Canada: Employer Update: CIC's New Administrative Monetary Penalty Regime Will Be Effective Dec. 1, 2015 — Are You Ready?

Employers of temporary foreign workers (TFWs) in Canada will be facing a new regime of administrative monetary penalties (AMPs) when new IRPA regulations come into effect Dec. 1, 2015.

The new regulations will provide government inspectors with the ability to assess a wide range of monetary penalties against non-compliant employers. Serious breaches of the rules could lead to employers being banned from using the Temporary Foreign Worker Program (TFWP) and the International Mobility Program (IMP).

Employers utilizing TFWs should take immediate steps to ensure that they are fully compliant with all of IRPA's conditions relating to TFWs. Any non-compliance should be rectified prior to Dec. 1, 2015 as the new penalty regime will not be retroactive to violations prior to that date.

Random inspections of employers that utilize TFWs are on the rise, and now include inspections of LMIA-exempt work permit situations. Consequently, there is a higher level of risk that employer non-compliance will be discovered. 

We have set out below an overview of the AMP regime. This is meant to provide highlights and is not a detailed treatment of this complex new regime. There is also a section on implications for employers at the end of this article.

The AMP Regime

The AMP regime is set out in regulatory amendments which may be viewed here. The full IRPA Regulations are available here.

Prior to Dec. 1, 2015, the only statutory consequence that could be applied against non-compliant employers was a two year ban from being able to utilize TFWs.

AMPs provide inspectors with a variety of penalty options, and are also intended to provide more incentive for employers to take steps to ensure that they are fully compliant with the statutory requirements under the TFWP and IMP.

Under the AMP regime:

  • Each separate violation will be assessed and assigned a point total by an inspector; the higher the point total, the harsher the penalty.
  • One factor is the type of violation; each obligation placed on employers under IRPA has been designated as a Type A, Type B or Type C violation, with Type C being the most serious. Please see the end of this article for a table that sets out the various potential regulatory sections that an employer might breach, and the type of violation each would be under the AMP regime.
  • Another factor is the employer's prior non-compliance history. Please see the end of this article for a table setting out details of this factor.
  • Another factor is the "severity of the violation". This is a factor over which the reviewing officer appears to have a large amount of discretion. Please see the end of this article for a table setting out the criterion under this factor and the range of points that can be assessed under this factor.  
  • If the employer made an "acceptable voluntary disclosure" of non-compliance, this could reduce the number of points assessed.
  • The violation of a single statutory condition that involves more than one TFW will be treated as a separate violation for each TFW. For example, if the employer failed to pay overtime in breach of the applicable employment standards legislation to six TFWs, that would amount to six separate violations, each of which could lead to penalties.
  • If a regulatory condition has separate elements, a failure to comply with any of the elements will each be treated as a separate violation. For example, there is a condition that employers must provide substantially the same (STS) wages and working conditions to a TFW as was set out in their offer of employment. Reducing the base salary and removing a benefit such as a car allowance will be treated as two separate violations under the AMP regime (failure to provide STS salary, failure to provide STS working conditions by removing car allowance).

Penalties

The penalty will be dictated by the points assessment. A very low points assessment may lead to only a warning. The higher the points assessment, the higher the monetary penalty. And if the points assessed for the violation reach a certain level, the employer will face a ban from the program (bans of 1, 2, 5, 10 years, or a permanent ban, are possible outcomes).

The monetary penalties differentiate between a "large business" and a "small business". A "small business" is any business (including affiliates) that has fewer than 100 employees or less than $5 million in annual gross revenue. Large businesses face higher AMP amounts than small businesses for the same violation.

The monetary penalties range from $0 to $100,000 per violation. Where the employer is written up for multiple violations, AMPs are cumulative, and the cumulative penalties may total up to a maximum of $1,000,000.

Employers that commit a violation and have received a notice of final determination will have their names published on a publicly accessible government website. The only exception is for a violation where no AMP or ban applies (e.g. for minor, first time violations or where voluntary disclosure reduces the AMP points total to a level that does not dictate a monetary penalty).

