As set out in a prior update, the Canadian government announced significant changes to the Temporary Foreign Worker Program in June. However, employers should also be aware of earlier amendments to the regulations of the Immigration and Refugee Protection Act (IRPA). These changes placed new statutory obligations on employers that engage foreign nationals in Canada.
Employers must be aware of these changes and must implement internal policies and practices to ensure ongoing compliance.
This update will set out some of the regulatory changes, and also recommend best practices for employers to implement.
Overview of Regulatory Changes
The regulatory amendments are part of a continuum of change which began in April 2013. The changes are stated to be aimed at “detecting and deterring” employer non-compliance.
The changes place more conditions on employers utilizing temporary foreign workers (“TFWs”), whether under Labour Market Impact Assessment (LMIA, formerly called LMO) based work permits or under LMIA-exempt work permits. The “look back” review period for compliance was increased from 2 years to 6 years (see details below). In addition, wide ranging inspection powers were provided to government inspectors.
Overall, the expansion of conditions and compliance requirements has increased the obligations on employers using TFWs. A non-compliant employer may be banned from using the program for two years. While the focus of the changes are supposed to be aimed at protecting foreign workers from exploitative employers, the regulatory changes are extensive enough that any employer using the program must take steps to minimize the risk of non-compliance.
An overview of the changes can be found in Regulatory Amendments and Ministerial Instructions Come Into Force.
Further details of some of these changes are set out below.
New Regulatory Conditions Placed on Employers
Statutory conditions imposed on all employers by the amendments (whether an LMIA is required for the TFW or not) include the following. These are in addition to regulatory conditions that were already in place when the amendments were made.
- An employer must be able to demonstrate that any information provided in relation to an LMIA and/or a work permit application was accurate and must retain any documentation that relates to compliance, for a period of 6 years beginning on the first day of the period of employment for which the work permit is issued.
- An employer must provide each TFW with employment in the “same occupation” as that set out in the TFW’s offer of employment, and with wages and working conditions that are “substantially the same as – but not less favourable” than “those in the offer”.
- An employer must make reasonable efforts to provide a workplace free of physical, sexual, psychological or financial abuse.
- An employer must comply with Federal and Provincial laws that regulate employment and the recruiting of employees.
There are further conditions placed on an employer issued a positive LMIA (in addition to those set out above). For example, an employer issued a positive LMIA may need to demonstrate that any of the factors that led to the issuance of the LMIA were met.
For example, if direct job creation was a factor that was cited in the LMIA application and which led to the issuance of the LMIA based work permit, the employer must be able to demonstrate that such direct job creation occurred. Failure to be able to do so, without justification, may result in a finding of non-compliance. Employers must also retain any documents that demonstrate such compliance for a period of 6 years from the first day of employment of the TFW.
Immigration and Service Canada officers now have wide ranging powers to conduct inspections to verify employer compliance.
The inspections may be used to verify whether the information provided by the employer at the time of a LMIA or work permit application was accurate, and whether the employer has met the ongoing conditions.
The inspections may be random, or may be conducted where there is cause for concern. A potential concern for employers is that complaints from disgruntled workers could potentially trigger such inspections.
Inspectors will be able to enter employer workplaces without a warrant to conduct inspections. They may demand to see any document and to have access to the employer’s computer systems.
Employer Compliance Reviews
Under the LMIA application regime, employers for some time have faced the potential of Employer Compliance Reviews (ECRs). ECRs may occur as part of an LMIA application where an employer has obtained a prior LMIA. If an ECR occurs, the processing of the underlying LMIA application that “triggered” the ECR is suspended until the ECR is completed. As ECRs often currently take months to be completed by Service Canada, the processing time of the underlying LMIA is increased significantly. Where the LMIA request is for a TFW already in Canada, the lengthy processing delays caused by an ECR may eventually put the immigration status of that TFW at risk since a new work permit cannot be obtained until a LMIA is issued.
The standard of review used on an ECR has been modified under the Regulations, making it tougher on employers.
Employers must be able to demonstrate that they provided the “same occupation” to the TFW. Prior to the change, they had to demonstrate that they provided “substantially the same” occupation. Employers must also be able to demonstrate that the wages and working conditions provided to TFWs are “substantially the same – but not less favourable than – those set out in” the TFW’s offer of employment.
Note that the new 6 year “look back” period for looking at past LMIA/LMO applications under an ECR is not retroactive. Therefore, the pre-2014 substantially the same test and 2 year review period remains in place for now for LMOs obtained prior to January 1, 2014.
Given that the new 6 year review period is not retroactive, the full 6 year “look back” review period will not be in place until January 1, 2020 i.e., 6 years from January 1, 2014, on LMIAs received after the regulatory amendments.
The new Regulations provide more power to the Minister to issue Ministerial Instructions which may be used to suspend or revoke LMIAs or to refuse to process LMIA applications. The ESDC announcement indicates that Ministerial Instructions may be used to refuse to process LMIAs for “a given sector, region or occupational group”. It further states that ESDC will provide information on any “Refusal to Process” sectors, regions or occupational groups on the TFWP website.
For example, Ministerial Instructions were used in the spring of 2013 to temporarily suspend applications for food sector employers.
It remains to be seen how often Ministerial Instructions will be used has a mechanism to manage or change the TFWP in future.
What Should Employers Do?
Employers that engage TFWs, whether through LMIA-based or LMIA exempt work permits, must familiarize themselves with the conditions and compliance requirements placed on them, and must be aware of the ongoing nature of the compliance requirements.
