Canada’s immigration legislation and programs are designed to assist the entry into Canada of business people and foreign skilled workers. The Canadian system also facilitates the entry of foreign businesses and businesspersons seeking to start new businesses or subsidiaries in Canada. Senior managers and key personnel may obtain work permits to allow them to work in Canada on behalf of a foreign business or a related Canadian entity.

The purpose of this article is to provide an overview of Canada’s work permit and immigration rules relating to sending or hiring foreign nationals to work in Canada.

Canada's Immigration and Refugee Protection Act (IRPA)

IRPA and its Regulations affect business operations, human resource planning and potential liability. For example, the legislation:  

  • Affects the ability to hire foreign workers for positions in Canada  
  • Has an impact on foreign service providers or business people wishing to come into Canada for business purposes  
  • Exposes companies and individuals to liability for breaches of IRPA  
  • Affects the ability of foreign national employees to acquire Canadian permanent resident status  

Canada’s Work Permit Rules – A General Overview

As a general rule, no person, other than a Canadian citizen or permanent resident, may work in Canada without valid authorization. So the first question to ask is whether or not a foreign national entering Canada requires a work permit.

"Work" is widely defined as "an activity for which wages are paid or commission is earned, or that is in direct competition with the activities of Canadian citizens or permanent residents in the Canadian labour market." If a foreign national is being sent or hired to work in Canada, he or she will require a work permit.

A work permit is a document that specifies the entity that the foreign national is legally entitled to work for in Canada, the occupation, and the location of employment. The work permit also has a specific validity period.

After assessing the person and the purpose of the entry, and determining that a work permit is required, the next step is to determine whether there is any work permit category under IRPA, under an international agreement (such as NAFTA) or under any government programs that fits the situation. If there is not, the employer must first apply to Service Canada (formerly HRSDC) to obtain a confirmation (called a labour market opinion or LMO) allowing employment to be offered to someone other than a Canadian citizen or permanent resident.

Labour Market Opinions (LMOs) Through Service Canada

Generally, the goal is to avoid the LMO process if possible. The reason for this is that it avoids the risk of Service Canada denying the LMO request. Secondly, having to apply for a LMO may delay the overall time frame for obtaining a work permit.

The application package for a LMO is detailed and must be prepared with great care. The entity wishing to hire the foreign national must demonstrate that it has met Service Canada’s recruiting requirements, and that the wage being offered meets the prevailing wage rate for the occupation and the location where the person will be employed. The recruiting requirements correspond to the skill level of the occupation under Canada’s National Occupation Classification (NOC) system.

Service Canada reviews a number of factors when assessing a LMO application, including

  • Whether the employer has made reasonable efforts to hire or train Canadian citizens or permanent residents.  
  • Whether the work of the foreign national is likely to result in direct job creation or job retention for Canadians or permanent residents;  
  • Whether the work is likely to result in the creation or transfer of skills and knowledge for the benefit of Canadians and permanent residents;  
  • Whether the work is likely to fill a labour shortage;  
  • Whether the wages and working conditions are sufficient to attract Canadian citizens or permanent residents.  

If a LMO is granted by Service Canada, it can then be used to obtain a work permit.  

If the foreign national will be working in the province of Quebec, special rules apply. In addition to the LMO from Service Canada, a CAQ must be obtained from Quebec’s Immigration ministry.

Other Work Permit Categories

There are a number of potentially useful work permit categories that are LMO exempt which employers should consider when hiring a foreign national in Canada. These include:  

1. Intra-Company Transferees

This work permit category is often used when a foreign entity wishes to start doing business in Canada. This provision is useful for transferring managerial or specialized personnel to Canada from a related foreign entity.

There are time caps that may limit the overall length of time that a foreign national may hold a work permit under this category. Executive or managerial transferees have a time cap of 7 years, while “specialized knowledge” transferees have a time cap of 5 years. Initial work permits are usually granted for a three year period. However, where the foreign national is being transferred to a start up company in Canada, the work permit will be granted for a one year period.

The basic rules are:

  • the transferee must be an executive, manager or have "specialized knowledge" and must be transferring into such a position;  
  • the applicant must have been employed full-time with the related foreign entity outside Canada for at least 12 consecutive months in the three year period prior to the application;  
  • there must be a proper relationship between the foreign entity and the Canadian entity receiving the transferee (for example, parent-subsidiary or affiliates owned and controlled by a common parent company).  

