Canada: Immigration Implications Of Corporate Acquisitions, Restructurings And Changes

Last Updated: August 22 2019
Article by Bill MacGregor

Companies and human resource managers need to be aware of the potential immigration implications that corporate changes, acquisitions or restructurings may have on temporary foreign workers (TFWs) that they employ in Canada.  The immigration and work permit implications must be assessed before changes occur. 

Corporate immigration expertise is needed to avoid pitfalls and should be used as part of the due diligence process in any acquisition that involves TFWs in Canada.  If not done correctly, the acquirer and managers directing the acquirer may become non-compliant under the Immigration and Refugee Protection Act upon closing.

Corporate changes and restructurings:  Immigration considerations

Canada's immigration department, IRCC, has a guideline on work permit considerations for mergers, acquisitions and company changes:  IRCC Guidelines on Employer Restructurings and Name Changes. Review this guideline well in advance of any changes.  Note that the guideline is updated by IRCC from time to time.

The IRCC guideline sets out when a new LMIA (Labour Market Impact Assessment) or work permit may be required.  The rules apply to employer-specific work permits under both the LMIA regime and under LMIA-exempt work permit categories such as the intra-company transferee category and NAFTA.

The guideline does not apply to TFWs who hold open work permits. Open work permits, such as post-graduate work permits, do not list a specific employer.

If the legal entity employing the TFW is not changing as a result of the transaction (such as in a share purchase scenario) nothing will need to be done as long as the TFW's terms of employment remain the same after the acquisition and as long as the underlying eligibility for the work permit category remains in place after the change.

In an asset purchase scenario or in some other types of company restructurings, the legal entity employing the TFW changes.  Whether or not a new LMIA or a new work permit is required will depend on applying the "successor in interest" definition.

Per the IRCC guideline (as of August 2019): "To establish a successor in interest, the successor entity must demonstrate that it has substantially assumed the interests and obligations, assets and liabilities of the original owner and that it continues to operate the same type of business as the original owner."  If it is a successor in interest scenario, and the terms of employment of the TFW are not changing, a new LMIA or work permit will not usually be required per the IRCC guidelines.

However, where the TFW's terms of employment or position will change, a LMIA and a new work permit may be needed.

Failure to assess the situation and to action any necessary LMIA or work permit changes will make the acquiring company non-compliant under Canada's immigration legislation and under IRCC's employer compliance regime.  It could also jeopardize the legal status of affected TFWs.

The acquirer, if it is inheriting TFWs or taking over the employment of TFWs in Canada, will assume obligations under IRPA's employer compliance regime. 

The compliance conditions imposed by IRPA include the following: "The employer must provide the foreign worker with employment in the same occupation as that set out in the offer of employment and with wages and working conditions that are substantially the same as, but not less favourable than, those in the same offer". Therefore, changing remuneration or the terms of employment before obtaining a new work permit may make an employer non-compliant.

Other employer conditions and obligations are set out at this IRCC website: Employer Compliance Conditions and Inspections.  A finding of non-compliance can lead to monetary penalties and a ban on using the foreign worker program.  The acquiring entity must be aware of its obligations and should ensure that it is not inheriting any compliance problems from the target company.

Due diligence considerations

In terms of other due diligence considerations, set out below is a non-exhaustive list that companies and their corporate counsel may need to consider if TFWs are involved in the transaction:

  • Are all TFWs in the target company properly authorized to work in Canada in their positions/locations?
  • Will the TFWs' employer of record or any terms of employment change?  If so, will a new LMIA and/or work permit be needed?
  • Will the change make any TFWs ineligible under their current work permit category?
  • Is the target company compliant under IRPA's employer compliance regime?
  • Has the target failed a compliance inspection under IRPA or is there a pending inspection?
  • Is the target compliant with any applicable provincial foreign worker protection legislation?
  • Will the change negatively affect any pending immigration applications, such as a provincial nominee based permanent resident application or a work permit extension?
  • Does the target have an IRCC Employer Portal account?  If the legal entity/CRA number of the employer will remain the same, the Employer Portal username, password and security questions will be needed by the acquirer to access the target's Employer Portal and to be able to apply for future LMIA-exempt work permits.


Corporate changes, transactions and acquisitions affect potential liability and compliance obligations where the entities involved employ TFWs.  Both the acquirer and the target/seller need to consider how such changes may affect their obligations under IRPA and the employer compliance regime.

Proactive recognition and assessment of the issues will mitigate risk.  Engaging corporate immigration counsel well in advance of any changes to corporate structure or to the legal entity employing the TFWs will help ensure ongoing compliance and that steps are taken to obtain new work authorizations, if necessary.

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