The Corporate Relocation Quarterly, December 2006

The Corporate Relocation Quarterly™ is a is a quarterly review of current developments in Canadian and American immigration law relating to the international relocation of human resources. It is a publication of the lawyers and attorneys at the Toronto law firm of Mamann & Associates. The articles contained herein are intended for lawyers, immigration professionals, human resources personnel and other consumers of professional immigration services.

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Many Canadians who may be tired of the winters here seek greener or, perhaps, warmer pastures south of the border.

Invariably, their quest leads them to the North American Free Trade Agreement.

Canada, the United States and Mexico entered into this treaty to facilitate the trade of goods and services between them. Since international commerce is difficult to conduct without moving people quickly across international borders, NAFTA contains a chapter which expedites or facilitates certain immigration applications.

These provisions only apply to citizens, and not permanent residents, of the three member states and only deals with temporary admission.

Although there are several types of temporary workers covered by NAFTA, one of the more common ones is the "intra-company transferee". This category is intended to expedite the transfer of senior personnel from a corporation in one country to its related company in another country.

To qualify, the employee is required to have been employed continuously for one year within the three-year period immediately preceding the date of the application in a capacity that is managerial, executive, or involving specialized knowledge.

"Managers" are viewed as those whose duties include managing a part of a company or a core function of the company, controlling the work of others, or overseeing the organizations daily functions. "Executives" are expected to direct the management, or some component of the organization, establish rules and policies, and take direction only from the highest members of the organization.

"Specialized knowledge" relates to significant aspects of the company, including but not limited to, its product, equipment or techniques. Such knowledge must be crucial to the company’s ability to stay competitive in the marketplace and must have been gained through extensive prior experience with that employer. An employee who is highly skilled is not necessarily a person who has specialized knowledge.

The employee must be destined to a similar position with the US "subsidiary or affiliate" of the Canadian company. This relationship usually means that one of the companies owns the majority of the shares of the other company or that the majority of the shares of the two companies are owned by the same individual or entity.

It is acceptable if the employee is seeking admission to "start-up" the US company provided that the company has already leased or purchased commercial premises in the US. If the Canadian company is essentially a one-man show, the proposed transfer will likely be refused since the operations of the Canadian company may cease thereby rendering the arrangement not a true "transfer".

The application is submitted at the port-of-entry or at a US pre-flight clearance station at a Canadian airport and is usually adjudicated immediately as an application for an L-1 visa. Family members may qualify for L-2 status which allows spouses to work and children to study in the US.

The L-1 is popular since it can later be used as a basis for a green card application. Permanent residents of Canada who wish to apply for an L-1 visa can do so, but not through immediate processing at a US port-of-entry or pre-flight inspection station.

Both the United States and Canada have provisions in their respective immigration regulations that allow qualified entrepreneurial applicants to apply for work permits. Many of the established criteria are similar, but there are also some key differences.

An E-2 visa is geared towards individuals who wish to establish a business in the US. In Canada, such work permits can be issued under Regulation 205(a) of IRPA where significant benefit to Canada can be demonstrated.

When entering the US as an entrepreneur, the first major factor that will be considered is the applicant’s residency. An individual intending to establish a business in the United States must be a citizen of a treaty nation in order to be permitted to apply for this visa. These countries include Canada, Chile, Japan, Mexico and Pakistan, among others. A full list is available in 9 Foreign Affairs Manual, s. 41.51, Exhibit 1. An applicant who wishes to establish a business in Canada can be from any country. Both countries require that all applicants otherwise meet all other admissibility requirements.

In applying for an E visa, details of the investment must be addressed fully in the submission package. The financial investment must be substantial, which is assessed with reference to the following factors: 1) the amount of qualifying funds invested weighted against the total cost of purchasing or creating the enterprise; 2) the amount normally considered sufficient to ensure the investor’s financial commitment to the successful operation of the enterprise; and 3) a magnitude of investment to support the likelihood that the investor will successfully develop and direct the enterprise. In addition to this requirement, these funds must be "at risk" to the applicant, and their acquisition must be fully documented. Generally, the investment must be made at the time that the application is made. The US Consulate in Toronto has indicated that they will accept money that is in escrow pending the outcome of the visa application.

Canada does not have the same established investment test. The applicant must instead show that the intended investment is reasonable, and that the applicant has the financial ability to establish a business in Canada.

Active participation in the business is a requirement for both Canada and the US. There has to be a need for the entrepreneur to be in the country, and the only mechanism to prove that is through substantive participation. A well-prepared business plan must reflect this requirement. Documentary evidence of past business experience will also substantiate the applicant’s business acuity to establish and/or run the specified business. Passive investments can be managed from abroad, so it is crucial that this point is addressed fully in both applications.

As with any temporary visa to Canada, intent remains a crucial issue that must be examined by an officer. In order to receive an entrepreneur work permit for either country, the applicant must show a clear intent that they are willing to establish a business and leave once it is running, or that the business is temporary in nature. If an applicant is unable to make a clear case for this, Canadian Immigration officials will be more likely to refuse an application, regardless of the extent of the investment. While the Canadian visa applicant is not required to maintain a residence abroad, s/he must convince an officer that their intent in Canada is truly temporary. The officer will examine the applicant’s ties to their home country in order to make this assessment. However, in some cases, an applicant can apply for permanent residence as an entrepreneur and request a work permit in order to enter Canada early for establishment, with the knowledge that should their application for permanent residence be refused, they will be required to leave upon expiry of the work permit.

