Requirement for Foreign Employees to Work
Unlike most labour and employment law, immigration law is under the jurisdiction of the federal government and is subject to the Immigration and Refugee Protection Act (the “IRPA”). To be lawfully employed in Canada, one must be a citizen, a landed immigrant, or have a work permit.
There is some increased movement of professionals, executives and skilled trades through free trade agreements with other countries, particularly the United States. No work permit is required for business visitors who come to Canada to meet with Canadian clients or assess business opportunities; however, a work permit will be required for foreign nationals who will be providing their services in Canada. Unless an exemption applies, the employer of the foreign national must apply to Service Canada to obtain a Labour Market Impact Assessment allowing it to offer employment to a foreign national. The two main categories of exemptions are for intra-company transferees and the “professionals” category under Canada’s treaty with the United States and Mexico. Both of these types of exemptions are available only to managerial, specialised or professional employees.
Apart from senior executives, professionals and workers with specialised skill-sets, most foreign workers in Canada are employed in the domestic care or agriculture sectors. Temporary foreign workers are protected by the same laws as Canadian employees, including labour and employment legislation and the Charter of Rights and Freedoms.
The Canadian government has recently announced an intention to increase the number of hours that can be legally worked by international students who hold a study permit (but not a work permit). At some point during the fall of 2024, this cap will increase from its current 20 hours per week to 24 hours per week.
In 2022, the Canadian government introduced new legislation to govern Canada’s Temporary Foreign Worker Program, designed to better protect foreign workers and to address short-term labour and skills shortages. The new regulatory amendments seek to rigorously assess the authenticity of employment offers in order to minimise fraudulent offers and better protect foreign workers from exploitation and abuse. A second element of the new rules seeks to bar employers from hiring temporary foreign workers when Citizenship and Immigration Canada has determined that the employer has failed to meet its commitments regarding terms and conditions of employment. Finally, according to the regulatory amendments, temporary foreign workers can hold a temporary work permit for only four years at a time. However, some workers are exempted from this limit, including most who occupy managerial, highly skilled, or other exempt positions.
Does a Foreign Employer need to Establish or Work through a Local Entity to Hire an Employee?
A foreign employer has several options when hiring a Canadian. One option is to hire the person as an independent contractor; however this means that the person is not technically an “employee” of the foreign company, and could work for other companies as well. Further, it can be difficult to impose the same duties (such as loyalty) on independent contractors. Finally, just calling someone a contractor does not make them one in the eyes of Canadian law. There are significant risks created by misclassification, making it a choice best taken only with great caution.
Another option is for a foreign employer to work with a Professional Employer Organisation (PEO) to assist in the hiring and other human resource related duties. PEOs are Canadian companies that help ensure foreign employers comply with the applicable laws of Canada.
It is also possible for a foreign entity to register with the applicable government agencies, so as to “do business” in Canada, which then allows them to employ workers. In other words, it is not essential that a foreign company create a separate Canadian affiliate or subsidiary. The choice is most often driven by corporate taxation considerations.
Finally, a foreign employer can create a corporation in Canada, which can then hire employees itself. This is the most common structure used by international employers of significant size, though new entrants hiring only a few employees in Canada often opt to simply register and employ staff directly. Again, the choice will be driven by corporate considerations, including taxation, regulatory requirements and other internal motives.
Limitations on Background Checks
In certain provinces (Alberta, British Columbia and Quebec), employee privacy legislation places limits on the collection, use and disclosure of personal information. Even when an individual has consented to a background check, the collection, use and disclosure of personal information must be reasonable under the circumstances, given the purpose for which it is being collected, used or disclosed. Employers must therefore have some justification for requesting that employees consent to a background check, criminal or otherwise, as they may be required to demonstrate that the check was reasonable and necessary in the circumstances.
Moreover, the provinces each have their own anti-discrimination legislation that may also apply to certain types of background checks. For example, British Columbia and Quebec require that any criminal background check and any decision relating thereto, must be directly relevant to the particular staff position at issue. At the other end of the spectrum, Alberta currently has no restriction on criminal background checks in its legislation at all. Other provinces are somewhere between these two extremes.
Further, as a matter of practice by law enforcement, a criminal record check can be obtained only with a prospective employee’s consent, and often only by the individual (who would then need to disclose it to the employer). Other types of background checks, such as social media background checks, may be performed without an applicant’s consent, but this type of check carries its own risks, as it can disclose identifying information about things like an individual’s religion, national origin, ethnicity, sexual orientation, family or marital status, and other factors that cannot be used in a discriminatory fashion, and which an employer should not be considering prior to making an employment decision.
For the foregoing reasons, employers generally should not conduct record checks until a conditional offer of employment has been made, and then only with the employee’s consent (and, often, participation). Upon receiving the results of a record check, it may be possible to rescind an offer of employment depending on the details of the results and the applicable legislation.
Restrictions on Application/Interview Questions
Canadian employers are subject to a number of restrictions in the hiring process based on human rights and privacy legislation.
Interview Questions
Human rights legislation in Canada prohibits discrimination in the hiring process. Many questions an employer may be interested in asking during the interview process may unintentionally solicit information regarding an applicant’s disability, age, religion, or another protected ground. For example, requesting that applicants provide the dates they attended educational institutions may unintentionally solicit information regarding age. Asking an applicant if he or she is available to work particular shifts during the hiring process may solicit information regarding the applicant’s religion or family status. If an applicant is ultimately unsuccessful in obtaining employment, that applicant may claim that they were not selected based on a prohibited ground of discrimination. Most employers therefore seek to limit the amount of information sought at the application stage that could unintentionally solicit disclosure of a characteristic that is protected by human rights legislation. More in-depth questions will be appropriate when a conditional offer of employment is made.
In Ontario, human rights legislation expressly recognises that a person’s right to equal treatment with respect to employment is infringed where, during the hiring process, an employer makes an inquiry that “directly or indirectly classifies or indicates qualifications by a prohibited ground of discrimination”. In a decision of the Human Rights Tribunal of Ontario (“HRTO”), an employer was found to have violated its obligations by obtaining copies of an applicant’s birth certificate and driver’s license at the commencement of a job application process. The HRTO found that the employer’s request for this information indirectly classified the applicant by age, and noted that this type of request would also have classified candidates by other protected grounds, such as place of origin. The HRTO stated that the employer was only entitled to request that type of documentation after a conditional offer of employment was made.
Additionally, in most Canadian jurisdictions, it is prima facie discrimination for an employer to refuse to hire someone because their relative works for the company. Whether or not this type of anti-nepotism policy can be justified will depend on the nature of the familial relationship (i.e. cousin vs mother), and the potential impact of having related persons employed by the company. Most employers therefore reserve this type of question until they are prepared to make a conditional offer of employment.
Application Forms
Application forms can also unintentionally solicit information that could reveal a potential employee’s place of origin. This can place an employer at risk of a human rights claim of discrimination in the hiring process. Employers may inquire about an applicant’s legal right to work in Canada; however, other questions may be unadvisable.
Pre-Employment Drug Testing
In Canada, employers are generally not permitted to test prospective employees for drug use, or to refuse to employ a person because of the results of a drug test. Adjudicators have found that pre-employment drug and alcohol testing is presumptively discriminatory on the basis of disability and/or perceived disability. Where a position is safety sensitive, drug or alcohol testing may be a valid requirement on the job, but is rarely permissible pre-employment.