The end of this article sets out tables showing potential AMPs and bans. This reflects the information that is in the regulatory amendment as of Dec. 1, 2015.

Voluntary Disclosure

The new system is meant to encourage voluntary disclosure of non-compliance by employers.

In determining the points for a specific violation, the inspecting officer is to subtract 4 points if the employer has "made an acceptable voluntary disclosure". Subtracting 4 points from the AMP calculation will usually have the effect of eliminating a monetary penalty.

To be an "acceptable voluntary disclosure", the disclosure must be complete and must have been done before any compliance or enforcement action has commenced. Therefore, it would be imperative for employers to undertake the voluntary disclosure prior to facing an inspection or compliance review. Clearly, the system has been set up to provide incentive to ensure ongoing proper practices and to disclose and deal with any potential non-compliance in a proactive manner.

The Inspection Process after Dec. 1, 2015

How would an employer that uses TFWs face a review that might lead to an AMP?

In June 2014, the Canadian government announced an overhaul of the TFW. There have been a number of changes since June 2014 aimed at ensuring employer compliance. The AMP regime is the latest development, and in essence provides "teeth" to the inspection regime in the sense that government inspectors will now have a tool box of penalties to utilize where a violation occurs.

The June 2014 announcement indicated that 1 in 4 employers that use TFWs would face an inspection in any given year. Random inspections have started and seem to be on the increase. Inspections might also occur based on a complaint or may occur if government authorities have concerns about potential violations by a particular employer.

Given the stated policy that all employers will eventually face at least a random inspection, employers using TFWs in Canada should assume that they will need to demonstrate that they meet the conditions placed on them by IRPA, at some point in time.

If an employer faces an inspection, we strongly recommend that legal advice be obtained.

If the inspecting officer concludes that a violation has occurred, and the employer's breach was not justified under one of the justifications set out in the IRPA regulations, a Notice of Preliminary Finding will be issued to the employer. The employer will have 30 days to provide written submissions after a Notice of Preliminary Finding is issued. Written responses from employers should address the facts relating to the breach, and the amount of the penalty or length of the potential ban. If no written submission is made, the employer will be considered to have committed the violation and will be liable for the consequences. 

Ultimately, a Notice of Final Determination that a violation was committed will be issued if there is a finding of non-compliance that could not be justified. This will set out any consequences such as an AMP or the length of any ban.

What is not known at this time is how will the AMP and random inspection regime be applied to employers in the field? For example, will the philosophy be, at least on first time random inspections, to use it more as a tool to help employers understand and meet their statutory obligations, by correcting minor or inadvertent violations with warnings rather than applying AMPs? 

It is also unclear how inspectors will exercise their discretion under the new AMP system. For example, it will be up to the inspecting officer to decide whether "acceptable voluntary disclosure" was provided. Secondly, officers appear to have a large amount of discretion in terms of the points assessed under the "severity of the violation" factor, since there is a points range they can choose across a number of criterion. As of the time of writing (November 2015), there are no publicly available guidelines or instructions on this, so we do not know how inspectors are to determine points under the ranges set out under the "severity of the violation" factor. 

Employer Conditions under the IRPA Regulations

The amended IRPA regulations contain a table which sets out all of the employer conditions that employers using TFWs must ensure they do not violate. This table has been set out at the end of this article. All employers should review the entire list to confirm that they are not breaching any of the statutory conditions.

Below is a list of a few of the employer conditions which are most likely to cause potential compliance problems.

Under IRPA, employers engaging TFWs must:

  • Be able to demonstrate that any of the information provided in respect of an LMIA or a work permit application was accurate and must be able to do so in the 6 year period beginning on the first day of the TFW's employment.
  • Retain any documentation relating to demonstrating compliance during a period of 6 years beginning on the first day of the TFW's employment.
  • Provide TFWs with the same occupation and substantially the same wages and working conditions as outlined in the LMIA application, LMIA confirmation and/or employment offer.
  • Comply with all federal and provincial laws that regulate employment and the recruiting of employees in the province where the TFW will work. This would include employment standards legislation, OHS laws and recruiting laws.
  • Make reasonable efforts to provide a work place that is free of abuse.

