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Hiring Temporary Foreign Workers: 6 Key Employment Contract Considerations

Published:

June 5, 2025

Author(s):

• Amanda Nash
• Morganne Foley

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While not generally mandatory, a current, clear and concise written employment contract is one of the best investments you can make to limit your liability related to your workforce. This is even more crucial when it comes to hiring temporary foreign workers whose employment depends not only on their personal qualifications and performance but also on your authorization to legally hire the foreign worker and your compliance with all requirements of the Immigration Refugee Protection Act and Regulations. Since September 2022, it is mandatory that all employers who hire under the Temporary Foreign Worker or the International Mobility Programs provide foreign workers with a written and signed employment contract outlining the terms and conditions of their employment. In addition to being consistent with the offer of employment in the approved Labour Market Impact Assessment (LMIA) or as declared in the submitted Online Offer of Employment and respecting the applicable provincial statutory labour standards minimums, there are additional considerations that apply to written employment contracts for temporary foreign workers to avoid unanticipated contractual and common law liability. Here are six key considerations for employment contracts for temporary foreign workers.

1. Term

In general, employers can be hesitant to make indefinite offers of employment to prospective employees because they often perceive such commitment as riskier than term employment. However, this is generally not the case. In fact, fixed-term contracts can be riskier if they lack an enforceable termination clause: if you terminate the contract before the end of the term you could be liable to pay the employee the balance of the term rather than reasonable notice. However, when hiring foreign workers, for a job offer to be eligible many immigration programs require the offer be for a minimum of one or two years, or where the job offer is in support of permanent residency that it be for a minimum amount of time after permanent residency is granted. In these cases, employers will often default to a term equal to the minimum duration of the job offer without considering the risks of a fixed-term contract.

For immigration purposes, you can satisfy the requirement that a job offer be for a minimum specified period by offering employment of indefinite duration that can be terminated in accordance with an enforceable contractual termination clause.

2. Position & Duties

When hiring a Canadian citizen or permanent resident, you have wide discretion in crafting positions, including a candidate’s job title, qualifications and job description, to suit your organization’s needs. Many employment contracts also include language reserving your right to change, alter or amend the employee’s duties as your business evolves. However, you don’t have the same latitude of discretion when it comes to hiring foreign workers.

The Government of Canada grants authorization of a foreign national to work in Canada only on the specific and approved terms and conditions of employment – and there is very little flexibility to change the foreign worker’s position or duties once hired. When seeking authorization to hire a foreign worker you must demonstrate the need to hire a foreign worker in a specific occupation and select the most appropriate National Occupation Classification (NOC) code applicable to the vacant position. Each NOC code will contain examples of job titles frequently associated with the occupation, detailed descriptions of the main duties of the occupation and the typical requirements for the position. Employer compliance with immigration laws depends on the foreign worker remaining within the approved NOC. Where duties between NOCs overlap, the appropriate NOC will be that in which the foreign worker will perform most of the main duties listed. However, once authorization is granted and the foreign worker hired, any changes to the position or duties that would bring the job into a different NOC requires both a new work permit and a new employment contract.

3. Hours of Work

Typically, an employer makes no guarantee of hours per day or per week whether employers operate on a fixed regular weekly schedule or on a shift schedule that varies and may rotate. Some employment contracts contain explicit terms making it clear there is no guarantee of hours; other contracts contain broader implicit language, such as an employee may be expected to work “up to” a specific number of hours per week and such hours may be “dependent on the operational needs of the business.” In either case, the effect is that you retain the right to limit and change hours at your discretion. This is in stark contrast to the commitments you make when hiring a temporary foreign worker.

For a job offer to be eligible for authorization to hire a foreign worker, it must be full-time and provide a minimum guarantee of at least 30 hours per week. If you fail to provide the foreign worker with the minimum guaranteed number of hours, you will be non-compliant with your immigration law obligations. In such cases, you could be liable for the payment of wages up to the guaranteed minimum even if the foreign worker doesn’t actually work those hours.

4. Wages & Benefits

The wages and benefits you can provide to foreign workers is counterintuitive. Generally, so long as you provide your employee with a higher level of wages and/or benefits than you offered them, everyone is happy. But doing so with respect to foreign workers means you will be non-compliant with immigration laws.

