Discussion paper: Regulatory proposals to enhance the Temporary Foreign Worker Program and International Mobility Program compliance framework

The Government of Canada recently announced extensive reforms to the Temporary Foreign Worker Program (TFWP) to ensure that qualified Canadians and permanent residents are given first chance at available jobs. The Government implemented important changes in 2013 to strengthen the labour market impact assessment process, to impose new conditions on employers, to enhance authorities to verify employer compliance through inspections, and to impose consequences for non-compliance.

On June 20, 2014, the Government of Canada announced further changes to ensure the TFWP continues to operate in the best interest of our country. At the same time, the TFWP was re-organized into two distinct programs to better reflect the major differences between the various streams. The TFWP will now refer to only those streams under which foreign workers enter Canada at the request of employers following approval through a new Labour Market Impact Assessment (LMIA). The new International Mobility Program (IMP) incorporates streams in which foreign nationals are not subject to an LMIA and whose primary objective is to advance Canada’s broad economic and cultural national interest, rather than filling particular jobs.

For those streams that will continue as part of the TFWP, the recent reforms include a new LMIA process that is more comprehensive and rigorous, a cap to limit the proportion of low-wage temporary foreign workers that a business can employ, and a requirement for employers of temporary foreign workers in high-wage occupations to submit transition plans to ensure that they are taking steps to reduce their reliance on foreign workers over time.

As part of these reforms, Employment and Social Development Canada (ESDC) and Citizenship and Immigration Canada (CIC) are moving ahead with enhancements to the compliance framework to better deter and respond to employer non-compliance with TFWP/IMP requirements and conditions.

The purpose of this discussion paper is to provide an overview of proposed regulatory changes and seek comments from interested parties. The next section provides background information on the TFWP and IMP, while the following section outlines the proposed approach. Information on how stakeholders may submit feedback is provided in the final section. Comments will be accepted until October 16, 2014.

1.0 Overview

The TFWP serves as a last and limited resort to allow employers to bring foreign workers to Canada on a temporary basis to fill jobs for which qualified Canadians and permanent residents are not available. In the past, the TFWP (which previously included the IMP) was jointly managed and administered by ESDC and CIC with the support of the Canada Border Services Agency (CBSA), under the authority of the Immigration and Refugee Protection Act (the Act) and the Immigration and Refugee Protection Regulations (the Regulations). As the TFWP has now been split into two distinct programs, ESDC and CIC will continue to be jointly responsible for the TFWP, while CIC will be responsible for the IMP.

The Government of Canada has reformed the TFWP to ensure that the Program serves the national interest and that it is not abused by employers. Economic Action Plan 2013 and Economic Action Plan 2014 announced a series of measures to ensure that Canadians and permanent residents are given the first chance at available jobs, including measures to prevent, detect, and respond to employer non-compliance with Program conditions. The Economic Action Plan 2014 Act, No.1, which received Royal Assent on June 19, 2014, amended the Act to authorize a system of administrative monetary penalties (AMPs). While the Departments can currently ban non-compliant employers for two years, the reforms announced on June 20, 2014 would add longer and shorter bans, as well as AMPs, so that the consequences of non-compliance are proportionate to its seriousness. Once implemented, these reforms would provide the TFWP and the IMP with a comprehensive compliance regime to encourage compliance and respond appropriately when employers do not comply with Program conditions.

2.0 Background

2.1 Roles and responsibilities

The TFWP is administered by ESDC/Service Canada and CIC under the authorities of the Act and Regulations. Employers who wish to hire a foreign national through the TFWP must request a labour market impact assessment (LMIA) (formerly called a labour market opinion [LMO]) from ESDC. ESDC assesses these requests and issues an LMIA stating whether the employment of a foreign national is likely to have a positive, neutral, or negative effect on the Canadian labour market. The employer then provides the foreign national with the LMIA so that it can be submitted to CIC with his or her work permit application. Immigration officers consider LMIAs (where required) when deciding whether to issue a work permit authorizing the foreign national to work in Canada, and would not issue a work permit if the employment of the foreign national is likely to have a negative effect on the labour market.