Implications for Employers

There are a number of implications for employers.

Prior to Dec. 1, 2015, employers should review their practices and policies to ensure they are compliant with IRPA. 

In particular, employers with TFWs should do an audit to ensure that they continue to provide TFWs with the same occupation and substantially the same wages and working conditions as those set out in the LMIA confirmation (where the TFW has an LMIA-based work permit) or the offer of employment (for LMIA-exempt work permit holders). If compliance issues are discovered, steps may be taken before December 1 to address any discrepancies and/or advise the relevant authorities. Legal advice should be obtained if any non-compliance is discovered.

The goal is to rectify any potential violations prior to Dec. 1, 2015 as the AMP regime will not be retroactive to violations that occurred prior to Dec. 1.

Employers should also ensure that they have policies and procedures in place to avoid potential breaches. For example:

  • Do you have a documentation retention policy in place to ensure that all documents relating to a TFW's hiring and employment are kept in place and are available for the required 6 year period beginning on the first day of the TFW's employment?
  • Do you have a policy in place to ensure that the job duties, remuneration or terms of employment of any TFW are never changed without first considering whether such a change would violate the "substantially the same" condition placed on employers?
  • Do you have policies and practices in place that demonstrate reasonable efforts to provide a workplace free of abuse?  For example, does the company have an anti-harassment policy and procedures in place for employees to report abuse?

The Service Canada website has a useful overview of employer compliance requirements, which also outlines some best practices that employers should adopt (see this link:  Employer Compliance) to demonstrate that they meet the IRPA requirements.

If a potential violation of the IRPA conditions is discovered after December 1, proactive steps will need to be taken to rectify the situation. As well, employers should consider whether they should provide voluntary disclosure. Legal advice should be sought.

Conclusion

Employers that engage TFWs need to be aware of the AMP regime which will be introduced Dec. 1, 2015. It will provide government inspectors with a wide array of potential penalties.

Employers should take steps to familiarize themselves with this new regime and to ensure that their current and future policies and practices will put them in the best position to ensure ongoing compliance with the conditions placed on them by IRPA. This is the best way to avoid having to pay AMPs, and to avoid being listed on the government website that will list all employers that have had to pay an AMP.

Employers should continue to monitor developments around the AMP regime as more information relating to it will likely be posted after the new rules become effective on Dec. 1.


The information below is taken from the IRPA regulatory amendments that are effective as of Dec. 1, 2015.  The actual, up to date IRPA regulations should always be referred to in case the information below is superseded.

Violations of Employer Conditions Under IRPA and Classification Under AMP Regime

Item

Provision under IRPA Regs

Short-form Description of IRPA Condition

Classification under AMP Regime

1.

209.2(1)(b)(i)

Be able to demonstrate that any information provided in respect of a work permit application was accurate during a period of six years, beginning on the first day of the foreign national's employment

Type A

2.

209.2(1)(b)(ii) and 209.3(1)(c)(ii)

Retain any document that relates to compliance with cited conditions during a period of six years, beginning on the first day of the foreign national's employment

Type A

3.

209.3(1)(a)(iii)(C)

For employers of a live-in caregiver: have sufficient financial resources to pay wages that were offered

Type A

4.

209.3(1)(c)(i)

Be able to demonstrate that any information provided for the assessment was accurate during a period of six years, beginning on the first day of the foreign national's employment

Type A

5.

209.4(1)(a)

Report at any time and place specified to answer questions and provide documents

Type A

6.

209.4(1)(b)

Provide required documents

Type A

7.

209.4(1)(c)

Attend any inspection, unless the employer was not notified, give all reasonable assistance to the person conducting the inspection and provide that person with any required document or information

Type A

8.

209.2(1)(a)(ii) and 209.3(1)(a)(ii)

Comply with the federal and provincial laws that regulate employment and the recruiting of employees in the province in which the foreign national works

Type B

9.

209.2(1)(a)(iii) and 209.3(1)(a)(iv)

Provide the foreign national with employment in the same occupation and substantially the same, but not less favourable, wages and working conditions as outlined in the foreign national's offer of employment

Type B

10.

