers to the
services a management company provides to other firms which aid those other firms in
achieving their strategic goals. These services entail the organization and coordination of
8
Criterion (c) is not applied, as non-industrial building construction cannot generate sales to unaffiliated
customers or clients.
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a firm’s activities to achieve its business goals within, and in accordance with, the firm’s
policies.
40. Where a management company provides administrative or management services to one or
more operating firms or to a group of affiliated firms, the classification unit(s) assigned to
each such service receiving firm is added to the management company’s account.
(e) Special hazard activities
41. A classification unit may be designated as a special hazard classification unit in an annual
Classification and Rate List.
42. A firm whose business operations include the pith of a special hazard classification unit
will have that classification unit added to its account if the firm’s activity in the industry
generates an annual assessable payroll of greater than four times the maximum wage rate9
for that year.
(3)
AP1- 37-2(3.2.3): A firm with business undertakings that do not qualify for
multiple classifications
43. AP1-37-2(3.2.3) applies to three specific circumstances:
(a) Where a firm has more than one business undertaking and the business undertakings
do not qualify for multiple classifications.
(b) Where a firm is classified in more than one classification unit and has additional
business undertakings which do not qualify for further classifications.
(c) Where a firm is in an enterprise and has a business undertaking in addition to the
enterprise’s main business undertaking and the firm’s business undertakings do not
qualify for multiple classifications.
(a) A firm has more than one business undertaking which does not meet the
criteria or a specific case
44. This policy exception recognizes that where a firm produces more than one product or
service for revenue and does not meet the “criteria for multiple classifications” or a
“specific case,” the determination of the firm’s primary product or service must reflect the
real likelihoods of a claim and the cost of the claim. Therefore, where a firm has more
than one business undertaking and the business undertakings do not meet AP1-372(3.2.1)’s criteria for multiple classifications and AP1-37-2(3.2.2)’s “specific cases,” the
firm is assigned to a single classification unit as follows:
9
Section 33 of the Act, Assessment Manual Item: AP1-38-6, and Appendix “A” to the Assessment Manual.
See, http://www.worksafebc.com/regulation_and_policy/policy_decision/maximum_wage/default.asp .
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(a) If one or more business undertakings make up at least 25 percent of the firm’s
business operations, the firm is assigned to the classification unit that has the highest
base assessment rate and makes up at least 25 percent of its business operations.
(b) If no business undertaking makes up at least 25 percent of the firm’s business
operations, the firm is assigned to the classification unit that has the highest base rate.
However, if the firm’s payroll in that classification unit is less than four times the
maximum wage rate, policy grants the Board discretion to assign the firm the
classification unit with the next highest base rate.
EXAMPLE 16: Janus Inc. receives ½ of its revenue from each of its two business undertakings, a
dance school and a taxidermy shop; which are, respectively, best described in Classification Units
765009 [Dance School] and 715031 [Taxidermy]. As Janus Inc. does not meet either the criteria
for multiple classifications or a specific case, it is assigned to CU715031 [Taxidermy]; as that
classification unit best describes the business undertaking which generates more than 25% of its
revenue and has the higher base rate.
(b) A firm with multiple classifications has additional business undertakings
45. Where a firm is assigned to more than one classification unit and has additional business
undertakings which do not meet AP1-37-2(3.2.1)’s criteria for multiple classifications and
AP1-37-2(3.2.2)’s “specific cases,” any such additional business undertaking is assigned
to a classification unit as follows:
(a) The business undertaking is assigned to the classification unit which,
 has met the criteria for multiple classifications, and
 has the highest base assessment rate, and
 makes up at least 25 percent of the firm’s business operations (where a “specific
case” applies).
(b) If no business undertaking makes up at least 25 percent of the firm’s business
operations, the additional business undertaking is assigned to the classification unit
which has met the criteria for multiple classifications and has the highest base
assessment rate.
EXAMPLE 17: As PMC Corp.’s (see example 12) business undertaking of operating a
campground does not meet either the criteria for multiple classifications or a specific case, the
payroll related to the campground business undertaking will be added to Classification Unit
761034 [Pub] as PMC Corp is already assigned to that classification unit; and the classification
unit makes up at least 25% of PMC Corp.’s business operations and has the higher base rate.