When setting up the corporate and ownership structure of a new business in Canada, consideration should be given to designing it in a way that will allow for the use of this work permit category.  

2. NAFTA Investor or Trader Categories

These work permit categories are potentially available to American and Mexican applicants who will be employed in Canada by enterprises with American or Mexican nationality. American or Mexican nationality means that at least 50 percent of the entity established in Canada must be held by American or Mexican citizens or entities.  

For the Investor category, the foreign national applicant must (a) be seeking entry solely to develop and direct the enterprise (“develop and direct” means that the applicant should have controlling interest in the enterprise) or (b) if an employee, be in a position that is executive or supervisory or involves essential skills. However, a one year work permit may be granted to an employee not possessing essential skills if the employee is needed for the start-up of a new enterprise, such as a technical employee needed to train Canadians who will be hired by the new business.

As well, a substantial investment has to be made. There is no set rule on what constitutes a “substantial” investment. It will depend on the circumstances and the nature of the business. The objective of the investor category is to promote productive investment in Canada. Therefore, an applicant is not entitled to this status if the investment, even if substantial, will produce only enough income to provide a living for the applicant and the applicant’s family.

For the Trader category, the foreign national applicant must be entering Canada to carry on substantial trade in goods or services principally between Canada and the United States or Mexico. To be “substantial trade”, over 50% of the total volume of trade conducted by the entity in Canada must be between Canada and the United States or Mexico. The applicant must be employed in a capacity that is executive or supervisory or involves essential skills or services.

Generally, the intra-company transferee category would be the preferable option for a work permit. However, in situations where the corporate structure does not support that category, or where the applicant has not worked for the related foreign company for at least 12 months, the NAFTA Investor or Trader category may provide a solution.

3. NAFTA Professional Category

The NAFTA Professional category may be used by eligible American and Mexican citizens. There is a similar provision in the Canada-Chile Free Trade Agreement that Chilean citizens may use.

NAFTA lists 63 professions that may be eligible for a work permit. The foreign applicant must usually have a university degree related to a listed profession, and the applicant must be entering to apply the skills of that profession. A three year work permit, which is renewable, may be obtained.

Some professions listed under NAFTA include: computer systems analysts, engineers, scientific technicians, management consultants, medical and some allied professions, and many scientific categories such as chemist, geologist and biologist.

4. Post-Graduate Work Permit Program

Foreign students who graduate from a Canadian post-secondary institution may apply for a postgraduate work permit. The application must be made within 90 days of written notification of graduation.

Foreign national graduates of eligible programs at most post-secondary institutions in Canada may obtain an open work permit without the requirement of first having a job offer. This type of work permit allows holders to work for any employer, or for multiple employers, in Canada.

The duration of a work permit under this category is three years where the foreign national is graduating from a program of study that takes at least two years to complete. If the foreign student's program is less than two years but at least eight months, the validity of the postgraduate work permit will be equal to the length of the period of study.

Post-graduate work permits or not renewable. Therefore, an extension beyond the initial period granted will first require a Service Canada LMO, or approval under another LMO exempt category. However, holders of post-graduate work permits will usually be able to transition to permanent resident status prior to the end date of the post-graduate work permit.

5. Spousal Employment Program

Spouses (including common law and same-sex spouses) of most foreign nationals working in Canada may apply for a work permit under the Spousal Employment Program. The principal foreign national must be working in a position that is at a higher skill level. Typically this includes management, professional occupations, and technical or skilled trades workers. This program may assist companies in their recruiting efforts, since accompanying spouses will be able to work in Canada.

6. Provincial Nominee Programs

Canadian provinces have Provincial Nominee Programs (PNPs) in place. Each of these provincial programs is different, but the general concept is that the PNPs are designed to facilitate the retention of existing foreign workers, and the recruitment of foreign skilled workers who are able to address skills shortages within the nominating province. Foreign nationals who qualify under a PNP are able to apply for permanent resident status on an expedited basis. If a foreign national is nominated under a PNP, they may obtain a work permit while the permanent resident application is being processed.

Ontario’s PNP includes an Investor category. To be eligible, the foreign company must: (a) Make an investment in Ontario of $10 million or more; and (b) Create at least 5 permanent fulltime positions in Ontario. Companies may request up to a maximum of five employees, known as nominees, for each qualifying investment they make in Ontario. Given the other work permit options available, foreign businesses should be able to find other work permit categories to bring in key personnel (such as the intra-company category). Permanent resident status could then be obtained once the foreign worker is in Canada.

