Interpretation Guidelines Manual British Columbia Employment Standards Act and Regulations

EMPLOYMENT STANDARDS ACT - PART 11 - ENFORCEMENT

ESA Section 87 – Lien for unpaid wages 


Contents:

Summary
Text of Legislation
Policy Interpretation
Related Information


Summary

This section explains what constitutes a lien and the priority that a lien under this section takes over other monies owing. 


Text of Legislation

87. (1) Despite any other Act, unpaid wages constitute a lien, charge and secured debt in favour of the director, dating from the time the wages were earned, against all the real and personal property of the employer or other person named in a determination, a settlement agreement or an order, including money due or accruing due to the employer or other person from any source.

(1.1) If a talent agency named in a determination, a settlement agreement or an order has

(a) received wages from an employer on behalf of an employee, and

(b) failed to pay those wages, less any fees allowed under the regulations, to the employee within the time required under the regulations,

the wages, less any fees allowed under the regulations, constitute a lien, charge and secured debt in favour of the director, dating from the time the wages were received by the agency, against all the real and personal property of the agency, including money due or accruing due to the agency from any source.

(2) Unpaid wages set out in a decision or order filed under section 30 of the Industrial Relations Act, R.S.B.C. 1979, c. 212, or under section 102 or 135 of the Labour Relations Code constitute a lien, charge and secured debt in favour of the persons named in the decision or order against all the real and personal property of the employer or other person named in the decision or order.

(3) Despite any other Act but subject to subsection (5), the amount of a lien, charge and secured debt referred to in subsections (1), (1.1) and (2) is payable and enforceable in priority over all liens, judgments, charges and security interests or any other claims or rights, including the following:

(a) any claim or right of the government including, but not limited to, the claims and rights of the Workers' Compensation Board;

(b) any claim or right arising through contract, account receivable, insurance claim or sale of goods;

(c) any security interest within the meaning of the Personal Property Security Act.

(4) Subsection (3) (c) applies whether the lien, judgment, charge, security interest, claim or right was perfected within the meaning of the Personal Property Security Act, or was created or made, before or after

(a) in the case of wages referred to in subsection (1) or (2), the date the wages were earned or the date a payment for the benefit of the employee became due, and

(b) in the case of wages referred to in subsection (1.1), the date the wages were received by the talent agency.

(5) The lien, charge and secured debt referred to in subsections (1), (1.1) and (2) has priority over a mortgage of, or debenture charging, land, that was registered in a land title office before registration against that land of a certificate of judgment obtained on the filing, under section 91, of a determination, a settlement agreement or an order of the tribunal, but only with respect to money advanced under the mortgage or debenture after the certificate of judgment was registered.


Policy Interpretation

Subsection (1)

The statutory lien for wages under this section of the Act has priority over all other claims, with the exception set out in s.87 (5), that is, an earlier mortgage or debenture registered against land, when money has been advanced under that mortgage or debenture.

The Act, without requiring action by any party, imposes a statutory lien in favour of the director. A lien is a charge on real and personal property of another for payment of a debt or a claim. The lien dates from the time that wages were earned and is enforceable against the employer or other person named in a determination, settlement agreement or an order.

Liens are attached to assets owned at the time wages were earned, and also automatically to any assets subsequently acquired. They remain attached until all outstanding wages are paid or the matter is resolved by settlement.

The lien attaches to all the assets of the employer or any person named in a determination, settlement agreement or an order. This includes money due, or accruing due, to the employer or other person from any source. "Assets" include both real and personal assets.

  • Real assets refer to land and anything fixed to land, such as buildings.
  • Personal assets are moveable property, such as vehicles, machines, equipment, stocks, bonds, and bank accounts.

Liability when purchased assets have lien attached

The lien remains with the assets if they are sold and in such cases when the determination remains unpaid the director may hold the purchaser liable for the amount of the lien.

Subsection (1.1)

Where any wages have been received by any talent agency on behalf of an employee, from an employer, the wages must be paid to the employee, less any fees allowed , as set out in the the regulations. Where a talent agency is named in a determination, settlement agreement or order, for being in contravention of these requirements, the wages (less the allowable fees) impose a statutory lien under this section of the Act in the same manner as in subsection (1) above.

Subsection (2)

The lien created under this subsection applies to unpaid wages determined by a decision or order filed under the Industrial Relations Act or the Labour Relations Code. The lien in subsection (2) is not created until that decision or order is filed in court.

When a decision regarding wages, if referred by an arbitration board under s.(8) of the Act to the Director of Employment Standards, the Director may collect those wages in the same manner as if it was an order of the Employment Standards Tribunal. The arbitration award is filed in Supreme Court under s.91(1) of the Act, to be enforced in the same manner as a judgment of the Supreme Court. The collection provisions of the Act would apply for recovery of the debt.

Subsection (3)

A lien gives the director, as the lien holder under this section, the right to receive the proceeds of the sale of the liened assets, in preference to certain other creditors, except as stated in subsection (5), including:

  • any claim or right of the government including, but not limited to, the claims and rights of the Workers' Compensation Board;
  • any claim or right arising through contract, account receivable, insurance claim or sale of goods;
  • any security interest within the meaning of the Personal Property Security Act.

Subsection (4)

Even though another creditor may have done everything correctly to secure a lien against the property of an employer, this section states that the statutory lien for wages, once established, is given priority over the lien created under the Personal Property Security Act (PPSA). This is the case regardless whether the lien created under the PPSA was created before or after:

  • the date the wages were earned; or
  • the date a payment for the benefit of an employee became due.

Example

An employer purchases a $100,000 piece of equipment and another creditor registers a lien under the PPSA against the equipment. The director’s wage claim would have priority and would be paid out of the sale of the equipment before the other claim.

Subsection (5)

The exception to the director’s priority is that wages do not take priority over an earlier mortgage or debenture registered against land, when money has been advanced under that mortgage or debenture.

If money has not been advanced under the mortgage or debenture, the director’s certificate of judgment has priority, regardless of when the mortgage or debenture was registered. The director’s registered certificate of judgment also takes priority over other judgments, no matter when those judgments were registered.

Example

ABCB Company owes wages to its employees. The director, in pursuing the wage claims, issues a certificate of judgment against land owned by ABCB Company. The bank has a prior registered mortgage or debenture against the same property, on which the funds have been released to the company. The director’s claim would not displace the bank’s ranking, so the bank would be paid out of the sale of the property before the director.


Related Information

Related sections of the Act or Regulation

ESA

ESR

Other

Talent Agencies in British Columbia

See Employment Standards Factsheets

Labour Relations Code, [RSBC 1996] Chapter 244

Industrial Relations Act

Personal Property Security Act, [RSBC 1996] Chapter 359


Factsheet

Enforcement Measures and Penalties