CBSA’s role in the TFWP and IMP includes, but is not limited to, the assessment and issuance of work permits on behalf of CIC at Canadian ports of entry and the enforcement of the Act. CBSA officers at ports of entry make the final decision on who may enter Canada.

The Act and the Regulations set out the requirements and conditions under which an employer may hire and employ a foreign national, including, for example, the conditions related to wages, occupation, and working conditions, and the length of time an employer must advertise a position before seeking to hire a foreign national. The positive LMIA and its associated annex set out specific conditions an employer must uphold. For example, an employer may commit to hiring or training a specific number of Canadians or permanent residents to transition away from employing foreign nationals. “Non-compliance” occurs when an employer fails to uphold these conditions and requirements as set out in the Regulations.

2.2 Proposed measures to prevent, detect and respond to employer non-compliance

The LMIA and work permit assessment processes are designed to assess risk and prevent harm to the Canadian labour market. In 2013, 19% of all LMIA applications resulted in negative opinions. If new information is received after an LMIA or work permit is issued, ESDC may suspend or revoke LMIAs so that they cannot be used to obtain a work permit, and CIC may revoke a work permit. When LMIAs are suspended or revoked, the employer’s name may be placed on a public blacklist entitled “Employers who have broken the rules or been suspended from the Temporary Foreign Worker Program”.

During the employment of a foreign national or after that employment has ended, officers may conduct inspections to verify employer compliance with Program conditions (one in four employers will be inspected each year). This can include on-site visits and interviews with foreign nationals and other employees. LMIAs can be suspended while the inspection is underway, particularly where there may be a risk of harm to a TFW or to the labour market. Currently, employers found to be non-compliant with a TFWP/IMP condition are banned from the Programs for two years, their name and address are placed on a public list, entitled “Ineligible employers”, and any LMIAs and work permits associated with that employer are revoked.

The existing authorities to ban a non-compliant employer for two years and revoke associated LMIAs and work permits may be too severe in some circumstances and not severe enough in others. These consequences also do not ensure that an employer does not benefit financially from non-compliance. It is important, therefore, that a range of compliance measures be available to promote employer compliance with Program conditions and to respond appropriately when employers do not comply.

The new TFWP/IMP compliance framework, with the proposed changes, is illustrated in Figure 1. As the diagram shows, some compliance activities are preventative and educational in nature. In cases where a determination of non-compliance with TFWP/IMP conditions is made, AMPs and varied ban lengths are proposed in addition to the existing two-year ban to encourage compliance when other measures would not be effective or proportionate to the violation.

The introduction of AMPs would help ensure that the TFWP and IMP have appropriate measures to respond to a range of non-compliance, in particular to cases where a ban from the Programs may be too severe or would be ineffective in encouraging compliance. AMPs may also be appropriate in cases where an employer has benefited financially from non-compliance, for example by underpaying foreign nationals and gaining an unfair market advantage.

Expanding the range of bans from two years to include one, five, and ten years would also help ensure that the response to employer non-compliance is proportionate to the gravity of the violation. In particular, longer bans would provide a more appropriate response to egregious or repeated cases of non-compliance where it is important to ensure that an employer cannot hire foreign nationals and that the labour market and foreign nationals working in Canada are protected.

As part of the implementation of these enhanced compliance measures, the TFWP and IMP would publish policies and guidelines to support the use of each type of sanction, including cases where sanctions could be combined. For example, an AMP and a ban could be issued together where this is an appropriate and proportionate response to an incident of non-compliance.

Figure 1: Proposed compliance framework for employers of foreign workers

The text description of the image is located below
Text description of Figure 1

The title of the figure is: “Proposed compliance framework for employers of foreign workers”.

The framework is illustrated by a pyramid of six levels.

Each level of the pyramid shows the CIC and ESDC responses to incidents of non-compliance, except for the first, or base, level of the pyramid.

The base level is labeled “Educations and Awareness, (information on the website, pamphlets, Employer Contact Centre)”.

The second level is labeled “Warning letter”.

The third level is divided vertically into two parts.