(c) A firm in an enterprise has additional business undertakings
46. Where a firm in an enterprise has a business undertaking in addition to the enterprise’s
main business undertaking, and the enterprise’s main business undertaking and the
additional business undertaking do not meet AP1-37-2(3.2.1)’s criteria for multiple
classifications and AP1-37-2(3.2.2)’s “specific cases,” the firm is assigned to a single
classification unit as follows:
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(a) If one or more business undertakings make up at least 25 percent of the firm’s
business operations, the firm is assigned to the classification unit that has the highest
base assessment rate and makes up at least 25 percent of its business operations (see
example 24).
(b) If no business undertaking makes up at least 25 percent of the firm’s business
operations, the firm is assigned to the classification unit that has the highest base
assessment rate. However, if the firm’s payroll in that classification unit is less than
four times the maximum wage rate, policy grants the Board discretion to assign the
firm the classification unit with the next highest base rate and meets four times the
maximum wage rate. If no business undertaking meets four times the maximum
wage rate, then the firm is assigned to the classification unit with the highest base
rate.
D
Consulting firms
47. AP1-37-1(1.3) describes a “consultant” as an individual or firm that performs impartial
services for unaffiliated clients on a contractual basis. The services are those provided by
an expert or a professional in a specific field, who has a wide knowledge of the subject
matter in that field and provides advice or assistance in a specific area of expertise, but
has no direct authority to make decisions or direct work.
48. An individual or firm who is responsible for implementation or who acts on behalf of, or
in place of, a manager is not acting as a consultant but as a “surrogate manager.” Such
business undertakings do not qualify as consulting.
49. The classification of an independent firm as a consulting firm entails the following:
There must be a contractual relationship between the firm as the service
provider and another as the service recipient.
Description
The firm cannot be affiliated with the service recipient.
The firm cannot have direct involvement or interest in the venture and
cannot favour one interested party more than any other.
The firm’s must provide professional or expert consulting services, which
must be limited to “investigations, analysis, pre-planning, design, or
compilation of a report” or a comparable service.
Whether
the firm
is a
consulting
firm
Consulting
services
The firm’s consulting services cannot, directly or indirectly, entail:
 fabricating, manufacturing, or constructing a product by any means,
 implementing the recommendations of a report, or
 supervising or directing the service recipient’s personnel (workers or
independent operators).
A construction management consulting firm may monitor or adjust
processes or tasks to ensure they are on-course and on-schedule in
meeting the objectives and performance targets.
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A consulting firm may be assigned to the classification unit which best
describes its business undertaking of consulting.
The firm’s classification
A consulting firm that meets each of AP1-37-2(3.3)’s criteria for
“construction management consulting” may be classified in Classification
Unit 763005 [Construction Management Consulting].
50. Where a firm fabricates, manufactures, or constructs a prototype or bench-test model as
part of its consulting services, and


the prototype or bench-test model is approximately the same size as the modeled
product, or
the fabrication, manufacture, or construction of the prototype or bench-test model is
subject to the same risks as those of the modeled product,
the firm is considered to be undertaking the fabrication, manufacture, or construction of
the modeled product. Generally, in such a case, the firm will be assigned to the
classification unit which best describes the fabrication, manufacture, or construction of
the modeled product.
EXAMPLE 18: Hugh Mus is a soil engineer in good standing with a professional accrediting body.
He operates his business as a sole proprietorship and serves the general public. Mr. Mus’ clients
collect soil samples and deliver them to his laboratory. He then provides his clients his
professional services of soil analysis and of preparation of expert reports.
An “independent firm” per AP1-1-1
 business existence (licenses &
permits, facilities, marketing, bank
records, benefits expenses, etc.)
 accredited by, and in good
standing with, a professional body
 insurance (general & professional
liability) in his own name
Whether Mr. Mus’ main
business undertaking is consulting
Description
Contracts between
Mr. Mus as a
service provider
and others as
clients
Mr. Mus is not
affiliated with any
of his clients
Consulting services
Mr. Mus does not:
 have direct
involvement or interest
in a venture, or
 favour one interested
party over any other
Mr. Mus’ expert and
professional services
are limited to analysis
and to the compilation
of a report
Mr. Mus’ expert and professional services do
not, directly or indirectly, entail:
 field investigation,
 fabrication, manufacture, or construction,
 implementation of his recommendations, or
 acting as a surrogate manager
Classification
The classification unit
which best describes Mr.
