IRCC/ESDC Employer Compliance Inspections

All employers of temporary foreign workers in Canada need to understand how the employer compliance regime works. Both Immigration, Refugees and Citizenship Canada (“IRCC”) as well as the Department of Employment and Social Development (“ESDC”) regularly audit and inspect the employers of foreign workers to make sure that they are complying with the Temporary Foreign Worker Program and/or the International Mobility Program (which are the two main programs through which foreign nationals can work in Canada). Both ESDC and IRCC have indicated that about 25% of employers can expect an inspection in any given year.

Most of these inspections and audits start with the employer receiving a letter from the Government of Canada informing them that they will be examined on a multitude of factors, including whether they have employed the foreign national in the job that they were supposed to, whether they paid the wages that they were supposed to, whether the employer complied with laws regulating employment, whether they maintained records and whether they took reasonable efforts to provide a workplace that was free of abuse.

I have embedded below the standard employer compliance letter that is sent out at the start of an audit.

Consequences of Non-Compliance

There are several consequences to Canadian employers of non-compliance with the Temporary Foreign Worker Program and/or the International Mobility Program, including possible fines and prohibitions on hiring foreign workers. The fines can range from a few hundred dollars to up to a maximum of $1,000,000.00 in a calendar year. The bans can range from a few months to a permanent ban.

The Government of Canada maintains what is commonly called an Employer Blacklist on its website. The Employer Blacklist provides a good example of the types of fines and prohibitions that employers who have been found to be non-compliant can expect.

Buying a Business that Has Foreign Workers

As an increasing number of Canadian employers employ foreign workers, and the Government of Canada is taking an increasingly strict approach in enforcing the rules regulating the employment of foreign workers, the issue of how companies can protect themselves when they buy companies that employ foreign workers is becoming increasingly significant.

As well, as explained in detail on the Immigration, Refugees and Citizenship Canada (“IRCC”) website, corporate restructurings, mergers and acquisitions may themselves trigger work permit-related issues for employer compliance.

It is accordingly important for all companies that are considering merging with or acquiring another company to consider whether (a) the transaction will result in the need for new work permits for existing employees and (b) whether the company that will be employing these foreign workers will become liable for any non-compliance of the previous entity.

Understanding the “Successor in Interest” Concept

While the IRCC website is clear that employers become responsible for compliance post restructuring, merger or acquisition, the issue of whether the new employers become liable for previous non-compliance is more nuanced, and depends on whether the new employer has become the “successor in interest” for the portion of the organization where the temporary foreign workers were employed.

A “successor in interest” occurs where the new company or the purchaser substantially assumes the interests and obligations, assets and liabilities of the original owner and continue to operate the same types of business as the original owner. There is no fixed definition of what “substantially assumes” entails, but companies should consider whether the new entity post restructuring, merger or acquisition has assumed the current assets, long term investments, property, human resources, patents, accounts payable, current liabilities, long-term liabilities, and continued employment of employees.

If the take-over organization is a successor in interest in that it has substantially assumed the interests,

Assessing the Genuineness of a Work Permit Offer of Employment

Canada’s Immigration and Refugee Protection Regulations (the “IRPR“) states that a work permit application must be refused if an officer determines that the offer of employment is not genuine.

Section 200(5) of the IRPR states that in order to determine whether an offer of employment is genuine an officer should consider (a) whether the offer is made by an employer that is actively engaged in the business in respect of which the offer is made, (b) whether the offer is consistent with the reasonable needs of the employer, (c) whether the terms of the offer are terms that the employer is reasonably able to fulfill, and (d) the past compliance of the employer with federal or provincial laws that regulate employment.

Immigration, Refugee and Citizenship Canada’s (“IRCC“) guidelines contain extensive instructions to officers on assessing the genuineness of the offer of employment on a work permit application.

Actively Engaged

In order to demonstrate that an employer is actively engaged in the business an employer must do all of the following:

have an operating business;
provide either a good or a service; and
have a physical work location in Canada where the temporary worker will work.

The following are some red flags that can trigger an in-depth assessment of whether a company is actively engaged in the business.

the business information in the offer of employment raises concerns with respect to the organization’s active engagement in a business (such as being less than 1 year old);
there is negative publicly available information regarding the organization; and
previous work permit applications were refused because officers had concerns about whether an employer was actively engaged in the business.

Global Skills Strategy – Short Term (15 or 30 days) Work Permit Exemption

On February 6, 2018 Immigration, Refugees and Citizenship Canada (“IRCC”) clarified how its short term work permit exemption under the Global Skills Strategy would work. Previously, the IRCC website simply stated:

Now, the IRCC website provides a much more comprehensive explanation of how the short term work permit exemption under the Global Skills strategy works.

