IRCC/ESDC Employer Compliance Inspections

IRCC/ESDC Employer Compliance Inspections

18th Jun 2018 Comments Off on IRCC/ESDC Employer Compliance Inspections

Last updated on March 8th, 2019

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. 

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Buying a Business that Has Foreign Workers

31st Mar 2018 Comments Off on Buying a Business that Has Foreign Workers

Last updated on June 20th, 2018

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,

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