7. The IT Workers Program

This program ended as of September 30, 2010. However, the program has been extended for six months for positions in B.C. and there will be a new program developed for employers in B.C. for I.T. Workers.

Employers wishing to hire software development workers proviously covered by this program must now apply for a LMO.

The IT Workers Program covered seven types of software occupations: software developer; MIS designer; software products developer; embedded systems software designer; senior animation effects editor; multimedia software developer; and telecommunications systems designer. Detailed descriptions of each job type were set out and included minimum educational criteria, work experience, technical knowledge and salary levels that had to be met. For example, candidates required at least two years of relevant work experience.

Other Immigration Issues

There are a number of other immigration considerations that need to be reviewed when bringing a foreign worker to Canada.

1. Is an Entry Visa Required?

Depending on the citizenship of the foreign national, an entry visa (called a “Temporary Resident Visa”) may be required before the person may enter Canada. Where this is the case, the work permit applicant must apply for both the work permit and the entry visa at a Canadian Visa Office abroad.  

2. Is an Immigration Medical Required?

Foreign nationals who have lived in certain designated countries for more than 6 months in the 12 months prior to the application, and who are coming to Canada for more than 6 months, require an immigration medical as a condition of entry. This requirement may delay the application process, as a work permit applicant who needs an immigration medical must apply through a visa office outside Canada.

3. Admissibility Issues

Beyond ensuring that the person is qualified for a particular work permit or immigration category, the foreign national (and any accompanying dependants) must not be inadmissible for such things as criminal convictions, medical problems or prior entry refusals. Where a candidate is inadmissible due to criminality, steps can sometimes be taken to remedy the situation depending upon the seriousness of the offence and the number of convictions.  

4. Dependants

The accompanying spouse and children of a foreign worker will need to acquire immigration documentation. For example, school-aged children may need to apply for a Study Permit or a Visitor Record. Spouses may qualify for a Work Permit under the Spousal Employment Program.  

5. Permanent Resident Status

Many foreign workers who obtain work permits in Canada eventually wish to apply for permanent resident status. Canada’s permanent resident rules are designed to help such foreign nationals gain permanent status. Employers that wish to retain foreign workers often provide support to the employee's application for permanent residence.

Other Considerations

There are numerous practical considerations beyond identifying the proper immigration or work permit category to use.

1. The Application Package and Supporting Documentation  

It is imperative to put together a strong application package when applying for a Service Canada LMO or for a work permit. By ensuring that an application is well documented and complete, the likelihood of it being approved is significantly increased. The extent and content of the material included in the application package will depend on the work permit category and the particular circumstances of each situation.  

2. Employment Issues  

Offers of employment and employment contracts for foreign workers must be carefully crafted. Offers of employment to foreign workers should be made conditional on the worker obtaining a work permit and maintaining valid status to work in Canada. We advise that transferred employees and foreign hires be asked to sign an employment contract during the hiring process to govern the employment relationship. While all aspects of the employment relationship should be addressed, it is particularly important to set out the jurisdiction that will govern the employment contract (especially in transfer situations), responsibility for relocation costs, and what will happen if a termination occurs (including the amount of notice to be provided by the employer).  

3. Tax Issues  

Different tax rates may need to be addressed in transfer situations. As well, there may be tax issues or withholding issues for the company or for personnel whenever income is being earned in another jurisdiction.  

4. Obtaining Health Coverage  

Health coverage is provided by provincial governments in Canada. Transferees or foreign hires and their dependants may be eligible for public health coverage. The eligibility rules of the province in question need to be examined. Private coverage should be arranged prior to entry to cover any waiting period. Extensions of Work Permits should be obtained early to avoid potential disruption in medical coverage.  

5. Social Insurance Numbers  

Foreign workers who will be paid in Canada will need a social insurance number. This may be obtained from a local Service Canada office or by mail. The Work Permit must be presented in order to obtain a social insurance number and card.

Conclusion

Companies in Canada may need to hire or engage foreign nationals to address their human resource needs. When hiring or recruiting foreign nationals, companies need to be aware of the applicable immigration rules, issues and options. When hiring a foreign national, it is also imperative to prepare strong application materials to support the immigration status being sought. Legal counsel can assist in assessing the work permit options and with preparing proper application packages.