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Changes to Federal Foreign Worker Regulations Effective April 1, 2011: A Serious Issue for Employers

March  6, 2011
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In the midst of a sea of change, the Federal Government has enacted Regulatory changes significantly impacting employers who hire foreign workers to come into full effect on April 1, 2011.

 

Recruiting and retaining qualified employees is a perpetual business challenge. In light of significant demographic shifts in the Canadian population, employers now commonly seek personnel beyond Canada’s borders, particularly for temporary employment. Historically, most temporary foreign workers were highly skilled, but recent labour market shortages have led to the recruitment of foreign workers to fill lower skilled positions as well. The employment of less educated foreign workers, arguably more vulnerable to unethical business practices, increases the concern about both real and perceived abuse of the immigration system.

 

Two critical aspects of the new Regulations are:

 

1) An increase in the significance of the contents of the immigration application, and

2) Creation of a cap on Canadian employment time.

 

The Application

 

Ordinarily, foreign workers can enter Canada based (in part) on their employer’s representations of the work hours, compensation and benefits associated with the position. The new Regulations will punish employers who fail to honour these representations.

 

Employers must, in all cases, provide foreign workers with employment terms substantially the same as those represented in the immigration application. Compliance with this requirement will now be assessed over the preceding two year period. Violators will be identified on an official published “blacklist”, and will be restricted for two years from applying for a Labour Market Opinion (a necessary first step in hiring a foreign worker). Furthermore, foreign workers will be prohibited from entering into any employment agreement, or extending an existing agreement, with an employer whose name appears on the list. This will force listed employers to use domestic sources to fill their human resource needs, however impractical or unrealistic it may be.

 

It remains to be seen how far enforcement of this new requirement will reach. For example, what degree of change in the employment relationship will qualify as a violation of the Regulations?

 

Workers who enter the country on a Work Permit often see minor changes in salary, benefits or job classification. Indeed, in most work environments, promotions and wage increases are normal consequences of a healthy employment relationship. In such cases, it will be a question of degree whether an employer has substantially changed the terms of employment, or simply allowed the employment relationship to evolve in the normal course.

 

It may take some time before the exact parameters of these restrictions are clear. The important consideration is that even an entirely positive change (e.g., a promotion and a significant raise) may be a “substantial” change. Work authorizations for immigrants are offered based on a specific set of facts; any change in those facts, for better or worse, could fundamentally alter the government’s view of the proposed employment. As such, it will be important for human resource professionals to carefully consider the immigration consequences before implementing any change in the terms of employment.

 

Cap

 

A second critical change is the creation of a four year cap on the time a foreign worker can be employed in Canada. In calculating the four (4) year cap, day one will be the latter of April 1, 2011 or the day on which the employment period started. Once a worker reaches this threshold she must leave Canada for four years before seeking re-entry as a temporary foreign worker.

 

This poses obvious retention problems for workers with a good track record with their employer. Furthermore, given Permanent Residency applications may take years to complete, the new time limits on employment may significantly complicate legitimate efforts to transition a valued employee from a temporary foreign worker to Permanent Resident status.

 

If nothing else, the Regulations add a new sense of urgency to the decision to consider a path to Permanent Residency as a means of employee retention.

 

Comment

 

Overall, the pending Regulations will profoundly impact Canadian businesses. The new Regulations will prohibit some employers from even recruiting foreign workers if violations are unearthed. Furthermore, employers must be cognizant of the four year limit faced by foreign workers. In the new Regulatory environment, it will be critical for employers to closely monitor compliance with these more stringent criteria.

 

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