Although the recession may have diverted attention away from the demand for foreign workers in the last few years, we know that the number of employees working across jurisdictions both within and outside of Canada increases along with the increase in global trade. Canada’s aging workforce and low birth rate are also contributing to the rise in the demand for foreign workers. These long-term trends mean that Canada will be increasingly dependent upon foreign workers in order to maintain a robust and growing labour force. However, a recent case suggests that the standard severance rules may need to be somewhat more flexible to address the needs of foreign workers.

Nishina v. Azuma Foods (Canada) Co. Ltd. involved a Japanese citizen, Maki Nishina, who worked with Azuma Foods International Inc. (“Azuma”), a company focused in specialized food production. Ms. Nishina initially began working with Azuma at its Haywood, California, location in June of 2001 and continued to work at that location until August of 2005 when she was transferred to Vancouver, British Columbia. Azuma sponsored Ms. Nishina in order to facilitate her securing a work permit and the permit was subsequently extended until August, 2008. Azuma also told Ms. Nishina that if she continued working in Canada they would support her in returning to California and applying for permanent residence status there. Despite this, Ms. Nishina was terminated for just cause in October, 2007. She sued Azuma for wrongful dismissal in the Supreme Court of British Columbia and, on the issue of cause, the Court found that there was not sufficient evidence to support the employer’s claim. This left the Court to determine Ms. Nishina’s proper severance entitlement.

Notwithstanding the fact that Ms. Nishina had worked just over six years with Azuma, only two of which were in Canada, the Court awarded her 12 months’ pay in lieu of notice. A major factor for the Court in awarding this long period of notice was the fact that Ms. Nishina had a work permit that restricted her to working only with Azuma. The Court found this situation analogous to one in which an employee is terminated while working within a “one-employer” town. In other words, in assessing damages, the Court took into account its view that the restrictive work permit would seriously inhibit Ms. Nishina’s ability to find alternate employment.

The Court also took Ms. Nishina’s immigration status into account when considering whether to award additional damages for mental distress. The Court held that Azuma breached its obligation to act in good faith since it ought to have known that its behaviour would have caused Ms. Nishina great difficulties, particularly in light of her immigration status. Ultimately, mental distress damages were not awarded because of insufficient evidence of quantifiable loss. However, the Court did award $20,000.00 for punitive damages because it felt that Azuma acted inappropriately in terminating Ms. Nishina for cause.

Although decided in British Columbia, the case serves as a warning to employers looking to hire foreign workers. If the decision is truly suggestive of a trend towards higher severance for foreign workers whose re-employment options are limited by virtue of their immigration status, then employers may wish to keep the following recommendations in mind:

What does this mean for employers?

Pay attention to the immigration process

Azuma prepared Ms. Nishina’s work permit and included the restrictive conditions which left her with so few employment options following her termination. Employers may wish to leave employees more flexibility in the preparation of similar documents if they want to avoid the risk of increased severance.

Invest in well-drafted employment contracts

Employers can help to reduce the uncertainty relating to potential disputes with foreign workers through well-designed employment contracts. A contract can anticipate contentious issues in advance, such as termination, and help establish who will be liable in such circumstances.  

Be particularly wary of vulnerable employees

Where an employer takes over an employee’s affairs concerning their immigration and employment, such that the employer is able to use its power and discretion to affect the employee’s legal and practical interests, the employer could also be found to be a fiduciary. In so doing, the employer could expose itself to additional liability if it does not exercise proper care with respect to the employee.