The left side of the third level of the pyramid pertains to ESDC response to non-compliance and is labeled “Suspension of an LMIA”.

The right side of the third level of the pyramid pertains to CIC response to non-compliance and is labeled “Suspension of work permit processing”.

The fourth level of the pyramid is divided vertically into two parts.

The left side of the fourth level of the pyramid pertains to ESDC response to non-compliance and is labeled “Revocation of an LMIA”.

The right side of the fourth level of the pyramid pertains to CIC response to non-compliance and is labeled “Revocation of a work permit”.

The fifth level of the pyramid is labeled “AMPs”.

The sixth level, or apex, of the pyramid is labeled “Bans”.

There is a solid line bracket on the left side of the pyramid covering the fifth (AMPs) level and the sixth (Bans) level of the pyramid that is labeled “EMPLOYER NAME IS PUBLISHED”.

There is a dotted line bracket on the left side of the pyramid covering the third (Suspension of an LMIA) level of the pyramid and the fourth (Revocation of an LMIA) level of the pyramid. This bracket indicates that, for suspension and revocation of an LMIA, the employer’s name will be published.

There is a solid line bracket on the right side of the pyramid covering the fifth (AMPs) level and the sixth (Bans) level of the pyramid that is labeled “Employer found non-compliant as a result of an inspection”.

3.0 Enhanced compliance framework

3.1 Stronger standards for compliance

Non-compliance with TFWP/IMP conditions may be justified under the existing Regulations. These justifications are listed in section 203(1.1) of the Regulations and include changes to federal or provincial laws or to collective agreements, changes in economic conditions that affect all employees, good faith errors, unintentional accounting or administrative errors, and force majeure (e.g., a fire or flood).

In many cases, the current Regulations also do not allow consequences to be applied to an employer found to be non-compliant if that employer takes corrective action. For example, where an unintentional accounting error results in a temporary foreign worker being underpaid, the employer cannot be sanctioned if those wages are repaid, even though the employer did, in fact, fail to comply with Program requirements.

Regulatory amendments to the existing justifications would be introduced so that consequences could be imposed on non-compliant employers regardless of whether they take corrective action. Specifically, non-compliance resulting from good faith errors and unintentional accounting or administrative errors would be subject to consequences such as an AMP and/or a ban, and the employer’s name would be published. The employer’s response to the violation (e.g., repaying wages) would be taken into account in determining the AMP amount or the length of the ban so that there is still an incentive for the employer to take corrective action.

Justifications related to force majeure and changes to federal or provincial laws, collective agreements, and economic conditions (e.g., a temporary foreign worker’s hours are reduced below what was stated on the job offer due to an economic downturn that reduced the hours of all workers) would not be changed. Sanctions such as AMPs and bans would not be issued to non-compliant employers when a justification applies.

3.2 Consequences for non-compliance

This section outlines consequences that would be applied only when an inspection has been completed and an employer has been determined to be non-compliant with a condition in section 209.2, 209.3 or 209.4 of the Regulations. This means that there is a final determination of non-compliance that is not justified as described in Section 3.1 above. No changes are proposed to the way inspections are conducted.

3.2.1 Proposed AMPs system

Administrative monetary penalties (AMPs), are financial penalties imposed in response to the contravention of legislative or regulatory requirements. AMPs are a form of administrative sanction, as opposed to criminal sanctions. AMPs provide a flexible tool to complement other types of sanctions such as orders, directions, and warnings. By having AMPs as a compliance tool, regulators can better ensure that the consequence of non-compliance is proportionate and better address situations where a person may have benefitted financially from non-compliance.

Many federal regulators currently impose AMPs for regulatory violations. The TFWP and IMP have reviewed the AMPs schemes of the Canada Pension Plan (CPP), Old Age Security (OAS), and Employment Insurance (EI) programs administered by ESDC; the CBSA; Environment Canada (EC); Health Canada (HC) – Product Safety; and the National Energy Board (NEB); among others. Many provincial and territorial regulators also have AMPs systems to deter non-compliance with legislative and regulatory requirements, and guest worker programs in some other countries (analogous to Canada’s TFWP/IMP) include civil penalties for employers that break the rules (e.g., Australia, United Kingdom).

