In today's increasingly global economy, Canadian employers
often turn to foreign nationals to maintain a competitive edge and
to remedy skill shortages in the domestic labor market. Recent developments in Canadian immigration law have made it
more challenging for Canadian employers and foreign entities with
Canadian operations to conveniently move skilled and key personnel
into Canada. In April 2011, new regulations were implemented under
the Immigration and Refugee Protection Act
("IRPA"). Although the new regulations are aimed
at protecting foreign workers, they directly impact all employers
by implementing a more rigorous application process and by imposing
a four-year cap on certain types of work permits. At the same time,
employers are facing a more restrictive work permit process, it is
also becoming more difficult for foreign nationals to obtain
permanent resident status as caps have been implemented under the
federal skilled worker program and higher monetary thresholds have
been implemented under immigrant investor programs. Layered on top
of these changes is the fact that Canada's overall approach to
immigration is being reviewed as part of a comprehensive public
consultation on immigration priorities. This paper focuses on recent developments in Canadian business
immigration law. We address the following: 1. the impact of new foreign worker regulations; 2. new restrictions under the federal skilled worker category
for obtaining permanent resident status; 3. developments with respect to immigrant investor and
provincial nominee programs; and A significant development in business immigration law was the
April 2011 implementation of regulations under the IRPA aimed at
protecting foreign workers. Until these regulations came into
force, there were few practical safeguards to protect foreign
workers from unscrupulous employers. Widely viewed as a reaction to
media reports regarding the exploitation and poor treatment of low
skilled foreign workers by Canadian employers and their recruiters,
these regulations, for the most part, do not differentiate between
foreign workers at various skill levels. As implementation
continues, we should expect more extensive information sharing
between federal and provincial agencies and retention of more
detailed, immediately accessible information about Canadian
employers and their past employment practices. The centerpiece of the new regulations is a more rigorous
assessment of the job offer and of the employer's past
commitments to foreign nationals it has employed. For positions
requiring a Labour Market Opinion (government certification that,
among other things, no Canadian citizens or permanent residents are
available for the position and that the employee will be paid the
prevailing wage for the position), the assessment will be completed
by Service Canada as part of that process. For Labour Market
Opinion-exempt positions, the assessment will be completed by
Citizenship and Immigration Canada ("CIC") or the Canada
Border Services Agency when a work permit is requested. The assessing agency is required to consider the genuineness of
the job offer. Four factors are to be considered, being
whether: If the employer has previously employed foreign workers, the
assessing agency will also consider whether the employer has, in
the two years preceding the application at hand, provided to such
foreign workers wages, working conditions and occupation type that
are substantially the same ("STS") as those set out in
their job offer. Where the information available indicates
non-compliance, the employer will have the opportunity to provide
reasonable justification. Such justification may include: While we were initially concerned about the compliance burden
that the more rigorous assessments might impose on Canadian
employers, we have been pleased that the practical impact to date
has been minimal. Some application forms were revised, new
certifications were introduced and additional documentation is
sometimes required by the assessing agency. As a whole, however,
these measures have not substantially increased red tape. We have
noted that the period for review of Labour Market Opinion
applications has increased by 30 per cent or more. We trust that
Service Canada will seek to reduce processing times to more
acceptable levels, either through streamlining its internal
procedures or by allocating additional resources. Employers that fail, without reasonable justification, to
provide substantially the same wages, working conditions or
occupation type may face refusal of work permit applications in
respect of any foreign national offered employment by that
employer, may render the employer ineligible to hire any foreign
nationals for a period of two years, and may lead to the
employer's name being posted on the CIC website. The
regulations also prohibit a foreign national from entering into, or
extending, an employment agreement with an ineligible employer. Obviously, a negative STS determination can immediately and
irreparably harm the employer's reputation and ability to
access foreign talent to alleviate shortages in the domestic labor
market. At this point, there is no appeal process for a negative
STS determination or listing on the CIC website. CIC is well aware
of the consequences of a negative assessment and we would expect
that they will act with a commensurate level of prudence and
caution. Six months after the implementation of the regulations, no
employers have been listed on the ineligibility list. Still, the
negative impacts associated with such an event should cause
employers to audit their current situations with respect to foreign
workers and to take appropriate measures now to remedy any
non-compliance. The regulations also introduced a maximum cumulative duration
for the period that a foreign national can work in Canada. This
four-year cap highlights the temporary nature of the work permit
regime and will encourage longer-term foreign workers to apply for
permanent residence to formalize their status. Calculation of the four-year cap started on April 1, 2011. With
certain notable exceptions, all work in Canada after that date
counts towards the four-year cap, including work done while under
implied status, unless the work was performed during a period of
authorized full-time study. Work in Canada prior to April 2011 does
not count towards the four-year total. Once a foreign national has
accumulated four years of work in Canada, CIC is authorized to
refuse the issuance of a further work permit. Foreign nationals