General Conditions

The short-term (15 or 30 days) work permit exemptions are for certain high-skilled work and apply to foreign nationals coming to Canada to perform work that is both of a short duration (15 consecutive calendar days or 30 consecutive calendar days) and is in an occupation that is listed in skill type 0 (management occupations) or skill level A in the National Occupational Classification (“NOC”) matrix.

Such individuals may work in Canada without a work permit.

The periods can be as follows:

15 consecutive days (if the foreign national has not been granted a work permit exemption under the Global Skills Strategy facilitating entry into Canada for short-term work in the last 6 months); or
30 consecutive days (if the foreign national has not been granted a work permit exemption under the Global Skills Strategy facilitating entry into Canada for short-term work in the last 12 months).

The short-term work permit exemptions do not exempt people from the requirement to obtain a temporary resident visa or an electronic travel authorization, if applicable.

Entering and Exiting Canada

While foreign nationals are allowed to exit and re-enter Canada within the prescribed time frame (15 or 30 consecutive days) of work under the exemption, the authorized work period begins on the date the exemption is granted and is counted consecutively,

Work Permits for Post-Doctoral Fellows and Research Award Recepients

Immigration, Refugees and Citizenship Canada has a Labour Market Impact Assessment (“LMIA“) exemption for post-doctoral fellows awarded a Doctorate of Philosophy and research award recipients. The advantage of such an exemption is that a person can obtain a work permit without the need of the prospective employer to first test the Canadian labour market.

Post-doctoral fellows holding a Ph.D. or its equivalent

To qualify for a work permit under this LMIA exemption, the prospective foreign worker must:

have completed, or be expecting to complete shortly, their doctorate;
be working in a field related to that in which they earned, or are earning, their Ph.D.;
be the direct recipient of the award involving work and remuneration;
actively contribute to and benefit a Canadian research project;
demonstrate academic excellence or expertise in a field related to the particular work to be undertaken;
be working in a time-limited position that reflects the experience and expertise of the applicant and the role that they will play on the project;
have a significant role to play or value to add to the research project.
hold an official position or an affiliation or registration with a credible academic or educational institution or agency in their country of citizenship or residence.

The post-doctoral fellows can either be the direct recipients of theaward or be offered a time-limited position to undertake research on behalf of or as part of a team of researchers.

Awards

In order for a person to receive a work permit based on an award, the prospective foreign worker must have received an award that was:

given based on merit and academic excellence;
based on the result of a competitive assessment and review process.

Work Permits for Camp Counsellors

As of March 1, 2017, camp counsellors going to residential camps during the summer season are exempt from the Labour Market Impact Assessment (“LMIA“) requirement. They can apply for work permits once their employers submit their online offers of employment into the employer compliance portal.

Religious Camp Counsellors

Religious camp counsellors should note that they should not be indicating in their online offer of employment offers that the LMIA exemption code is religious or charitable work under LMIA exemption code C50. Immigration, Refugees and Citizenship Canada (“IRCC”) has determined that the normal work of a camp counsellor (whose primary duties consist of supervising children and leading sports, crafts, games and other recreational activities) is not considered religious in nature. Rather, LMIA exemption code C20 should be used.

In the case of a counsellor who is unpaid and who works for a charitable or religious organization, an employer compliance fee fee exemption may apply. To be fee-exempt, the foreign national cannot receive remuneration other than a stipend for living expenses, which, if monetary, should be below the prevailing minimum wage. Otherwise, the foreign national should receive only non-monetary benefits (e.g., accommodation and health care). It is the responsibility of the organization to prove that they are charitable or religious.

More information about this can be found here.

Foreign Worker Stats – 2004 – 2014

The following are some interesting stats on the number of foreign workers in Canada from 2004 – 2014.

The first chart is for the number of foreign workers in the Temporary Foreign Worker Program from 2004 – 2014. The top four countries where the Philippines, India, the United States of America, and Mexico.

In the International Mobility Program the top 5 countries are very different. There, it is the United States of America, India, China, and France.

The data also shows that from 2004 – 2014 the number of temporary foreign workers in Canada more than doubled from 86,551 to 177,704. Almost all of this growth was in the Labour Market Impact Assessment Program, with most of it being lower-skilled foreign workers.

There was also considerable growth in the International Mobility Program, with the number of work permit holders going from 110,525 to 390,273 during the period from 2004 – 2014. Much of the growth came from the introduction of the Post-Graduate Work Permit Program, International Experience Canada, and C-10 applications.