The recent amendments to the Act provide authority to make regulations establishing a system of administrative monetary penalties for contravention of conditions applicable to employers hiring foreign nationals. Accordingly, the Minister of Employment and Social Development and the Minister of Citizenship and Immigration intend to propose amendments to the Regulations to establish when AMPs could be applied to employers, the method to determine the amount of an AMP, and the process for the administrative review of decisions.

It is proposed that the minimum AMP amount be $500 and the maximum amount payable for a single violation be $100,000. $500 would ensure that employers take compliance seriously while not being punitive for minor violations, while the $100,000 maximum would be appropriate for serious violations, particularly when an employer has significantly benefitted financially from non-compliance.

Penalty amounts would vary based on whether the employer is an individual or small businessFootnote 1, or a large businessFootnote 2 or corporation, as well as the employer’s compliance history and the severity of the violation.

In cases where an employer is found non-compliant with more than one condition, the AMP amounts would be calculated separately and added together to produce the total amount payable. When a violation affects more than one foreign national, each foreign national would be treated as a separate case and the resulting penalties would be added together. For example, if a violation affects five foreign nationals and results in an AMP of $10,000 in each case, the total penalty payable would be $50,000.

The names of all employers found non-compliant and issued an AMP would be published to ensure that potential foreign workers and the general public are aware that the employer has not complied with Program conditions.

3.2.2 Proposed ban lengths

A ban is an administrative sanction preventing an employer from hiring foreign workers through the TFWP and IMP for a specified period of time. As with AMPs, bans are intended to encourage compliance with TFWP/IMP conditions and requirements. However, bans have an additional objective in that they protect the Canadian labour market and foreign nationals working in Canada from harm by denying the employer future access to foreign workers. For this reason, the names of employers who have been banned are published so that potential foreign workers and the general public are aware that the employer is ineligible to hire foreign nationals.

ESDC and CIC propose to amend the Regulations to provide for bans of one, five, and ten years, in addition to the existing authority to ban employers found non-compliant for two years. A permanent ban, where appropriate, is also under consideration. Expanding the range of bans available would help to ensure the response to employer non-compliance is proportionate to the violation. Longer bans, for example, would provide a more appropriate response to egregious or repeated cases of non-compliance where it is important to ensure that an employer cannot hire foreign workers and that the labour market and foreign nationals working in Canada be protected.

Bans would continue to be applied to employers found to be non-compliant with conditions for which an inspection may be conducted (i.e., conditions in subsections 209.2, 209.3 and 209.4 of the Regulations). The ban length for any particular case would vary according to the type of violation, the compliance history, and the severity of the violation. The type of employer (i.e., small or large business) would not affect the length of the ban.

In cases where an employer is found non-compliant with more than one condition, the ban lengths would be calculated separately and the longest resulting ban would be applied. When a violation affects more than one foreign national, bans would not be cumulative as with AMPs. For example, if a violation affects five foreign nationals and results in a ban of five years in each case, the total ban would be five years.

The names of all employers found non-compliant and banned from the Programs would be published.

3.2.3 Violations

It is proposed that the violation of all conditions for which an inspection may be conducted be subject to a possible AMP and/or ban. This would include conditions listed in sections 209.2, 209.3 and 209.4 of the Regulations relating to:

  • the genuineness of the job offer;
  • the employment of a live-in caregiver;
  • wages, occupation and working conditions;
  • reasonable efforts to provide a workplace free from abuse;
  • labour market impact;
  • reporting and document retention; and,
  • cooperation during inspections.
Step 1: Classifying violations

The proposed approach would classify violations into three types (shown in Table 1) based on the risk that breaching the condition could have bad effects on the labour market or on foreign nationals. Generally, penalties for violations that harm the labour market or individuals (Types B and C) would be higher than for less serious violations (Type A). However, the proposed methodology (shown in tables 2-4) also enables maximum penalties for Type A violations, depending on the circumstances.

