When promises of payment become promises to pay: Are there risks around honourariums?

The B.C. Civil Resolution Tribunal’s recent decision dismissing claims by three Richmond volunteers offers a timely reminder to Canadian employers: the line between gratitude and obligation can be surprisingly thin when money changes hands for what might be considered work.

The participants in a pedestrian safety project run by the Richmond Poverty Reduction Coalition thought they had earned their $200 honouraria simply by showing up to a few meetings. The tribunal disagreed, ruling that “an honourarium is not the same as wages for a fixed-term of employment. Rather, it is generally an expression of gratitude or recognition for volunteer work.”

More tellingly, the decision found “no legal basis” to thank the participants for volunteer work they did not do.

At first glance, this might seem like a straightforward case about difficult volunteers who attended only a handful of meetings before conflicts arose. But strip away the interpersonal drama, and you’re left with a fundamental question that keeps employment lawyers busy: when does a promise of payment create a contractual obligation?

That answer matters plenty in an era where organizations increasingly engage volunteers, community participants, and gig workers in programs that blur traditional employment boundaries. From corporate social responsibility initiatives to community engagement projects, could the promise of modest payment transform what appears to be volunteerism into something resembling work?

The government’s careful line

The federal government has thought carefully about this distinction. Treasury Board guidelines explicitly state that honourarium payments “should always be gratuitous” and that “the decision to provide an honorarium should have no influence on the decision of the individual to participate or volunteer their time.”

More crucially, the guidelines warn that “a service contract should be established where there is an expectation that compensation will be provided for a service rendered even where the payment may be nominal.”

This isn’t bureaucratic hairsplitting. Universities across Canada have also developed detailed policies to help ensure these payments don’t trigger serious consequences. The University of Waterloo warns that incorrectly coding honouraria can result in “the University being in violation of federal and provincial tax regulations,” “a reassessment by the Canada Revenue Agency,” and even violations of employment standards legislation.

The distinction hinges on a deceptively simple principle. Carleton University and the University of Waterloo both emphasize that “if payment is agreed upon, this constitutes a contractual arrangement.” As Waterloo puts it: “This means that an employment or independent contractor (business) relationship exists.”

When good intentions meet legal reality

Consider the practical implications. A company launching a community consultation process promises participants $100 for attending three sessions. Sounds harmless enough — after all, it’s just covering time and travel costs. But if participants can reasonably expect that payment simply by showing up to the prescribed number of meetings, have you just accidentally created an employment relationship?

The Richmond case suggests not, but only because no written agreement existed and the participants attended so few meetings. The tribunal noted that “the participants need to prove that the RPRC breached the parties’ verbal agreement about the project.” They couldn’t, partly because their attendance was sporadic and the organization had legitimate reasons for the conflict.

But what if the facts were different? What if participants had attended regularly, fulfilled their obligations, and were excluded for reasons having nothing to do with their performance? The tribunal’s reasoning suggests the outcome could have been different.

The $500 threshold and beyond

Some institutional guidelines set $500 as the annual threshold for treating payments as potentially more than nominal. The Canada Revenue Agency supports “small payments that are not subject to the usual tax rules” provided they meet specific criteria: they’re “nominal,” “made to an individual for voluntary services for which fees are not legally or traditionally required,” and “made on a one-time or non-routine basis.”

But amount alone doesn’t determine the legal relationship. As the Treasury Board guidelines make clear, even nominal payments can create contractual obligations “where there is an ongoing or recurring nature to the payment.” Pattern and expectation matter as much as dollar figures.

This creates a particular challenge for organizations running multi-session programs. Each individual payment might be modest, but the cumulative effect of regular, expected payments can shift the legal landscape.

Building the proper foundation

Organizations are learning to be explicit about their intentions from the outset. Government guidelines recommend that “the decision to provide an honorarium should have no influence on the decision of the individual to participate.”

This means being clear that participation is genuinely voluntary and that any payment is truly gratuitous — determined only after the work is completed.

The alternative is to acknowledge what you’re really doing and structure it properly as a service contract. As Treasury Board guidance notes: “Departmental managers should consult their procurement functions to determine the appropriate form of contract.”

It might be better to pay someone $500 under a clear consulting agreement than to pretend a $200 “honorarium” carries no obligations.

The Richmond coalition’s experience illustrates the stakes. While they ultimately prevailed, they were forced to deal with legal proceedings over $600 that was probably never owed anyway. For organizations genuinely trying to recognize volunteer contributions, that’s a cautionary tale about the importance of getting the structure right from the beginning.

In an employment landscape where every interaction is scrutinized for signs of hidden obligations, clarity isn’t just good practice — it’s protection. The lesson isn’t to avoid recognizing volunteers financially, but to ensure that when you do, both you and they understand exactly what kind of relationship you’re creating.