Under the Temporary Foreign Worker Program, the minimum starting wage for foreign workers in a particular occupation is dictated by the prevailing wage rate determined by Employment and Social Development Canada (ESDC) for the applicable NOC and will vary by location across the country. In this regard, there is a new requirement that employers must review and adjust the wage offered to ensure that a foreign worker’s wage does not fall below the prevailing wage for their occupation. There is also a small cushion for annual increases that are not more than the applicable rate of inflation. However, employers are otherwise prohibited from offering a foreign worker higher wages and benefits than were contemplated at the time of hire and work authorization grant. The rationale for this policy is that the authorization to hire a foreign worker is, in most instances, based on the lack of an available qualified Canadian citizen or permanent resident to do the advertised work, resulting in a vacancy in the labour market. To allow employers to increase wages of foreign workers after the fact would be to undermine the requirements of many immigration programs to demonstrate a vacancy because a Canadian citizen or permanent resident might have applied for the job if it were advertised at the higher wage rate.

Under the International Mobility Program, the expectation is that the foreign worker’s wage will fall within the wage range for the NOC, as set out by ESDC and that the employer will provide the employee with “wages and working conditions that are substantially the same as — but not less favourable than — those set out…” in the Online Offer of Employment, as per the Immigration and Refugee Protection Regulations. Generally, an increase of no more than two to three percent of the wage set out in the Online Offer of Employment is accepted as being “substantially the same”.

As a result, if you intend to employ foreign workers, consider at the outset what, if any, additional wages and benefits you might pay over the duration of the work authorization period being sought and explicitly reference such increases in the employment contract. Failure to be specific and to include explicit references in the job posting during recruitment, in the employment contract and in the LMIA or Online Offer of Employment (as applicable) during hiring will prevent you from the ability to alter the foreign worker’s compensation without re-starting the process and obtaining a new work permit. It will not be sufficient to include vague references to annual increases at the employer’s direction or general statements about the benefits available in the employment contract or merely incorporated by reference to a benefit booklet.

5. Termination

Just as with non-foreign workers, you can terminate the employment of a temporary foreign worker with or without cause so long as you terminate their employment in accordance with the termination provisions of their employment contract and the provisions of that contract are enforceable. Where you must proceed with caution with temporary foreign workers, highlighting the need to ensure their employment contracts have valid termination provisions, is the fact that most temporary foreign workers will have no ability to mitigate their damages thereby  increasing your liability exposure: any temporary foreign worker whose work authorization is through a closed (that is, employer-specific) work permit is unable to work for any other employer until they obtain a new work permit for work with the new employer. This process can take several months even if the new employer already has approval to hire a temporary foreign worker.

You must also be cognizant of your post-termination obligations to temporary foreign workers, particularly where the foreign worker is employed in a low-wage position. In this context, low-wage does not only apply to entry-level or minimum wage positions; low-wage positions can be any position where the wage paid falls below the applicable provincial median wage plus 20% for the location. In these cases, depending on the immigration program involved, you may have committed to providing the terminated temporary foreign worker with return transportation to their home country. Where you have made such a commitment, failure to honour it amounts to non-compliance with your obligations as an employer of a foreign worker and could jeopardize your future participation in immigration programs.

Similarly, it’s worth noting that because the Canadian government focuses more on compliance, many immigration programs are beginning to prioritize the retention of temporary foreign workers and tracking employers’ use and retention rate of those hired through the respective programs. In this regard, be aware that the government may scrutinize your decision to terminate the employment of temporary foreign workers and that decision could impact your ability to hire temporary foreign workers in the future. If you have no choice but to terminate the employment of a temporary foreign worker, carefully document the reasons for the decision and any efforts taken to avoid it.

6. Conditions of Employment

Many employment contracts contain provisions regarding conditions of employment generally setting out the conditions an employee must meet prior to employment as well as maintain throughout the duration of employment to perform the duties of their job. Examples include the requirement to be licensed in their profession, having a valid driver’s license, and passing a pre-employment medical or drug test. However, when employing a temporary foreign worker, it’s also important to include a provision regarding work authorization as a condition of employment. This will ensure the employment contract of a temporary foreign worker who becomes inadmissible or otherwise loses their legal status before or during employment will end without liability to either party. However, note that such a provision is unlikely to limit your liability exposure if you intentionally or negligently contribute to the worker’s inability to secure work authorization.

Please contact your McInnes Cooper lawyer or any member of our Immigration Law Team @ McInnes Cooper to discuss employment contracts for temporary foreign workers.

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