Major Changes To Canada's Intra-Company Transferee Work Permit Guidelines

­­On Oct. 3, 2024, Immigration, Refugees and Citizenship Canada (IRCC) updated and clarified its guidelines for intra-company transferee (ICT) work permits. The changes are significant and represent stricter requirements for ICT work permits, most significantly for specialized knowledge worker transferees.

The changes affect employers seeking to transfer personnel to Canada from related companies. The changes also affect foreign companies seeking to establish new operations in Canada.

Employers need to understand the new guidelines before filing an ICT work permit application. What may have worked in the past, and the documentary evidence needed to apply, have changed.

Employer takeaways

• The new guidelines are stricter, especially for specialized knowledge worker transferees.
• ICT work permit applications will face greater scrutiny and refusal rates will likely rise in the near term as the stricter guidelines are applied.
• The amount of documentation and the evidence needed to support an ICT work permit application has increased. Do not rely on what has worked prior to October 2024, as it may no longer be sufficient. The new guidelines need to be reviewed and taken into consideration on any new ICT work permit applications or ICT extensions.
• The changes appear to be less pronounced for ICT applications made under a Free Trade Agreements (FTAs). Employers that have a choice of filing under an FTA or under the general ICT provisions should carefully review the pros and cons of each option.
• Foreign companies that operate only in their home country and seek to have their first international operation in Canada will no longer be able to use the general ICT work permit category to transfer personnel to Canada.

Background

The intra-company transferee (ICT) work permit category is used to transfer executives, managers or key specialized knowledge workers to Canada from a related foreign entity. These workers are usually essential to support the operations of a Canadian affiliate or subsidiary.

For information on general requirements, see our Guide to doing Business in Canada.

ICT work permits derive from two different legislative sources.

Some ICT work permits fall under the provisions of Free Trade Agreements (FTAs such as CUSMA, CETA, CPTPP, etc.) under R204(a) of the Regulations. Eligibility to apply under a FTA ICT depends on the nationality of the applicant and of the applicant's foreign employer.

There is also a general ICT category under Canada's immigration legislation that may be used regardless of citizenship, under R205(a).

While there are changes to both types of ICTs, it is the general ICT category that is more negatively affected. Companies that cannot utilize a FTA for transfers will face more obstacles.

The changes are part of IRCC's overall goal of reducing the number of temporary residents in Canada and reflect a more hardline approach to interpreting the ICT provisions. It remains to be seen how the new guidelines will be applied by officers.

Key changes

IRCC's Oct. 3, 2024 Program Delivery Update sets out the main changes regarding the general ICT category (non-FTA ICTs under R205(a)). Separate PDUs have also been issued for each FTA. The PDUs have links to each of the new guidelines.

Key changes to both General ICTs and FTA ICTs:

1. The definition of "specialized knowledge" has been clarified. Applicants must demonstrate that they meet all facets of the test.
2. Applicants must show that their position in the foreign enterprise remains available to them throughout their period of time in Canada so that they might return to their position after completing the assignment in Canada. No details on what would be sufficient to prove this is provided by IRCC.
3. Applicants must show a clear employer-employee relationship with the Canadian company. The Canadian company should be directing the day-to-day activities of the TFW. This is designed to prevent the "parachuting in" of TFWs to Canada where there is no real connection to the Canadian company.
4. Rules have been clarified on how to deal with a change in category (specialized knowledge worker to manager or vice versa) for ICT work permit holders. Employers must be very careful to ensure they remain compliant and that a new work permit is obtained prior to a promotion or change of employment terms.

Other Key Changes to the general ICT category:

