An economic downturn sometimes forces an employer to make difficult decisions to reduce its workforce, which can also affect its temporary foreign workers. The measures chosen by an employer are likely to result in federal and/or provincial legal obligations for that employer.

In this bulletin, we will discuss the obligations to be complied with by an employer hiring foreign workers so as to ensure compliance with immigration laws and programs when downsizing.1 Other obligations are also likely to apply under the various applicable laws.

Layoffs

By definition, a layoff is temporary. For example, in Québec, when an employee is laid off for a period of less than six (6) months, the employer is under no obligation to send the employee a notice of termination.2 In Ontario, a temporary layoff is a layoff of not more than 13 weeks in any period of 20 consecutive weeks, or a layoff of less than 35 weeks in any period of 52 consecutive weeks if one of the specific situations set out in Ontario law applies.3

The best practice in the case of an employer using the Temporary Foreign Worker Program ("TFWP") would be to inform Service Canada/Employment and Social Development Canada ("Service Canada/ESDC") of each foreign worker temporarily laid off.4 For Québec employers, la Commission des normes, de l'équité, de la santé et sécurité au travail ("CNESST") does not need to be informed of such a situation, unlike in cases of group terminations or individual terminations.5

Employers using the International Mobility Program ("IMP") to recruit foreign workers do not need to notify the Immigration, Refugees and Citizenship Canada ("IRCC") in the case of a temporary layoff. If they wish to do so, they can use the voluntary disclosure form available on the Immigration, Refugees and Citizenship Canada website.6

Individual and Group Terminations

An individual termination is an act by which the employer terminates an employee's employment contract for economic, organizational or administrative reasons. It can be a final termination or a long-term layoff that does not meet the criteria for a temporary layoff under the applicable law. An individual termination generally involves providing a notice of termination to the employee in question.

An individual termination of several employees within a given period may also constitute a group termination within the meaning of the employment standards legislation applicable to the employer.7

The best practice for an employer using the TFWP would be to send Service Canada/ESDC the list of foreign workers affected by individual or group terminations.8 Québec employers subject to the Act respecting labour standards9 are also required to notify the CNESST of terminations via their website by clicking on "MonEspace – Employeurs" or by mailing the CNESST's declaration form regarding the hiring of temporary foreign workers ("Déclaration d'embauches de travailleurs étrangers temporaires," only available in French).10

Even if the employer plans on calling foreign workers back to work, we believe that (with respect to temporary foreign workers) it is best to consider the departure date indicated on the individual notice of termination and the notice of collective termination, if applicable, as being equivalent to a termination date. The obligations in the event of termination under either the employment contract or the TFWP should therefore be implemented by the employer. For example, the low-wage component of the TFWP requires the employer to pay for the return airfare of foreign workers at the end of their employment contract, with the sole exception being where the worker finds another position with an employer who has received a positive Labour Market Impact Assessment (LMIA).

Conversely, an employer who uses the IMP to recruit foreign workers is not required to report an individual or group termination to the IRCC. However, under certain circumstances, it would be advisable to use the voluntary disclosure form available on the IRCC website to notify the immigration authorities of the situation.11 In the event of termination, the employer should also carry out the steps set out in the employment contract, if applicable.

Wage Reductions

As an alternative to terminations or temporary layoffs, an employer can ask employees to voluntarily accept a reduction in wages, benefits or working hours. Employers hiring foreign workers should then notify Service Canada/ESDC or IRCC, depending on the applicable immigration program, of the proposed changes to the job offer and the economic reasons for their decision.

It should be noted that such proposed reduction in wages may be refused by an employee. If the employer decides to unilaterally proceed with such a wage reduction, they could face a constructive dismissal complaint. In the event of such a complaint, an employee could claim damages similar to those arising from wrongful dismissal in court of competent jurisdiction. Under certain circumstances and depending on the applicable legislation, they may also apply for reinstatement.

Compliance Inspections

The employer may have to justify the measures taken during a compliance inspection conducted by Service Canada/ESDC or IRCC, depending on the immigration program. The inspection could be longer and more complex if the employer is unable to provide clear and concise information, as well as the requested supporting documents. It is therefore very important to keep a copy of the standard documents given to employees affected by a group termination, a temporary layoff or a wage reduction in the file of each foreign worker.12

An employer can justify any non-compliance with the period of employment and/or the other conditions of employment set out in the offer of employment by showing that it has implemented the measures in response to serious economic changes directly affecting its business, provided that the measures were not directed disproportionately at foreign workers employed by that employer.13

Group terminations, temporary layoffs and wage reductions are some of the measures that can be used to help an employer to deal with an economic downturn. The employer must also prove that the chosen measure was applied consistently for all its employees, regardless of the employees' migratory status.

It is important to remember, however, that in addition to immigration rules, employers may be bound by other legal and contractual obligations.

Employment Insurance Benefit Eligibility

A foreign worker with a closed work permit is not normally eligible for employment insurance benefits, even if they have accumulated the required number of insurable hours. However, an administrative directive allows employment insurance officers to accept a claim for employment insurance benefits under certain conditions, such as if the foreign worker declares that they are available to accept an offer of employment from a new employer.14

We recommend that employers implementing individual terminations, group terminations or temporary layoffs accompany foreign workers in the process of applying for employment insurance benefits. The employer should, however, make it clear that the final decision regarding their eligibility for benefits rests with the employment insurance officer.

Key Points

Canada's current labour shortage will continue to be a challenge for employers. More and more employers are opting for foreign recruitment. Adverse economic conditions requiring downsizing are often temporary. With compliance inspections by employers on the rise since the implementation of the additional compliance requirements in September 2022, and given that non-compliance with immigration rules could prevent an employer from hiring foreign workers, it is in an employer's best interest to maintain compliance with immigration programs at all times.

Footnotes

1. Temporary Foreign Worker Program (TFWP) and International Mobility Program (IMP)

2. Act respecting labour standards, CQLR c. N-1.1, section 82 (LSA).

3. Employment Standards Act, 2000, S.O. 2000, c. 41, subsection 56(2). In Ontario, it is recommended that employers expressly include the option to impose a temporary layoff under the applicable legislation in their employment contracts, so that they can invoke the provisions of the law.

4. Employer Contact Centre of Service Canada/ESDC

5. Act respecting labour standards, CQLR c. N-1.1, section 82.

6. Hire a worker without an LMIA: voluntary disclosure for employers

7. The definition of a group termination is set out in the provincial or territorial employment legislation, or in the Canada Labour Code, RSC, 1985, c. L-2 for employers under federal jurisdiction. In the event of a group termination, the employer must normally satisfy the specific obligations under the applicable laws, such as notifying the Minister of Labour and/or the union.

8. Employer Contact Centre of Service Canada/ESDC

9. Act respecting labour standards, CQLR c. N-1.1.

10. Déclaration d'embauche de travailleurs étrangers temporaires (available in French only)

11. Hire a worker without an LMIA: voluntary disclosure for employers

12. For example, a notice of temporary layoff or a notice of group termination or a notice of wage reduction, proof that the notice of group termination was sent to the relevant government authority, individual notice of termination, proof of delivery of amounts owed to employees such as wages, overtime amounts, vacation pay, and severance pay if applicable.

13. Immigration and Refugee Protection Regulations, subsections 209.2(3)(c) and 209.3(3)(c), as applicable.

14. Digest of Benefit Entitlement Principles Chapter 10 - Section 2

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.