Mus’ main business
undertaking of consulting
is CU763033 [Geological
Consultation or Analysis]
Mr. Mus’
business is
assigned to
CU763033
51. A firm which engages in consulting and another business undertaking may be assigned to
more than one classification unit if the multiple classification criteria are met.
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E
Labour supply firms
52. A labour supply firm is one which hires workers directly, arranges for the workers to
work under the direction and control of a client, and pays the wages of the workers [AP137-2(3.4)].
53. The Classification System contains several “labour supply” classification units, which are
identified as such by explicit language in either the classification unit’s title –“worker
supply” or “labour supply” or in its classification unit description. These include:
Classification Unit 701008
Farm Labour Supply or Farm Services
Classification Unit 721013
Construction Labour Supply or General Labour
Supply (not elsewhere specified)
Classification Unit 762010
Clerical Worker Supply
Classification Unit 731005
Warehouse Operation
Classification Unit 766006
Community Health Support Services
Classification Unit 763007
Computer Consulting or Custom Computer
Programming
Classification Unit 764029
Domestic Childcare
Classification Unit 701012
Greenhouse
Classification Unit 761019
Catering Services
Classification Unit 741013
General Retail (not elsewhere specified)
Classification Unit 741033
Large Retail Store (not elsewhere specified)
54. A firm whose main business undertaking is best described in any one of these labour
supply classification units will be assigned to that classification unit.
55. A labour supply firm who furnishes an individual or a group of individuals to a firm in an
industry not in one of the labour supply classification units will be assigned the recipient
firm’s applicable classification unit(s) or will have those classification unit(s) added to its
account.
F
Firms in an enterprise
56. An enterprise consists of two or more affiliated firms intentionally and willingly acting in
common in harmonious combinations or interactions to synchronize and accomplish the
transformation of inputs (resources, raw materials, services) into desired products,
services, or results; not for the enterprise’s own use.
57. AP1-37-2(3.5) directs that all firms in an enterprise will be viewed as one for the purposes
of classification and will generally be assigned to the classification unit which best
describes the enterprise’s main business undertaking in British Columbia, and the multiple
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classification criteria may also apply. Accordingly, the classification of firms in an
enterprise entails the following four findings of fact:
(a) The firms are affiliated.
(b) The firms are engaged in a cooperative and coordinated relationship to produce a
product or service.
(c) The enterprise’s main business undertaking in British Columbia.
(d) Whether the multiple classification rules apply to the subject firm in the enterprise.
Whether the firms are in an enterprise
The firms are affiliated
(1)
The firms are engaged
in a cooperative and
coordinated
relationship
Classifying a firm in the enterprise
The enterprise’s main
business
undertaking in British
Columbia
Whether the multiple
classification rules
apply to the subject
firm in the enterprise
The subject
firm’s
classification
The firms are affiliated
58. The pith of affiliation is control: the “ability or power, actual or potential, direct or
indirect through intermediaries, to direct or cause the direction of the management of a
firm’s business operations, through the ownership of voting securities, by contract, or by
other means” [AP1-37-1(1.3)].
59. As control entails the organization and coordination of the firm’s activities to achieve the
firm’s goals within, and in accordance with, the firm’s or an enterprise’s policies,
objectives, and overall direction; it falls between the strategic and tactical regions of the
continuum. Accordingly, control does not entail operational, project, or contract
management.
Integral to achievement
of goals and critical to
its existing and future
business direction
Endeavors that trend
toward achieving
strategic goals
Control
Strategic
Decided by a firm’s directing mind
(e.g., a company’s board of
directors or its senior executives)
Day-to-day logistics and oversight
that achieve tactical objectives within
the boundaries of infrastructures,
resources, and processes
Tactical
Operational
Decided by
departmental heads
Operationalized by
subordinate staff
60. Assessment Manual Item: AP1-1-1 directs that a principal controls a firm, and that an
“officer, director or shareholder10 active in the operation of a corporation or similar entity
is presumed to be a principal of that firm.”11
10
A Ministry of Finance BC Company Summary lists a corporation’s officers and directors, or a partnership’s
partners. A corporation’s central securities register lists the shares issued and transferred, and a corporation’s
shareholders (owners) can be ascertained from such.
