Interpretation Guidelines Manual British Columbia Employment Standards Act and Regulations
EMPLOYMENT STANDARDS ACT - PART 11 - ENFORCEMENT
ESA Section 89 – Demand on third party
The director can collect money from a third party if that money is owed to or held for a person required to pay money under a determination, a settlement agreement or an order of the tribunal. This section sets out how and in what circumstances the director may issue a demand and the obligation on the third party who receives it.
89. (1) If the director has reason to believe that a person is or is likely to become indebted to another who is required to pay money under a determination, a settlement agreement or an order of the tribunal, the director may demand in writing that the person pay to the director, on account of the other's liability under the determination, settlement agreement or order, all or part of the money otherwise payable to the other person.
(2) A person on whom a demand is made under this section must, if indebted to the other person, pay to the director or to someone specified by the director the amount demanded, within 15 days after the later of
(a) the date the demand is served, and
(b) the date the person named in the demand becomes indebted to the other person.
(3) The director's receipt for money paid by a person in response to a demand is proof that the person's liability to the person required to pay under the determination or settlement agreement or under the order of the tribunal is discharged to the extent of the amount stated in the receipt.
(4) For the purposes of this section, a savings institution is indebted to a person required to pay under a determination or settlement agreement or under an order of the tribunal for money or a beneficial interest in money in the savings institution
(a) on deposit to the credit of that person when a demand is served,
(b) held in trust by a depositor for that person when a demand is served, or
(c) deposited to the credit of that person after a demand is served.
(5) A demand made under this section continues in effect until it is satisfied or until it is cancelled by the director.
The director has the authority to collect money from a third party that owes money to, or is holding money for, a person named in a determination, settlement agreement or an order of the Employment Standards Tribunal. The determination, settlement agreement or order is normally filed in court prior to the demand being issued but this is not a requirement of the Act.
The following criteria apply to issuing a demand:
- the demand must be in writing
- one of the following must have been issued:
- a determination under s.79.
- a settlement agreement under s.78.
- an order of the Tribunal under s.115.
- the director must have reason to believe the third party is, or is likely to become, indebted to the person named on the demand
Collection action can begin at any time after the determination of the director, a settlement agreement, or order from the Tribunal has been issued.
The director may make a decision to start collection action before the end of the appeal process, in particular cases. This decision could be based on such things as a history of non-compliance, the economic viability (distress) of the business, or knowledge that the employer is planning to leave the province.
One demand can be issued to cover several determinations of the director, settlement agreements, or orders of the Tribunal including any interest that has accrued under s.88 of the Act.
Referral of an arbitration board decision
Where an arbitration board has referred a decision to the director for the purposes of collecting the wages under s.3(8) of the Act, the director may also enforce compliance under ss.87 to 97 and s.99 of the Act, as though it were an order of the tribunal.
The person who owes money to an employer must pay the money:
- within 15 calendar days of the demand being served, or
- within 15 calendar days after becoming indebted to the person named in the demand
whichever is later.
The demand will set out the amount owing. Individuals on whom demands are served must pay the amount for which they are indebted to the person named on the demand, up to the full amount of the demand.
If the person remits an amount less than the amount set out on the demand, that demand remains in effect until the director cancels it or the demand is satisfied.
A demand for $550 is served on the bank. Only $300 is in the employer’s account. The bank has 15 days to remit to the director the money in the account. The bank sends the $300 to the director within 15 days. One month later, the employer deposits the rest of the money in the account. The bank must remit the balance ($250) within 15 days of the deposit.
A customer of a company named on a determination is billed on June 1st for services rendered. The invoice from the company states payment is due on July 15th. The customer is then served with a demand notice on June 3rd. The customer must now pay the director instead of the company (to the extent of the demand notice) within 15 days of the due date of July 15th.
The director’s receipt is evidence that the amount received under the demand has been paid and this receipt is proof that the person’s liability to the person named in the demand is discharged, to the extent of the amount of the receipt.
For purposes of the Act, a savings institution such as a bank or credit union is considered to be indebted to a person when they hold money or a beneficial interest in money for the person named on a demand.
Money, or beneficial interest, includes but is not limited to bank accounts, stocks, bonds, GIC's, mutual funds, term deposits and other money held in trust by the savings institution. Further, the director has priority over the bank or credit union to money deposited to the account after the demand is served. The demand would rank in priority over the loan payment the bank is owed.
An employer has a term deposit which matures in 60 days. The demand is served 45 days prior to maturity. The bank has 15 days from the date of maturity to remit the amount to the director.
Financial institutions are liable to pay demand notices on joint bank accounts only if determinations have been issued against all of the joint account holders.
Related sections of the Act or Regulation
- s.3, Scope of the Act
- s.78, Settlement agreements
- s.79, Determinations and consequences
- s.85, Entry and inspection powers
- s.90, Failure to comply with demand
- s.119, Extraprovincial certificates
- s.122, Service of determinations and demands
- s.25, Interest on money owing by employer
- s.26, Investigation without a complaint
- s.27, Interest on money received by the director
- s.29, Administrative penalties
Enforcement Measures and Penalties