209.3(1)(a)(iii)(A)

For employers of a live-in caregiver: ensure that foreign national resides in a private household in Canada and provides child care, senior home support care or care of a disabled person in that household without supervision

Type B

11.

209.3(1)(b)(i)

Ensure that the employment of the foreign national will result in direct job creation or retention for Canadian citizens or permanent residents, if that was a factor that led to the issuance of the work permit

Type B

12.

209.3(1)(b)(ii)

Ensure that the employment of the foreign national will result in the development or transfer of skills and knowledge for the benefit of Canadian citizens or permanent residents, if that was a factor that led to the issuance of the work permit

Type B

13.

209.3(1)(b)(iii)

Hire or train Canadian citizens or permanent residents, if that was a factor that led to the issuance of the work permit

Type B

14.

209.3(1)(b)(iv)

Make reasonable efforts to hire or train Canadian citizens or permanent residents, if that was a factor that led to the issuance of the work permit

Type B

15.

209.2(1)(a)(i) and 209.3(1)(a)(i)

Be actively engaged in the business in which the offer of employment was made, unless the offer was made for employment as a live-in caregiver

Type C

16.

209.3(1)(a)(iii)(B)

For employers of a live-in caregiver: provide the foreign national with adequate furnished private accommodation in the household

Type C

17.

209.2(1)(a)(iv) and 209.3(1)(a)(v)

Make reasonable efforts to provide a workplace that is free of abuse within the meaning of paragraph 72.1(7)(a) of these Regulations

Type C

 

 

Administrative Monetary Penalty Amounts

Item

Total Number of Points

Type A Violation

Type B Violation

Type C Violation

Individual or Small Business ($)

Large Business ($)

Individual or Small Business ($)

Large Business ($)

Individual or Small Business ($)

Large Business ($)

1.

0 or 1

none

none

none

none

none

none

2.

2

500

750

750

1,000

1,000

2,000

3.

3

750

1,000

1,250

2,000

5,000

10,000

4.

4

1,000

2,000

3,000

7,000

10,000

20,000

5.

5

4,000

6,000

7,000

12,000

15,000

30,000

6.

6

8,000

10,000

12,000

20,000

20,000

40,000

7.

7

12,000

20,000

20,000

30,000

35,000

50,000

8.

8

20,000

30,000

35,000

45,000

45,000

60,000

9.

9 or 10

30,000

45,000

50,000

60,000

60,000

70,000

10.

11 or 12

40,000

60,000

60,000

70,000

70,000

80,000

11.

13 or 14

50,000

70,000

70,000

80,000

80,000

90,000

12.

15 or more

100,000

100,000

100,000

100,000

100,000

100,000

 

Period of ineligibility to use TFW program

Item

Total Number of Points

Type A Violation

Type B Violation

Type C Violation

1.

0 to 5

none

none

none

2.

6

none

none

1 year

3.

7

none

1 year

2 years

4.

8

1 year

2 years

5 years

5.

9 or 10

2 years

5 years

10 years

6.

11 or 12

5 years

10 years

10 years

7.

13 or 14

10 years

10 years

10 years

8.

15 or more

permanent

permanent

permanent

 

Compliance History Factor

Item

Criterion

Points

1.

For Type A and Type B violations — first violation

1

2.

For Type A violations — second or subsequent violation

2

3.

For Type B violations — second violation

2

4.

For Type C violations — first violation

2

5.

For Type B violations — third or subsequent violation

3

6

For Type C violations — second violation

3

7.

For Type C violations — third or subsequent violation

4

 

Severity of the Violation Factor

Item

Criterion

Points

1.

The employer derived competitive or economic benefit from the violation

0 to 6

2.

The violation involved abuse of a foreign national (physical, psychological, sexual or financial)

0 to 10

3.

The violation negatively affected the Canadian labour market or the Canadian economy

0 to 6

4.

The employer did not make reasonable efforts to minimize or remediate the effects of the violation

0 to 3

5.

The employer did not make reasonable efforts to prevent recurrence of the violation

0 to 3

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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