Industrial Benefits

Before any work or activity is authorized in the Offshore Area, the Operator must submit a Canada-Newfoundland and Labrador Benefits Plan for approval by the C-NLOER, unless the C-NLOER directs that a Benefits Plan is not required. Approval of a Benefits Plan is not a fundamental decision, and therefore not subject to subsequent approval by Ministers.

In accordance with the requirements of the Acts, the Operator’s Benefits Plan must contain specific provisions to ensure that:

• The Operator shall establish an office in the province where appropriate levels of decision-making are to take place;
• Individuals resident in the province shall be given first consideration for training and employment;
• Expenditures shall be made for research and development to be carried out in the province and for education and training to be provided in the province;
• First consideration shall be given to services provided from within the province and to goods manufactured in the province, where those services and goods are competitive in terms of fair market price, quality and delivery; and
• Designated individuals or groups have access to training and employment opportunities and to enable such individuals or groups, or businesses owned or operated by them, to participate in the supply of goods and services.

The C-NLOER has developed the Benefits Plan Guidelines to assist Operators in the preparation of a Benefits Plan. These guidelines also include information on Research and Development expenditures and preparing Exploration Benefits Plans.

The legislation requires that a Benefits Plan contain provisions intended to ensure that, while respecting the Charter of Rights and Freedoms, qualified individuals resident in the province shall be given first consideration for training and employment in the work program for which the plan was submitted. The C-NLOER defines a Newfoundland and Labrador resident as a Canadian citizen (or permanent resident) who meets the residency requirements of the province as defined by the Elections Act, 1991 (i.e., principal residence is in the province).

The first consideration provision of the legislation clearly requires that the Operator and its contractors look first to the Newfoundland and Labrador labour market to meet their human resource requirements.

Employers have the right to establish, in advance of the recruitment process, the qualifications, experience and competencies required of candidates for employment. However, the first consideration obligation means that once the requirements for a position have been established, a Newfoundland and Labrador resident who meets these requirements must be given preference for employment.

Where an Operator is a party to a collective agreement, paragraph 45(3)(b) of the Atlantic Accord Implementation Acts (Acts) requires such agreements to include first consideration for employment and training.

Prior to both the construction and operations phases of any major development, employment plans for the Operator and each major contractor are required to be submitted to the C-NLOER, including strategies, where applicable, for succession of qualified residents of the province, and other Canadians, to any positions held initially by Non-Canadians.

During the hiring process for importation of new vessels and installations into the Canada-Newfoundland and Labrador Offshore Area, the C-NLOER will review the proposed crew complement and monitor the employer’s efforts to hire available and qualified Newfoundland and Labrador and other Canadian residents. The C-NLOER will review vessel crew rosters and the level of Non-Canadian crew to identify opportunities for replacement of Non-Canadian crew with Newfoundland and Labrador and other Canadian crew members.

Employers’ hiring of temporary foreign workers is outside the scope of the C-NLOER’s review. In practice, the C-NLOER considers the reasonableness of the overall employment levels of Newfoundland and Labrador, other Canadian, and Non-Canadian residents and where appropriate, may require succession plans for replacement of foreign workers, and that employers consider training and mentoring opportunities to prepare residents of the province for future opportunities. The C-NLOER takes a long-term view of foreign worker hiring and accepts that some positions may be occupied by foreign workers, particularly in senior management roles, subject matter experts, and onboard specialized vessels.

Operators provide regular quarterly and annual reports to the C-NLOER on employment levels and are responsible for ensuring that they and their contractors meet the commitments of their approved benefits plan.

For further information on Benefits Plan provisions in relation to employment and training, refer to the Benefits Plan Guidelines.

The legislative requirement for expenditures related to research and development and education and training (hereinafter referred to collectively as ‘R&D/E&T’) in the province is contained in Section 45 of the Atlantic Accord Implementation Acts (Acts).

Section 151.1(1) of the Acts (reference herein to federal version) authorizes the C-NLOER to issue and publish in such manner as it deems appropriate, guidelines and interpretation notes with respect to the application and administration of Section 45.

In 2004, the C-NLOER issued Guidelines for Research and Development Expenditures (superseded by the Benefits Plan Guidelines) and since that time, has annually calculated an R&D/E&T spending obligation for each producing project. The Regulator annually calculates an operator’s required amount of R&D/E&T spending under the Guidelines using this formula:

Annual oil production x oil price x US-CAD $ exchange rate x 5-year average of Statistics Canada R&D Benchmark

With effect from January 1, 2017, the five-year average of the Statistics Canada R&D Benchmark is capped at 0.5% (0.005).

Operators may submit a R&D/E&T Work Expenditure Application to the C-NLOER for eligibility determination and pre-approval of a R&D/E&T activity.

Each year, actual R&D/E&T expenditures are required to be reported by Operators to the C-NLOER, and are reconciled against the spending obligation. For historical expenditure information, refer to the Project Eligible Expenditures in Research & Development/Education & Training.

For further information on Benefits Plan provisions in relation to research and development and education and training, refer to the Benefits Plan Guidelines.

News Release: Competitiveness and Regulatory Certainty in Research and Development Expenditures Provided in the Canada-Newfoundland and Labrador Offshore Area

Letter to Current Petroleum Operators and New Entrants