Internal systems and procedures need to be implemented in order to ensure that employers:
- are compliant at the front end of the process during the recruiting phase;
- are compliant when LMIA and/or work permit applications are prepared and filed;
- meet ongoing compliance requirements during the employment life cycle and beyond;
- are prepared to deal with inspections or Employer Compliance Reviews;
- are best placed to try to justify findings of non-compliance if such a finding occurs; and
- avoid facing a ban from using TFWs and/or penalties due to non-compliance.
Set out below are some best practices to consider.
1. Internal Policies:
Employers utilizing TFWs need to have in place internal practices and procedures to ensure that they are compliant during the hiring and application process, and to ensure ongoing compliance after LMIAs and/or work permits are obtained.
Centralizing oversight of the immigration area is strongly recommended. This would avoid issues caused by different practices or procedures at different branches or locations of the company. A finding of non-compliance at any location of an employer will affect access to the program for the entire organization. Consider centralizing the immigration responsibilities with in-house legal or human resources, or in concert with outside immigration counsel.
Having centralized practices and record keeping relating to TFWs will also assist employers if they need to deal with an inspection or an ECR.
Another reason to centralize oversight of immigration and work permit matters is that this is the best way to ensure that you meet the declarations in the LMIA application form. It will also ensure that there is consistency across applications in terms of the information and representations being made to government authorities.
The content of any form or supporting documentation provided by an employer to support an LMIA or work permit application must be carefully reviewed to ensure that it is accurate before it is filed, as an employer may later face an inspection in which the accuracy of such documentation may need to be demonstrated. Do not rely on TFWs to draft up application materials for the company to sign off on, unless the content is carefully vetted prior to signing it.
2. Document Retention:
A document retention policy is a key consideration given that there is a statutory obligation to retain any documents relating to compliance for a period of 6 years beginning on the first day of the period of employment for which the work permit is issued to a TFW.
The document retention policy should include the retention of documents relating to any work permit or LMIA application (including any recruitment documentation), as well as ongoing documentation relating to the employment of the TFW in order to be able to demonstrate that the “same occupation” and “substantially the same but not less favourable” wages and working conditions were provided during the course of employment.
The Regulations indicate that an employer may justify the lack of retention of any document that relates to compliance where the employer can demonstrate that it “made all reasonable efforts to comply with the condition”. It is unclear how “all reasonable efforts” will be interpreted, but an employer that ignores the requirement and does not implement internal policies and practices to try to retain documentation could have a difficult time showing that “all reasonable efforts” were made to meet the statutory requirement to retain the documents.
ESDC sets out a list of documentation that employers must retain in Requirements for Employer Compliance.
3. Changes to Terms of Employment of TFWs:
This is a critical consideration.
Employers must ensure that they do not change the occupation or the terms of employment of TFWs (whether LMIA based or LMIA exempt) before consideration is given to whether a new LMIA or work permit may be needed. The former “substantially the same” test has been revised such that employers must be able to demonstrate that they provided the “same” occupation to the TFW and “substantially the same but not less favourable” wages and working conditions. This is a harder test for employers to meet.
If the duties are to be changed such that the job would now be classified under a new NOC (National Occupation Classification) code, clearly a new LMIA and/or work permit would first have to be obtained. However, there is at present no clear guidelines from ESDC on the extent to which duties under the same NOC might be revised before the position is no longer the “same occupation”. Some NOC codes are fairly broad, such as some managerial ones, so this could be an issue.
Note as well that increasing salary or remuneration to a TFW under an LMIA based work permit may trigger the need to get a new LMIA, under the theory that there may be qualified Canadians who might now apply for the position given the higher salary level.
Therefore, it is imperative to have internal policies and practices in place to ensure that any potential changes to employment terms of TFWs (and especially those under LMIA based work permits) are reviewed well in advance of any proposed changes occurring. Seeking advice from immigration counsel is strongly recommended.
4. Mergers & Acquisitions:
If there is a merger or takeover of another Canadian entity, the acquiring entity needs to ensure through the due diligence process that TFW practices of the target organization are reviewed. The acquiring company or entity does not want to find out after the acquisition that there was a breach of the rules, as this could then taint the entire organization and potentially lead to a finding of non-compliance.
Human resources practitioners involved in supporting mergers and acquisitions that involve companies that have TFWs in Canada need to ensure that they are not inheriting compliance problems.
5. Transitioning TFWs to Permanent Resident Status:
To reduce the potential risk of non-compliance, employers should consider assisting TFWs to obtain permanent resident (“PR”) status.
The shorter the period of time the TFW is on a work permit, the lower the risk that there may be an inadvertent breach of conditions, such as where the terms of employment are changed in a way that seems to be minor, but which may breach the “substantially the same” test.
Furthermore, moving the TFW to PR status may eliminate the need for a subsequent LMIA. By minimizing the number of LMIA applications, an employer reduces the risk of facing an Employer Compliance Review (ECR).
Note that obtaining a work permit under an LMIA exempt category (which is usually the goal any time a TFW is to be hired) would be preferable to obtaining an LMIA based work permit as this eliminates some of the conditions and potential non-compliance risks associated with LMIA based work permits.
Note that moving a TFW to PR status does not eliminate the requirement to maintain proper documentation to be able to demonstrate compliance for the “look back” period.
Employers must be aware of the regulatory requirements placed upon them. The December 31, 2013 amendments increased compliance requirements.
To avoid potential non-compliance, and to minimize the negative impact that a government inspection or ECR may have, employers must ensure that their practices and internal policies take into account the regulatory amendments. A number of best practices can be implemented.
It remains to be seen how some of the regulatory amendments and process changes will be interpreted and applied by officers. For example, workplace inspections have not been widespread, but the June 20, 2014 announcement of the overhaul of the Temporary Foreign Worker Program included a promise to increase resources to allow for more inspections to take place (see Overhauling the TFWP / ESDC Publication and our update on the June 2014 changes).