11
The presumption establishes the fact of control unless contradicted and outweighed by rebuttal evidence. The
party seeking to rebut the presumption bears the onus of producing the rebuttal evidence.
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61. The common use of a name or a distinguishing term12 amongst a group of separate legal
entities, or a published assertion that a firm is part of an enterprise (howsoever described,
e.g., corporate group, family of companies) can be presumptive of either or both of
affiliation and a cooperative and coordinated relationship to produce a product or
service.13
A published assertion on a website is presumptive
of affiliation and common business operations
The use of “Croesus” in each financial firm’s name may be
presumptive of affiliation and common business operations
The Croesus Family of
Companies work together to
provide a full range of financial
services:
$
$
Bank of Croesus
(2)
Croesus Leasing LLP
Croesus Mortgage
Corporation
$
Croesus Payday
Loans Inc.
Bank of Croesus
Croesus Leasing LLP
Croesus Mortgage Corporation
Croesus Payday Loans Inc.
A cooperative and coordinated relationship
62. A cooperative and coordinated relationship entails two or more firms intentionally and
willingly acting in common in harmonious combinations or interactions to synchronize
and accomplish the transformation of inputs (resources, raw materials, services) into
desired products, services, or results.
EXAMPLE 19: Below in the diagram on the left, Seven Dwarves Mining Ltd. and Glass Slippers
Corp. do not constitute an enterprise: although the firms are affiliated (as they have a common
shareholder), they are not engaged in a cooperative and coordinated relationship to produce a
product or service. In the diagram on the right, as the firms are in an enterprise and are engaged
in a cooperative and coordinated relationship, they will be treated as one for the purpose of
classification, and the multiple classification criteria may be applied (see example 24).
35%
100%
35%
100%
MICROSOFT CORPORATION
MICROSOFT CORPORATION
MICROSOFT CORPORATION
MICROSOFT CORPORATION
Shares
Shares
Shares
Shares
Glass
Slippers
Corp.
Wicked
Witch Sugar
Mills Inc.
Seven
Dwarves
Mining Ltd.
No
cooperative
and
coordinated
relationship
A
cooperative
and
coordinated
relationship
Hansel &
Gretel
Candy
Company
12
This does not apply to commonplace identifiers such as surnames, place names (e.g., Nanaimo), or simple
descriptive terms (e.g., financing, bargains).
13
Where found, the presumption establishes the facts of affiliation and a cooperative and coordinated relationship
to produce a product or service, and will support a finding of either or both unless contradicted and outweighed
by rebuttal evidence. The party seeking to rebut the presumption bears the onus of producing the rebuttal
evidence.
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63. Generally, the cooperation and coordination underlying an enterprise is directed by the
person(s) who control the firms within the enterprise. Accordingly, AP1-37-1(1.3)’s
direction that the Board may find a firm to be affiliated with a firm that has ceased to
operate or exist will apply if the evidence establishes that the person(s) who control the
firms within the enterprise oversaw a cooperative and coordinated relationship, whether or
not the firms existed or acted contemporaneously.
EXAMPLE 20: Immediately before LabelCo ceases operations, its principal incorporates
CollectCo and transfers all of LabelCo’s accounts receivable to CollectCo, which then only
collects the monies that were owing to LabelCo. Although LabelCo did not operate – or perhaps
even exist – when CollectCo was active, the firms nevertheless constitute an enterprise as each
of the necessary control, and cooperation and coordination exist.
64. As an enterprise does not require common ownership amongst all its member firms (e.g.,
common interlocking ownership, directors, or officers may be sufficient), an enterprise
can be comprised of a patchwork of the whole or part of other enterprises so long as such
encompasses firms engaged in a cooperative and coordinated relationship to produce a
product or service.
