Can People Working Without Status Enforce Contracts?

The Ontario Labour Relations Board (the “OLRB“) has just released a fascinating decision which involves the interplay between immigration and employment law.  The case involved a German foreign national who entered into an employment agreement with Essar Steel Algoma (the “Employer“) prior to Citizenship and Immigration Canada (“CIC“) issuing him a work permit to work for the company.  Things did not work out between the Employer and the foreign national, and the Employer terminated the relationship.  The United Steelworks of America (the “Union“) filed a grievance, and the issue of when the foreign national became an employee of the Employer arose.

The OLRB decision involved numerous factual determinations involving contested issues of when the foreign national alerted the Employer that he was a foreign national who required a work permit, whether the Employer promised the foreign national that obtaining a Labour Market Opinion (“LMO“) would be easy, and whether the Employer rescinded the foreign worker’s job offer upon the LMO being rejected.

Lurking in the background of these factual disputes was the legal issue of “when does a foreign national become an employee of an employer?”

The Union argued that as a matter of contract law a person becomes an employee of an employer at the instant when he accepts an unconditional offer of employment, even if the offer contemplates that he will not actually commence work for a period of time.  The Union further argued that there was no necessity for the person hired to have actually started work in order to be considered an employee.

The Employer argued that its employment agreement with the foreign national was illegal and unenforceable by reason of the foreign worker’s lack of a valid work permit. It further argued that the foreign national could not have accepted the offer because he did not have a work permit.

On the issue of whether the job offer was illegal, the OLRB found that it was not.  In doing so, the OLRB had to reconcile the fact that Canadian immigration law makes it illegal for a Canadian employer to employ a foreign national who is not authorized to work, yet at the same time generally requires a foreign national have a job offer with a Canadian employer before CIC can issue the foreign national a work permit (!).  The OLRB concluded that:

It would be easy to contrast sections 30(1) [of the Immigration and Refugee Protection Act, which states which states that a foreign national may not work in Canada unless authorized to do so] and 124(1)(c) of the Act [which makes it a crime to employ a foreign national not authorized to work], and reach the highly technical conclusion that s. 30(1) only prevents a foreign worker from working for a Canadian employer without a work permit, whereas s. 124(1)(c) prevents a Canadian employer from employing a foreign worker who does not have the appropriate work permit, whether that foreign worker performs work or not.  A strict reading of the two sections, and the different terminology employed, might lead to the conclusion that a Canadian employer could not have any kind of employment relationship with a foreign worker who did not have the appropriate work permit, and even that an offer of employment to a non-permit holding foreign worker would be illegal.

Such an interpretation, however, takes no account of the regulations under the Act, which clearly advert to the possibility that a job offer might be made to a foreign workers in advance of the issuance of a permit, and the requirement that the employer describe its job offer on the application for an LMO.  Moreover, the regulations, and the LMO itself (which must be issued before a work permit can be obtained), require that the employer comply with the terms of the job offer, except where it has reasonable justification for its failure to do so.  Further, it would be the height of absurdity to require an employer to take all of the steps necessary to obtain a positive LMO in respect of a foreign worker without having discussed with the worker the offer it was prepared to make, and having received from the worker an indication that he or she was prepared to accept those terms.  

I therefore conclude that, had the May 18 job offer not been rescinded, there would have been nothing illegal in the employer making a job offer to the grievor, or in his indication of acceptance of that offer.

[Emphasis Added]

However, while the job offer was not illegal, the OLRB nonetheless found that it did not create an employment relationship because the foreign national lacked the capacity to accept the offer.  The OLRB noted that:

However, the grievor’s acceptance of the offer would not, in these circumstances, create an employment relationship.  The grievor, in my view, was not in a position to finally accept the offer until such time as he had a work permit which permitted him to do so.  One of the purposes of the Immigration and Refugee Protection Act is to ensure that a foreign worker does not deprive a legal Canadian resident of a job which the Canadian is able and willing to perform.  This is the reason for the requirement that the job be advertised in Canada in advance of, and in support of, an application for an LMO and the subsequent issuance of a work permit.  The lack of such advertising was the reason that the employer’s first application for an LMO with respect to the grievor was rejected.  In my view, therefore, the grievor was not legally competent to finally accept the employer’s offer until August 4, when he obtained his work permit.  Thus, even absent the rescission issue, the employment contract could only have become effective on that date; and

This decision should not be interpreted as being that foreign workers who do not have authorization to work cannot enforce the terms of their employment agreements.  Such a principle would be contrary to public policy, and in any event even if the employment agreement were unenforceable the principle of unjust enrichment would likely necessitate enforcement of the contract.  It could, however, potentially have far reaching implications on the enforceability of job offers to foreign nationals prior to work permit issuance, and the ability of employers to rescind such offers.


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