Employment Update

Although it is well established that employers owe temporary foreign workers the same obligations as those owed to Canadian citizens and permanent residents, employers often struggle with understanding the particular obligations attached to the termination of temporary foreign workers and the resulting aftermath.

Here are five things employers need to know in connection with the termination of temporary foreign workers:

1. The type and nature of the work permit held by the temporary foreign worker will dictate the applicable post-termination obligations

Employers should establish whether or not the employee is in fact a temporary foreign worker. Save certain specific exceptions that allow a foreign national to work in Canada without a work permit, most temporary foreign workers need to first secure either an open work permit or a closed work permit in order to be authorized to work in Canada. An open work permit generally allows the holder to work in Canada in any occupation and location and for any employer. Contrary to an open work permit, a closed work permit, also known as an employer-specific work permit, is the type of work permit that will restrict the holder to work in a specific occupation and location and for a specific employer.

After having established whether the work permit of the employee to be terminated is open or closed, employers should then determine the nature of the work permit. Work permits are either issued under the Temporary Foreign Worker Program (“TFWP”) or the International Mobility Program (“IMP”).

Work permits issued under the Temporary Foreign Worker Program

Work permits issued under the TFWP require a positive Labour Market Impact Assessment (“LMIA”) confirmation from Employment and Social Development Canada (“ESDC”). In order to obtain a positive LMIA confirmation from ESDC, employers need to demonstrate that there are no qualified Canadian citizens or permanent residents to fill the job position and that the hiring of the temporary foreign worker will not have a negative impact on the Canadian labour market. LMIA-based work permits issued under the TFWP are always closed.

Work permits issued under the International Mobility Program

Unlike the TFWP, which helps employers find solutions to labour shortages or evaluates the impact that the hiring of a temporary foreign worker will have on the Canadian labour market, the IMP is aimed at advancing Canada’s broad economic and cultural national interest. Work permits issued under the IMP are exempt from the LMIA requirement.

LMIA-exempt work permits issued under the IMP may either be closed or open depending on the stream used by the employee to secure his or her work permit (e.g., NAFTA/GATS, Intra-company Transfer Program, International Experience Canada, Post-Graduation Work Permit Program, etc.).

2. Situations where the employer must report the termination

Employers that have nominated temporary foreign workers under the Provincial Nominee Program (“PNP”) are generally required to report to the appropriate provincial PNP office about a change of employment status. A change of employment status includes terminations, lay-offs and resignations. It is important for employers to be aware that the termination of temporary foreign workers who have a pending permanent residence application under the PNP may negatively affect their eligibility to become permanent residents, particularly in situations where the PNP approval was contingent upon maintaining arranged employment in Canada.

In accordance with the TFWP rules, employers must report to ESDC any change in the employment status of temporary foreign workers holding LMIA-based work permits.

The IMP rules do not require employers to report to ESDC or Immigration, Refugees and Citizenship Canada (“IRCC”), formerly Citizenship and Immigration Canada, a change in the employment status of temporary foreign workers holding LMIA-exempt work permits, regardless of whether their work permits are open or closed.

However, in all cases, if the employer has grounds to believe that the temporary foreign worker may attempt to work in Canada illegally after a termination, lay-off or resignation, we recommend reporting the situation to IRCC and the Canada Border Services Agency.

3. Return transportation costs must be paid to temporary foreign workers in low-wage positions hired under the TFWP

If temporary foreign workers are hired in low-wage positions under the TFWP, employers are required to pay for the return transportation costs of the temporary foreign workers to their home countries until their LMIA-based work permits expire. Since an eventual change in the employment conditions may affect the effective departure date of the temporary foreign worker, it is recommended that employers do not purchase return tickets at the time of hiring but only near the expiration date of the temporary foreign worker’s work permit.

If the terminated temporary foreign worker secures a new work permit to work for another employer in Canada or becomes a permanent resident, the original employer would then no longer be required to pay for the return transportation costs.

4. Wrongfully terminated temporary foreign workers holding closed work permits may be entitled to an increased notice period

In the context of wrongful dismissals, relevant jurisprudence reveals that employers may be required to provide an increased notice period to temporary foreign workers holding closed work permits. This is explained by the fact that courts are becoming more sensitive to the challenges that temporary foreign workers face when temporary foreign workers try to secure alternative employment in Canada, particularly when their work permits are tied to a specific employer.

For the purpose of calculating the appropriate notice to be provided to a temporary foreign worker, employers should take into account the type and nature of the work permit held by the employee as well as the remaining period of the work permit’s validity.

5. Terminated temporary foreign workers are authorized to remain in Canada until their work permits expire

Temporary foreign workers are entitled to remain in Canada until their work permits expire. Although a termination does not invalidate the holder’s work permit, terminated temporary foreign workers may face complications if they decide to leave and re-enter Canada on the basis of their work permits.