The US addresses intent a bit differently. It is not a requirement that the non-immigrant visa holder retain a separate residence abroad. However, intent to return to their home country must be shown by an entrepreneur’s statement to that effect, or other similar evidence.

It should be noted that neither an E-2 visa nor a Canadian significant benefits work permit will entitle the holder to permanent residence. In either case, a separate application for permanent residence must be made. Nevertheless, both visas offer an entrepreneur the ability to enter either the US or Canada to test the waters to determine if their business will be successful. For many, the ability to establish business ties before making a permanent residence commitment is the central attraction of the entrepreneur visa.

Any applicant who successfully obtained a Labour Market Opinion (LMO) may still be refused a work permit if an immigration or visa officer is not satisfied that the applicant can satisfy the job requirements of the position being offered.

One would think that the employer is in the best position to determine whether or not a candidate has the necessary skills and experience for a particular job being offered. However, in reality, immigration officials can refuse a work permit application on this basis even where an LMO has been issued.

Companies that rely on foreign talent can suffer tremendously if they do not ensure that a work permit application includes a description of the job orientation that they intend to provide to a worker who may not be accustomed to Canadian practices and standards.

A recent case of the Federal Court was decided in the context of the food industry. However, the decision has wide implications for employers in all sectors as to how far a visa officer can go in deciding whether or not a foreign worker can adapt to a position in the Canadian workplace environment.

In Randhawa v. Minister of Citizenship and Immigration [2006] FC 1294, an Indian Restaurant in Toronto had gone to considerable lengths to hire a cook who specialized in North Indian cuisine. At his interview in New Delhi, the chef encountered a visa officer who doubted the applicant’s ability to maintain a standard of hygiene and sanitization expected in the Canadian context.

After attending a food hygiene course at the visa officer’s behest, the applicant was refused a work visa.

In reviewing the decision, Kelen J. held that:

". . . a visa officer is not an expert on food hygiene, yet the visa officer "grilled" the applicant on this subject. The Court concludes that the intense questioning of the applicant by the visa officer on his ability to "maintain high standards of hygiene and sanitation" was an unreasonable basis to form the conclusion that there were reasonable grounds to believe that the applicant is unable to perform the assistant cook job offered by the Mantra Indian restaurant in Toronto."

Kelen also held that the officer erred by failing to consider that the employer would also train the applicant after arrival in Canada, concluding that:

"While it is reasonable to require that an applicant satisfy the job requirements of a particular position before obtaining a work visa, it is unreasonable not to take into account some measure of job orientation that would inevitably be provided to the claimant."

This decision should come as welcome news to employers who will require the completion of posthiring training programs, such as WHMIS, as it offers some assurance that their hiring decision will not be undermined by an overzealous examination at a visa post by officers who are not necessarily in the best position to assess a candidates employment suitability.

On November 15, 2006 the Minister of Citizenship and Immigration announced improvements to the temporary foreign worker program. These changes are designed to improve access to the foreign labour market by reducing costs and decreasing processing times for Canadian employers. Unfortunately, these initiatives will only benefit employers in Alberta and British Colombia.

Although the labour market in these provinces is quite tight, labour shortages are also common in other regions of the country. It is not clear from the Minister’s announcement whether the program will be expanded to include other regions or specific industries.

The changes include:

• the creation of regional lists of occupations considered to be in demand. Employers seeking to hire employees in the specified occupations will now be eligible for shorter, simpler and less expensive advertising requirements in order to obtain a Labour Market Opinion. These lists include a broad range of occupations from petroleum engineers to light duty cleaners;

• a new information guide developed in order to provide employers with better information on the requirements of the foreign worker program. In the past, information concerning the hiring of foreign workers could be complex and difficult to access for Canadian employers, especially for small businesses. The idea behind the new initiative is to facilitate access for small employers to foreign labour markets; and

• the creation of Federal-Provincial working groups in the designated provinces. For now only Alberta and British Colombia will identify existing and emerging skill shortages and determine the best ways to respond to these shortages quickly and in a manner that will respond to the needs of specific regions.

Although the new initiative has been welcomed by many interested groups it is seen as a temporary, piecemeal measure which will only address Canada’s labour problems in a limited way and within limited regions of Canada.

At present, it remains to be seen whether these changes to the temporary foreign workers program will herald a new era of inter-governmental co-operation.

We are pleased to be participating at the upcoming HRPAO’s conference in Toronto.

Please take this opportunity to visit us at Booth 815 to meet with our managing partner Guidy Mamann. Mr. Mamann is a former immigration officer and is a syndicated immigration columnist. He has over 20 years of Canadian and US immigration experience.

Also on hand will be Jennifer Nees, our firm’s US attorney. She is a member of the Bars of Ontario and Massachusetts and has extensive experience in corporate related immigration.

Both will be available to discuss your company's immigration-related needs.

We look forward to seeing you at our booth. Please visit: www.hrpao.org/conf2007

Reminder Beginning January 23, 2007, ALL persons, including U.S. citizens, traveling by air between the United States and Canada, Mexico, Central and South America, the Caribbean, and Bermuda will be required to present a valid passport, Air NEXUS card, or U.S. Coast Guard Merchant Mariner Document.

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