LMIA Cap on Low Wage Employees

Canada’s Temporary Foreign Worker Program (the “TFWP“) allows employers to bring foreign workers to Canada to temporarily fill jobs for which qualified Canadians are not available. After the program became increasingly controversial in 2012-13, the Department of Employment and Social Development Canada (“ESDC“) on June 20, 2014 imposed a cap limiting the proportion of low-wage foreign workers that businesses can employ.

How the Cap Works

Employers with a company-wide business size of 10 or more employees are subject to the cap. The cap percentage is determined for each individual worksite location and is based on paid positions and total hours worked at that worksite.

Employers that are new to the TFWP or returning employers who did not have any foreign workers on staff on June 20, 2014 are capped at 10% low-wage foreign workers for each work location.

The cap, implemented on June 20, 2014, was phased in to provide employers time to transition to a Canadian workforce which means that they are limited to a:

20 percent cap on the number of foreign workers in low-wage positions, or the employer’s established estimated cap (whichever is lower), if the employer hired a TFW in a low-wage position prior to June 20, 2014; or
10 percent cap on the number of foreign workers in low-wage positions if the employers did not employ a TFW in a low-wage position prior to June 20, 2014.

Effectively, companies are limited to a 10% cap on the proportion of low-wage foreign workers that they can have. The low-wage is based on a province’s median wage, which as of writing is as follows:

Province/Territory
Wages prior to

May 3, 2018

2016 Wage ($/hour)
Wages as of

May 3,

IRCC Clarifies Non-Compliance in the International Mobility Program

It is imperative that employers hiring foreign workers in the International Mobility Program (“IMP“) understand the consequences of non-compliance. Immigration, Refugees and Citizenship Canada (“IRCC“) has finally published information on its website which summarizes how it will determine when non-compliance has occurred and what the consequences will be.

Since December 1, 2015, IRCC has had the legislative authority to apply administrative tools, including warning letters, administrative monetary penalties (“AMPs“) and bans on employers accessing the IMP to certain employers where an IRCC officer has determined that an employer has breached the terms and conditions of participating in the IMP.

Breaches that Occurred Before December 1, 2015

It is important to note that the AMP and the bans described below only apply to employer breaches that occurred after December 1, 2015. The penalty to an employer for unjustified breaches that occurred prior to December 1, 2015 is a two-year ban on that employer from being able to hire foreign workers under the IMP. However, while the consequences to an employer for being found non-compliant changed on December 1, 2015, the way in which IRCC assesses whether non-compliance has occurred remains substantially the same.

The Administrative Monetary Penalty Regime

Under IRCC’s AMP regime, employer non-compliance is divided into three types of violations.

Type A violations include where an employer:

is unable to demonstrate that any information that it provided in respect of a foreign national’s work permit application was accurate during a period of six years beginning on the first day of the foreign national’s employment;
did not retain document(s) that relates to employer compliance during a period of six years, beginning on the first day of the foreign national’s employment
did not report at any time and place specified by IRCC to answer questions and provide documents during an IRCC inspection of the employer’s compliance with the IMP;

Free trade agreements help those who want to work in Canada, but the Trump presidency could impact Americans

On Oct. 30, 2016, Canada and the European Union signed the Comprehensive Free Trade Agreement (CETA), which, amongst other things, will make it easier for European Union citizens to work in Canada without their employers first needing to obtain labour market impact assessments (LMIA).

CETA is only the latest free trade agreement that Canada has signed. One of the first steps that a foreign national who is interested in working in Canada should do is determine whether their home country has signed a free trade agreement with Canada. If so, they should check if the agreement encompasses their specific area of employment.

LMIA vs. free trade agreements

The main benefit of a free trade agreement encompassing one’s employment is that the person’s potential Canadian employer does not need to first obtain a positive or neutral LMIA prior to the foreign worker being able to obtain a Canadian work permit.

LMIAs can be a very cumbersome process. They generally require that an employer conduct domestic recruitment, meet prevailing wage requirements, complete numerous application forms, enter into a transition plan, and pay a $1,000 per foreign worker application fee. For many employers, obtaining LMIAs is simply too great an obstacle to employing foreign nationals in Canada.

It is much easier for employers to employ workers who are encompassed by free trade agreements. Employers must simply enter information about the proposed job offer into the Immigration, Refugees and Citizenship Canada website, pay a $230 employer compliance fee and provide a written job offer to the prospective employee.

Free trade agreements

As of writing, Canada has free trade agreements that contain immigration provisions in force with the United States, Mexico, Chile, Peru, Colombia and South Korea.

The North American Free Trade Agreement (NAFTA) is a free trade agreement between the United States,