During times of economic growth, Canadian employers have actively recruited foreign workers to assume temporary or permanent employment in Canada. However, with the recent economic downturn, many Canadian employers are now faced with the unfortunate task of cutting costs and reducing personnel. While employer obligations with respect to the dismissal of Canadian employees are well-established, what obligations are imposed on Canadian employers with respect to the foreign workers they have recruited and relocated to Canada?

Employers' Obligations to Foreign Workers Upon Termination

Every province across Canada has legislation that governs the termination process and ensures human rights are protected. In Alberta, for example, the Employment Standards Code governs the relationship between employers and employees, including temporary foreign workers. Employers who dismiss foreign workers must abide by the same notice provisions that are applicable to Canadian workers. They must also not run afoul of human rights legislation. In Alberta, for example, employers must also abide by the Human Rights, Citizenship and Multiculturalism Act, which prohibits employers from discriminating against any employee. Each province has similar employee protection legislation.

When dismissing foreign workers, employers must abide by employment legislation and provide adequate notice or payment in lieu of notice. When a temporary foreign worker is dismissed by a Canadian employer, he is eligible to remain in Canada until the expiration date of his current work permit. However, the foreign worker cannot work for another Canadian employer without first obtaining a new work permit - either by way of Labour Market Opinion ("LMO") approval from Service Canada or an exemption category under the Immigration and Refugee Protection Act.

Unlike with skilled workers, employers who enter employment contracts with low-skilled workers pursuant to the Service Canada Low-Skilled Worker Program are contractually obligated to pay for the employee's travel to and from Canada. Therefore, an employer who dismisses a low-skilled foreign worker will still be contractually bound to pay the travel expenses for the employee to return to his country of origin.

Foreign workers on work permits laid off first

Over the past couple of years, Service Canada has begun to include specific instructions for employers when approving LMO confirmations. Generally speaking, these instructions indicate that if the employer is forced to lay off employees that are in the same job category, the foreign workers in that job category should be dismissed before any Canadians or permanent residents of Canada are dismissed. Employers should be sure to check any LMO approvals they may have received from Service Canada to ensure they comply with these instructions when faced with terminations. Although Service Canada has no direct recourse if an employer chooses to disobey the layoff instructions outlined in the LMO approval, it will certainly make it more challenging for the employer to obtain future LMO approvals in the future once the economy rebounds and the need for foreign workers increases again.

If an employer dismisses a foreign worker, we would recommend notifying Citizenship and Immigration Canada of the termination in order to ensure there is no possibility of misuse or fraud of the Canadian work permit held by the foreign worker, however, the employer is not obligated to.

Employment Insurance Benefits

Canadian employment insurance benefits may be collected by foreign workers who are dismissed by their Canadian employers and remain temporarily in Canada seeking new employment. In order to qualify, the employee must be unemployed, have a valid work permit and meet eligibility criteria, such as minimum hours worked.

Canadian employment insurance benefits may be collected by foreign workers who are dismissed by their Canadian employers and remain temporarily in Canada seeking new employment. In order to qualify, the employee must be unemployed, have a valid work permit and meet eligibility criteria, such as minimum hours worked.  

Effect of Dismissal on Permanent Residence Status

Employers who nominate foreign workers for permanent residence status through a provincial nomination program ("PNP") have an obligation to notify the PNP office of the change in employment status of the worker. Depending on how far along the employee is in the nomination process, the unfortunate result could be that the foreign worker would no longer be eligible for permanent residence as a provincial nominee.

The termination of the temporary foreign worker's employment contract may or may not affect eligibility for permanent residence for those temporary foreign workers who have had their provincial nomination approval forwarded to a Canadian consulate for final processing. Depending at what point the consulate is processing the permanent residence application when the dismissal occurs, the consulate will likely review each case individually and decide how to proceed. Generally, if the applicant would have qualified anyway for permanent residence as a skilled worker (without the nomination), then it is likely the application for permanent residence will proceed, but it is at the discretion of the consular officer.

Temporary foreign workers with at least two years of full-time (or equivalent) skilled work experience in Canada can apply for permanent residence through the new Canadian Experience Class. Presumably, a temporary foreign worker whose employment contract has been terminated can still apply for permanent residence through this class, provided he or she meets the eligibility requirements, and applies within one year of leaving the Canadian employer.

It is unfortunate that due to the current economic situation, employers may be forced to dismiss or lay off employees. So long as Canadian employers are aware of their obligations to all employees, including foreign worker employees, they can make the best decisions to meet their business needs.