applying for work permit renewals near the end of the four-year
period are likely to see work permit validity periods truncated in
keeping with the cap. If caught by the cap, a foreign national must spend four years
either outside Canada or in Canada but not working in order to
restart the clock on a new four-year period. There are certain useful exemptions and exceptions to the
four-year cap including those for foreign nationals working in
managerial or professional occupations, under work permits issued
under international agreements such as the North American Free
Trade Agreement and the General Agreement on Trade in Services, and
under work permits issued under the significant benefit provisions
of the regulations. Work permit duration will generally be used to calculate
cumulative duration. Upon presentation of appropriate evidence,
however, CIC will consider not counting gaps in employment such as
extended medical leaves, maternity/parental leaves, international
assignments or other absences from Canada. Clearly, foreign workers
intending to 'recapture' time in this manner should
accumulate appropriate documentation or other evidence over the
course of their employment and keep detailed records to support
such claims. In response to these regulatory changes, we have advised clients
to place an increased emphasis on record keeping with respect to
their foreign workers and applicable terms of employment, to
consolidate hiring and decision-making authority with respect to
foreign workers in one person or department, and to promptly notify
Service Canada or CIC of any changes in the employment
relationship. Canada has granted permanent resident status to approximately a
quarter of a million immigrants each year since 2002. One class of
permanent residents is referred to as the "economic immigrant
class". Among the categories of immigrants in the economic
immigrant class is the federal skilled worker category. A
"federal skilled worker" refers to a skilled worker
applying to live anywhere in Canada, other than in Québec
which has its own immigration requirements, who is selected based
on his or her ability to become economically established in
Canada. Applicants under the Federal Skilled Workers ("FSW")
program must pass an approved language proficiency test and have
either a valid offer of arranged employment or a minimum of one
year of continuous full-time (or equivalent) work experience within
the last ten years in one of 29 occupations. For a list of eligible
occupations, see www.cic.gc.ca/english/immigrate/skilled/apply-who-instructions.asp#list.
The eligible occupations were selected based on Canadian labor
market needs. Once a federal skilled worker meets the eligibility requirements
to apply, he or she is evaluated in the areas of education, work
experience, language proficiency, age, adaptability and whether he
or she has arranged employment in Canada. These criteria are
demonstrated indicators of how well immigrants economically
establish themselves in Canada. Points are assigned to an applicant
for each criteria up to a possible maximum of 100 points. A pass
mark of 67 points or higher is not determinative but indicates that
an applicant "may qualify to immigrate". The FSW program is a popular route for immigrants applying for
permanent resident status, and, as a result, the program has been
plagued with backlogs. In 2008, amendments to the IRPA and
the Action Plan for Fast Immigration (the "Action Plan"),
an initiative implemented to deal with processing backlogs, led to
changes in how applications are processed. Prior to the Action
Plan, it was mandatory that all applications be processed which led
to a backlog of more than 640,000 people in the FSW program with
wait times of up to six years. The amendments to the IRPA
authorized the Minister of Immigration to issue ministerial
instructions to visa officers. Ministerial instructions addressing
the eligibility of applications for processing were contained in
the Action Plan. The eligibility criteria contained in the
ministerial instructions (for example, an original list of 38
in-demand occupations) applied to all federal skilled worker
applications received on or after February 27, 2008. Since
implementation of the Action Plan, the backlog has been reduced to
approximately 316,000 people with wait times ranging from
approximately six to 12 months. On June 26, 2010, a second set of ministerial instructions
introduced a cap on the number of applications that would be
processed in the FSW category. A total of 20,000 applications would
be processed under the FSW category per year with a corresponding
1,000 applications cap per occupation per year. This cap did not
apply to applicants with a valid offer of arranged employment.
Effective July 1, 2011, the total applications cap was decreased to
10,000 with a corresponding cap of 500 applications per eligible
occupation. The cap on the total number of applications was
introduced because there were more applications in the FSW category
than the government could process while the cap per occupation was
introduced to mitigate against "over-representation of any one
occupation". Three months after the reduced caps were imposed,
Registered Nurses and Professional Occupations in Business Services
to Management have reached the occupational caps and, accordingly,
no more applications will be accepted for those occupations until
July 2012. CIC has emphasized that the objective of introducing the caps is
to improve processing times. Prior to the Action Plan in 2008, wait
times grew as the backlog increased, forcing applicants to wait
years before knowing if they would be granted permanent resident
status. CIC emphasizes that an important distinction to recognize
is that the program has not led to a reduction in applicants
granted permanent resident status, or in the proportionate
representation of FSW applicants among those granted permanent
resident status, it has only limited the number of applications
that will be processed. The Canadian federal government and the province of
Québec both offer passive investment options for foreign
nationals seeking permanent resident status in Canada. These
programs allow applicants to obtain such status in exchange for a
five-year interest-free loan to the government. The federal
government distributes the proceeds generated to fund economic
development and local job creation initiatives in participating
provinces and territories. Funds raised by the Québec
program are used exclusively in Québec for similar purposes.