Table 1: Employer Conditions
Type A Type B Type C
Must be able to demonstrate that all information on LMIAs was accurate during the previous 6 years –209.2(1)(b)(i), 209.3(1)(c)(i) Must demonstrate efforts to hire and train Canadians/PRs, if that was a condition that led to a positive LMIA - 209.3(1)(b)(iv) Must demonstrate reasonable efforts to provide a workplace free of abuse - 209.2(1)(a)(iv), 209.3(1)(a)(v)
Must be able to demonstrate that all information provided for employer-specific work permit applications was accurate – 209.2(1)(b)(i) Must demonstrate that Canadians/PRs have been hired or trained, if that was a condition that led to a positive LMIA - 209.3(1)(b)(iii) For Live-in Caregiver Program: Must demonstrate that adequate furnished private accommodation has been provided to the foreign national - 209.3(1)(a)(iii)(B)
Must attend any inspection, unless no prior notification was provided - 209.4(1)(c) Must demonstrate job creation or retention for Canadians/PRs, if that was a condition that led to a positive LMIA - 209.3(1)(b)(i) Must demonstrate that the employer is actively engaged in the business in which the job offer was made - 209.2(1)(a)(i), 209.3(1)(a)(i)
Must provide relevant documents to be examined as requested - 209.4(1)(b) Must demonstrate skills and knowledge transfer to Canadians/PRs, if that was a condition that led to a positive LMIA - 209.3(1)(b)(ii)
For Live-in Caregiver Program: Must demonstrate sufficient resources to pay wages - 209.3(1)(a)(iii)(C) Must report any time and place with requested documents for the purposes of an inspection - 209.4(1)(a)
Must retain all documents relevant to demonstration of compliance with conditions for 6 years, beginning on the first day of the foreign national’s employment: - 209.2(1)(b)(ii), 209.3(1)(c)(ii) Must comply with and remain in compliance with all federal, and provincial laws on employment and recruitment - 209.2(1)(a)(ii), 209.3(1)(a)(ii)
For Live-in Caregiver Program: Must demonstrate that foreign national cares for a child, senior or disabled person - 209.3(1)(a)(iii)(A)
For Live-in Caregiver Program: Must demonstrate that foreign national resides in the household - 209.3(1)(a)(iii)(A)
Must demonstrate that all foreign nationals have been provided with the same occupation and substantially the same, but not less favourable, wages and working conditions, as outlined in the job offer – 209.2(1)(a)(iii), 209.3(1)(a)(iv)

3.2.4 Determining AMP amounts and ban lengths

The AMP amount or ban length would be adjusted based on the circumstances of the violation so that the consequence is proportionate to the impact. It is proposed that penalties be adjusted according to the following variables:

  • the type of violation;
  • the severity of the impact of the violation;
  • the history of violations of TFWP/IMP conditions by the employer within the previous 10 years; and,
  • for AMPs only, the type of employer (individual/small business or large business).

These variables could be evaluated and points assigned in a manner similar to the two tables below. The total points would be used to determine the final AMP amount or ban length. (Points systems are commonly used in AMPs regimes, for example, the AMPs system used by the National Energy Board.)

Step 2: Applying variables
Table 2: History
Criteria Points
1. For Type A and B violations, the violation is a first offence +1
2. For Type A and B violations, the violation is not a first offence +2
3. For Type C violations +2
Table 3: Severity
Criteria Points
1. The employer derived competitive or economic benefit +1 to +3
2. The violation involved significant financial harm to a foreign national +1 to +4
3. The violation involved abuse of a foreign national (e.g., physical or psychological harm) +1 to +6
4. The violation negatively affected the Canadian labour market +1 to +6
5. For the conditions to demonstrate LMIA accuracy (section 209.3(1)(c)(i)) and work permit accuracy (section 209.2(1)(b)(i), the violation involved a deliberate attempt to mislead through inaccurate information and would have affected the decision to issue an LMIA or work permit +6
6. The employer did not make reasonable efforts to mitigate or reverse the impact of the violation, where possible.* +2
7. The employer has not taken steps to prevent recurrence of the violation +2
8. Other factors (to be listed in the Notice of Violation) +1 to +6

*If it is not possible to mitigate or reverse the impact, no points would be assigned.