EXAMPLE 21: In the diagram below, as Firms A and M comprise an enterprise and as Firms M
and Z comprise an enterprise; Firms A, M, and Z comprise an enterprise: Firm M is affiliated with
each of Firms A and Z; and Firms A, M, and Z are engaged in a cooperative and coordinated
relationship to produce a product or service.
Enterprise AM
Firm A
Enterprise MZ
Affiliation
Firm M
Affiliation
Firm Z
A cooperative and coordinated relationship to produce a product or service
(3)
The enterprise’s main business undertaking in British Columbia
65. In determining the classification unit which best describes an enterprise’s main business
undertaking in British Columbia, the Board considers the products and services the
enterprise produces or provides through its business operations in British Columbia and
may consider other relevant measures.
EXAMPLE 22: OpCo manufactures stoves in Alberta. OpCo calves off its accounts payable and
accounts receivable functions to FinCo, a daughter firm which operates in British Columbia.
Although OpCo and FinCo constitute an enterprise – they are affiliated and are engaged in a
cooperative and coordinated relationship to produce a product or service – FinCo will be assigned
to the administration of an operation conducted outside British Columbia, which is the
classification unit which best describes its main business undertaking in British Columbia.
EXAMPLE 23: OpCo calves off its accounts payable and accounts receivable functions to its
daughter firm, FinCo. FinCo provides 80% of its services to OpCo. As OpCo and FinCo
constitute an enterprise – they are affiliated and are engaged in a cooperative and coordinated
relationship to produce a product or service – they are assigned to the classification unit which
best describes the enterprise’s main business undertaking in British Columbia. None of the
multiple classification rules apply.
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66. AP1-37-2(3.5) establishes the dictate that the “Board generally assigns each firm in an
enterprise to the classification unit which best describes an enterprise’s main business
undertaking.” The inclusion of the word “generally” means that it is non-binding and can
be deviated from in order to effect a reasoned balance between “the best interests of the
workers’ compensation system” [s. 36(2) of the Act] and the prevention of demonstrable
prejudice to a firm. Such balance requires that the department consider the purposes and
objects of the Act, the purposes and principles of classification policy, the merits and
justice of the individual case, and other relevant criteria, such as:
(a) The ratio of revenue in each potential classification unit.
(b) The ratio of assessable payroll in each potential classification unit.
(c) The ratio of a relevant quantifiable measure – e.g., mileage, gasoline usage, hours –
in each potential classification unit.
(4)
The multiple classification rules
67. AP1- 37-2(3.2)’s “multiple classification rules” may then apply. Accordingly, each of the
following should be considered: AP1- 37-2(3.2.1)’s “criteria for multiple classifications,”
AP1- 37-2(3.2.2)’s “specific cases of business undertakings in multiple industries,” and
AP1- 37-2(3.2.3)’s principles for classifying a “firm with one or more business
undertakings that does not qualify for multiple classifications.”
EXAMPLE 24: TruckCo is a wholly owned subsidiary of Department Store Inc., a large national
retailer. 70% of TruckCo’s revenue is generated directly from its services to Department Store
Inc., and the remaining 30% is generated from services to the general public.
AP1-37-2(2)’s rule of classification entails the following three findings of fact:
TruckCo’s main business
undertaking in British
Columbia
The classification unit which
best describes TruckCo’s
main business undertaking in
British Columbia
Whether a policy
exception applies
Trucking
Classification Unit 732019 [General
Trucking (not elsewhere specified)]
1) Criteria for multiple classifications
2) Firms in an enterprise
Criteria for Multiple Classifications: As the “Firms in an Enterprise” exception is to be
considered and as that exception directs that the “multiple classification rules…may also apply,”
the criteria for multiple classifications are considered within the context of the “Firms in an
Enterprise” exception. (If, however, the “Firms in an Enterprise” exception did not apply, as
TruckCo does not meet criterion (c) of AP1-37-2(3.2.1)’s criteria for multiple classifications (at
least 50% of its product or service is not sold to unaffiliated parties), the criteria for multiple
classifications do not apply.)
Firms in an Enterprise: AP1-37-2(3.3) directs that all firms in an enterprise will be viewed as one
for the purposes of classification and will generally be assigned to the classification unit which
best describes the enterprise’s main business undertaking in British Columbia, and the multiple
classification rules may also apply.