Both programs have undergone changes in the last year to
accommodate a growing volume of applications and to better align
Canada's passive investment requirements with those of other
comparable immigrant-receiving countries. The purpose of the federal Immigrant Investor Program (the
"Federal Program") is to attract "experienced
business people who bring significant economic benefits to
Canada". Research has demonstrated that the Federal Program
has been instrumental both in securing up front capital investments
from immigrants and in gaining the "business acumen, important
links to global economies and an understanding of international
markets" immigrants contribute once they are permanent
residents or Canadian citizens. The Federal Program requires that an applicant meet three
eligibility criteria. An applicant must: In June 2010, the Federal Program was suspended until December
1, 2010, to allow CIC an opportunity to deal with backlogs. The
Federal Program was in need of an overhaul in order to bring it in
line with comparable programs in other immigrant-receiving
countries as the eligibility criteria had not changed since 1999.
For example, Australia, the United Kingdom, New Zealand and the
United States all required investments of at least C$1,000,000,
while at that time the Federal Program only required an investment
of C$400,000. Effective December 1, 2010, the investment
requirement under the Federal Program was increased to C$800,000
and the personal net worth requirement was increased from C$800,000
to C$1,600,000. Another objective of introducing more demanding
eligibility criteria was to reduce the flow of applications. The
number of applications to the Federal Program had almost tripled
between 2007 and 2010, contributing to excessive wait times.
Furthermore, a cost-benefit analysis estimated that implementation
of the more demanding criteria would provide an increase of
approximately C$72,300,000 per year in investment capital. Effective July 1, 2011, a cap of 700 applications was introduced
for the first time. This cap was introduced because CIC was still
receiving more applications than it could process. Despite the more
demanding eligibility requirements, we understand that the Federal
Program was flooded within applications within a few days. The
program was suspended at that time and, until the cap is reset on
July 1, 2012, no more new applications will be accepted. The Québec Immigrant Investor Program (the
"Québec Program") has similar eligibility
requirements and is available to applicants intending to settle in
Québec. Prior to December 2010, the Québec Program
had the same requirements as the Federal Program previously had.
After changes in December 2010, applicants must have a net worth of
C$1,600,000 and agree to invest C$800,000 with the province of
Québec for five years on an interest-free basis. Applicants
who meet the eligibility criteria of the Québec Program and
pass the selection interview, if required, are issued a selection
certificate. Once selected, the applicant applies to CIC for
permanent resident status. The Québec Program has experienced similar issues with
backlogs as the Federal Program. As a result, the Québec
Program was temporarily suspended in October 2010 until the new
changes in the eligibility criteria took effect in December of that
year. However, the Québec Program did not adopt a cap on the
number of applications and, as a result, the Québec Program
is still accepting applications. While we have no direct
information about oversubscription of the program, it is not
difficult to imagine that the Québec Program could be
experiencing heightened strain as a result of the suspension of the
Federal Program. Most provinces have a provincial nominee program
("PNP") that allows the province to nominate foreign
nationals who intend to settle in that province. These programs
require that certain "active investment" criteria be
satisfied which reflect an applicant's ability to make an
economic contribution to Canada. By agreement with the federal
government, the provinces have broad discretion to develop their
own eligibility criteria which reflect local immigration needs and
policies. Depending on the province, immigrants may be nominated if
they are skilled workers, semi-skilled workers, international
graduates of Canadian universities, entrepreneurs intending to own
a business in the province, self-employed persons or are persons
with family connections in Canada. Once nominated, an applicant
applies to CIC for permanent resident status. Prince Edward Island
has a PNP and prior to being shut down in September 2008, the PEI
PNP had an immigrant investor stream which allowed immigrants to
invest in a local business in exchange for nomination. After the
federal government announced that the immigrant investor portion of
the PNP program would be shut down, thousands of immigrants were
rushed through in only a few months, with media reports stating
that C$400 million was saved. In 2008, allegations of fraud and bribery surrounding the PEI
PNP surfaced and have recently resurfaced. In September 2011, three
former provincial government workers came forward claiming that
senior bureaucrats pressured them to approve certain applications.