Guidance documents would clearly explain each criterion, including detailed instructions and example scenarios to assist program officers in making determinations. In particular, where a range of points is available, clear instructions would be developed to ensure that the criteria be applied in a consistent manner across sectors and regions. These documents could be made public to enhance transparency for stakeholders.

Finally, the total number of points would be used to determine the AMP amount and/or ban length as shown in Table 4.

Step 3: Determining sanctions
Table 4: AMP amounts and ban lengths
Points Type A Type B Type C
Individual or Small Business Large Corp. Individual or Small Business Large Corp. Individual or Small Business Large Corp.
1 $500
No ban
$750
No ban
$750
No ban
$1,000
No ban
n/a* n/a*
2 $750
No ban
$1,000
No ban
$1,250
No ban
$2,000
No ban
$2,500
No ban
$4,000
No ban
3 $1,000
No ban
$2,000
No ban
$10,000
No ban
$20,000
No ban
$25,000
No ban
$50,000
No ban
4 $5,000
No ban
$10,000
No ban
$20,000
No ban
$35,000
No ban
$35,000
No ban
$60,000
No ban
5 $10,000
No ban
$20,000
No ban
$35,000
No ban
$50,000
No ban
$45,000
1-yr. ban
$70,000
1-yr. ban
6 $15,000
No ban
$30,000
No ban
$50,000
1-yr. ban
$65,000
1-yr. ban
$60,000
2-yr. ban
$80,000
2-yr. ban
7 $20,000
1 or 2-yr. ban
$40,000
1 or 2-yr. ban
$65,000
2-yr. ban
$80,000
2-yr. ban
$80,000
5-yr. ban
$90,000
5-yr. ban
8 or more $100,000
5 or 10-yr. ban
$100,000
5 or 10-yr. ban
$100,000
5 or 10-yr. ban
$100,000
5 or 10-yr. ban
$100,000
10-yr. ban
$100,000
10-yr. ban

* All Type C violations will have two points on Table 2.

3.2.5 Service of documents

The regulatory amendments would set requirements for notices of violation, which would include a notification that a determination of non-compliance has been made, the sanction that has been issued (an AMP and/or a ban), and details on how payments can be made in the case of an AMP. The amendments would also include details about how documents such as notices of violation must be served on employers. For example, documents may be served in person, or by registered mail, courier, or other electronic means.

3.2.6 Administrative review process

It is proposed that the Regulations provide an administrative review process for employers who wish to challenge a determination of non-compliance, the amount of an AMP, or the length of a ban. The process would be explained in the notice of violation, and would be conducted by an official who was not involved in the original determination of non-compliance. Employers who are not satisfied with the outcome of the administrative review would continue to have the option to pursue judicial review.

3.2.7 Publication of employer names

ESDC and CIC currently have authority to publish the names and addresses of non-compliant employers who receive a 2-year ban from the Programs. This would continue if compliance measures were expanded to include AMPs and varied ban lengths. For all final determinations of non-compliance, the employer name, address, date of the finding of non-compliance, nature of the violation, and AMP amount and/or ban length would be published on the TFWP and/or IMP website.

3.2.8 Collection of AMPs

The notice of violation would specify that employers must pay the AMP within 30 days from the date that the notice was issued. This time period would be suspended if an employer requests an administrative review. If an employer cannot pay the AMP amount within the specified time period, the notice of violation would contain a process by which the employer can ensure the AMP is paid. New requests for an LMIA or work permit would not be processed until the AMP is paid or an arrangement to pay it has been made.

Footnotes

Footnote 1

A “small business” is defined as any business, including its affiliates, that has fewer than 100 employees OR less than $5 million in annual gross revenues. This definition is based on the Treasury Board of Canada Secretariat guide, “Hardwiring Sensitivity to Small Business Impacts of Regulation: Guide for the Small Business Lens.”

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Footnote 2

A “large business or corporation” is defined as any business that is not a small business.

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