Requirements for Foreign Employees to Work
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.
The Canadian government recently 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 minimize 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 Organization (PEO) to assist in the hiring and other human resource related duties. PEOs are Canadian companies that help ensure foreign employers comply by 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
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.
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.
For the foregoing reasons, employers generally should not conduct record checks until a conditional offer of employment has been made, and then mostly only with employee 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
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. 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. 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. Most employers therefore reserve this type of question until they are prepared to make a conditional offer of employment.
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.