The federal government has asked the RCMP and Canada Border
Services Agency to investigate. Whether or not these allegations
are proven, we expect the federal government to re-evaluate the
efficacy and appropriateness of PNPs. This will entail a careful
balancing of provincial demands to select immigrants and generate
local investment with the perception held by some that these
programs can be used to buy permanent resident status. The IRPA identifies 19 objectives with respect to
immigration and refugees. These objectives may be classified as
either economic priorities, family priorities or refugee and
humanitarian priorities, all of which must be balanced in
Canada's approach to immigration. Statistics on immigration
levels indicate that CIC granted permanent resident status to
251,642 applicants in 2010, 138,251 of which were economic
immigrants. These numbers reveal that 55 per cent of the applicants
CIC admitted last year were economic immigrants, which is
consistent with its track record between 2005 and 2009 of admitting
between 55 per cent and 61 per cent of applicants based on economic
factors. The IRPA does not provide guidance on how to balance
these objectives and, consequently, it is difficult to know if the
current approach to immigration in Canada is optimal. A tension
exists between all three classes of priorities and trade-offs are
necessary to achieve an appropriate balance. In particular, the
apparent emphasis on admitting applicants who can contribute to
Canada's economy and labor market, as demonstrated by the data,
may call into question CIC's selection approach. While it is
widely accepted that immigration is important for meeting labor
market needs and building a skilled workforce, the economic
priorities of immigration must be reconciled with the other
objectives identified under the IRPA. CIC has recently
reached out to the Canadian public for its advice on how the
government should prioritize these conflicting objectives. In July 2011, the Minister of Immigration launched a series of
cross-country consultations on immigration levels and mix which was
followed by an online consultation process that closed in September
2011. The public consultation sought feedback from various
stakeholders, including employers, unions, academics, academic
institutions, professional organizations, businesses and
municipalities, among other interested groups. CIC asked
participants to respond to the following questions respecting
Canada's immigration program: CIC reports that during the cross-country consultations in July
and August, stakeholders "identified immigration as a critical
way to meet labor market needs, citing economic factors as among
the most important considerations when establishing immigration
levels". A report providing a more comprehensive overview of
the public response will be published by CIC sometime in late 2011
or early 2012. In early 2011, CIC conducted another public consultation
regarding its proposed changes to the FSW program. The proposed
changes involved adjustments to the number of points attributable
to each of the following six eligibility criteria: education;
proficiency in English and/or French; experience; age; arranged
employment in Canada; and adaptability. The purpose of the proposed
adjustments is to weigh the criteria in a way that more accurately
reflects their value as indicia of an applicant's ability to
become economically established in Canada. Specifically, CIC
proposed increasing the importance of proficiency in official
languages and age while decreasing the importance of work
experience and the number of years of education required for
skilled tradespeople. In support of this position, CIC cited
research suggesting that people who are proficient in an official
language, or are younger (aged 20-30), have the greatest economic
impact on the receiving country. The results of this public
consultation will be published by CIC sometime in the fall of
2011. Although comprehensive results of these two public consultations
have not yet been published, there is some information available
that may provide insight into how the Canadian public has responded
to CIC's inquiries. For example, in an evaluation of the FSW
program released in August 2010, surveys of stakeholders revealed
that employers had found it difficult to fill positions for which
federal skilled workers were subsequently hired. Furthermore, stakeholders expressed their views on the
importance of economic immigration by citing labor shortages and
the aging population as reasons for maintaining the FSW program.
These endorsements of the FSW program may not provide a full
picture on the views of Canadians with respect to balancing
economic immigration with other classes of immigration; however,
they do demonstrate that economic immigration is valued by
Canadians. The results of another public consultation performed in 2010,
respecting what levels of immigration should be maintained in 2011,
may also provide some insight on how the Canadian public values
economic versus non-economic factors in the context of immigration
selection. While a number of objectives and selection factors were
cited by respondents, the overall conclusion of the consultation
was that "economic factors [were] primary considerations when
establishing immigration levels and objectives". Footnotes 1 The author acknowledges the contributions of Jocelyn
Reikie, Articling Student, in preparing this paper. The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted. © Copyright 2012 McMillan LLP
4. the public consultation process on immigration mix.introduction of new foreign worker
regulations
federal skilled worker restrictions
immigrant investor and provincial nominee program
developments
public consultation on immigration mix
ARTICLE
6 June 2012
Doing Business In Canada: Immigration (Business)
In today's increasingly global economy, Canadian employers often turn to foreign nationals to maintain a competitive edge and to remedy skill shortages in the domestic labor market.