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Whether Department Store Inc. and
TruckCo constitute an enterprise
The firms are affiliated
The firms are engaged
in a cooperative and
coordinated
relationship
Yes.
Yes.
“TruckCo is a wholly
owned subsidiary of
Department Store Inc.”
Department Store Inc.
and TruckCo are
intentionally and
willingly acting in
common in
harmonious
combinations or
interactions to
synchronize and
accomplish a desired
service: the delivery of
wares sold by
Department Store Inc.
Classifying
TruckCo
The enterprise’s main
business undertaking
in British Columbia
1. TruckCo operates
in the business
undertaking of
trucking.
2. The enterprise’s
main business
undertaking is that
of a department
store (by revenue).
3. Therefore, TruckCo
is provisionally
assigned to
CU741033
[Department Store].
Whether the multiple
classification rules
apply to TruckCo
Criterion (c) of the
“criteria for multiple
classifications” does
not apply.
None of the “specific
cases of business
undertakings in
multiple industries”
apply.
AP1-37-2(3.2.3)(a)
applies.
TruckCo’s
classification(s)
1. TruckCo’s business
undertakings are
trucking and
department store.
2. Each business
undertaking makes
up at least 25% of
TruckCo’s business
operations.
3. TruckCo is
assigned to the
classification unit
with the higher
base rate – CU
732019 [Trucking].
IV “FULL AND ACCURATE INITIAL INFORMATION”
68. Assessment Manual Item: AP1-38-1 charges every employer, and every firm seeking
registration, with the “responsibility to provide full and accurate initial information”; and
AP1-37-2(1)(f) charges every registered firm “to immediately inform the Board of any
circumstance which may affect its classification, or assessment rate, and to notify the
Board of any changes to its business operations, assets or ownership which may affect its
status, classification or assessment rate.”
69. With respect to assignment into the Classification System, “full and accurate initial
information” includes comprehensive descriptions of the following:
(a) The firm’s usual and primary product or service which is not for its own use.
Generally, this is ascertained through revenue; but in those few atypical cases where
it is probable that revenue may not be the best measure, “full and accurate initial
information” means revenue plus all other relevant measures.
(b) The firm’s process of production, including the types and proportional combination
of technology, skills, and labour used.
(c) The raw materials and services utilized in the firm’s process of production.
(d) Whether the firm is part of an enterprise, or is affiliated with another firm, or is
otherwise engaged in a cooperative and coordinated relationship to produce a product
or service. If so, subparagraphs (a), (b), and (c) apply with the necessary changes
being made after taking the relevant differences into account.
70. A firm’s failure to fully discharge any part of its above duties may constitute a “failure to
provide timely, complete, and accurate information” and therefore misrepresentation (see
Assessment Manual Item: AP1-37-3 and Practice Directives 1-37-3(A) and 1-96-1(A)).
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APPENDIX “A”
The classification unit
which best describes
the firm’s main
business undertaking
in British Columbia
The firm’s main
business undertaking
in British Columbia
Does a policy
exception apply
Yes or unknown
Strategic
business
undertaking
No
The firm is assigned to the
same classification unit(s) as
the other entity
Yes
Administrative
business
undertaking
No
Does the firm
have a
secondary
business
undertaking
Yes
Clear
separation
of risk and
enterprise
Yes
Not a
strategic or
administrative
business
undertaking
Yes
50% of the
output is
sold to
unaffiliated
customers
Yes
Is it
significant
No
AP1-37-2(3.2)’s multiple classification rules
Fishing industry
No
Non-industrial
building
construction
No
Residential
employer
The firm is assigned to more than
one classification unit
Yes
Yes
No
No
Management
company
No
Special hazards
No
Yes
AP1-37-2(3.2.3)
The multiple
classification
rules may apply
No
Consulting
No
The firm is classified, at
least in part, through application of
the applicable policy exception
Yes
Labour supply
No
Affiliation
Yes
Cooperative
and coordinated
relationship
No
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Yes
The firm is assigned to the
classification unit of the enterprise’s
main business undertaking in BC
The firm is assigned to the
classification unit which best
describes its main business
undertaking in British Columbia
Practice Directive 1-37-2 (A)
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