1. ICTs limited to "Multinational Corporations": This is a major change.
   
   IRCC has added a new requirement that the foreign related entity must be a "multinational corporation" (MNC). An MNC is defined as "a company with business operations in at least one country other than its home country that generates revenue beyond its borders." The guidelines state that: "When assessing an ICT work permit application, officers must ensure that the foreign enterprise is that of an existing MNC with revenue generating operations in at least two countries before establishing an enterprise in Canada." To be eligible to transfer personnel under the general ICT category, the business must already be an MNC. The ICT category cannot be used by a business to become an MNC by establishing its first foreign operation in Canada. Therefore, where a new Canadian operation is to be started, the business must already have active operations in at least two countries before it will be able to use the ICT category to transfer TFWs to Canada. The MNC concept has not been adopted for FTA ICT work permits. The practical effect of this is that a foreign business wishing to launch operations in Canada must already be operating outside of Canada in at least two countries to be able to use the general ICT work permit category to move key personnel to Canada. This change is intended to reduce ICT work permit applications from small foreign businesses or businesses that operate in only one other country outside of Canada. For those situations, a different work permit category would need to be utilized. Will this change negative affect foreign investment in Canada? For example, a $500 million company that operates only in Brazil would not be able to use the ICT work permit category to transfer key personnel to Canada if it wanted to start up its first foreign operation in Canada. While there may be other work permit categories available, denying access to ICT work permits may make it seem riskier to invest in Canada as compared to other countries, if it will be a challenge to temporarily transfer key leaders or specialists to support a new Canadian operation.
2. Significant benefit to Canada: Applications must clearly demonstrate that the work will generate significant economic, social or cultural benefits for Canada, or create opportunities for Canadian citizens or permanent residents.
3. Work location: The new guidelines state that ICT workers must work "at the physical commercial premises where business operations are conducted in Canada."
   
   Businesses in Canada with no physical commercial premises are not eligible under the ICT category, including businesses operating from non-commercial or residential locations, co-shared premises, and virtual businesses with a mailing address in a commercial location. A business based on an entirely remote model, no matter its size, will not be able to use the ICT category. The reference to having to work at "physical commercial premises" has not been explicitly set out in the FTA ICT guidelines. It is not yet clear if this is an oversight or if IRCC intends to apply less restrictive work location rules to FTA ICT applicants.
4. Prevailing wage requirement for managerial ICTs: There has always been a mandatory wage floor/prevailing wage requirement for specialized knowledge ICTs. The guidelines appear to extend this to managerial ICTs as they state: "To prevent wage suppression, wages should not be lower than the prevailing wage for the occupation in the location of work."
5. Specialized knowledge ICTs and foreign work experience: The guidelines appear to create a de facto requirement that the TFW have at least two years of work experience with the foreign related company, instead of a one year minimum.
   
   "Significant experience" is a factor that officers are to consider and "depending on the industry or sector should be two or more years." The instructions tell officers that in "rare cases" less than two years of experience may give a TFW the required level of "advanced proprietary knowledge." Therefore, it appears that in most cases, depending on the industry or sector, TFWs will now need to demonstrate at least two years of work experience within the MNC to meet the specialized knowledge category requirements, instead of a minimum of one year. The references to needing two or more years of experience do not show up in the FTA ICT guidelines.
6. Specialized knowledge ICTs and skill level of occupation: The guidelines set out that a TFW applying in this category should be employed in a high skill occupation, one that falls under TEER 0, 1, or 2 of the National Occupation Classification (NOC) system. Applicants who work in a lower TEER category (TEER 3, 4 and 5) are to be scrutinized very carefully as they are "unlikely" to meet the specialized knowledge test.

Other Key Changes to the FTA ICT category

Mandatory Wage Floor: There has always been a mandatory wage floor/prevailing wage requirement for specialized knowledge workers under the general ICT category. The prevailing wage is the median wage published by ESDC on the Job Bank's Compare wages page for the NOC code of the position and the location of work.

Officially, ICTs under Free Trade Agreements remain exempt from the mandatory wage floor requirement, but the new guidelines may create a de facto prevailing wage requirement. This will depend on how the guidelines are applied and, in particular, the reference to preventing wage suppression.

The ICT FTA guidelines say:

Conclusion

The full effect of these changes remains to be seen, but as a whole they point to a tightening of eligibility requirements for the intra-company transfer category. This is consistent with other recent temporary resident program changes, which are designed to reduce the influx of temporary residents to Canada.

In the new guidelines, IRCC has highlighted that the ICT category is not intended as a means to transfer an enterprise's general work force to affiliated entities in Canada.

Employers need to be aware of these changes and take them into consideration on future ICT work permit applications.

There will likely be some ongoing clarification of the new guidelines over the next number of months. For example, will the stricter requirements be applied to TFWs in Canada who need to renew their current ICT work permit, and will this lead to and increase in refusals on extension requests?

As IRCC continues to reform their programs, employers and foreign workers should monitor the changes carefully to ensure they continue to meet changing eligibility requirements.

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