- Many Canadian employers are not aware of the serious penalties for improperly employing a foreign worker.
- The right to work in Canada is restricted to Canadian citizens and permanent residents.
- Foreign workers are normally required to have legal authorization (e.g. a work permit) in order to work in Canada.
- Canadian employers are under an obligation when hiring an employee to make sure that the employee is legally authorized to work in Canada (“due diligence obligation”).
- Employers who illegally employ foreign nationals are liable to fines of up to $50,000, and employees who knowingly participate in the illegal hiring are liable to terms of imprisonment of up to two years.
- If there is evidence of misrepresentation on the part of the employer or its employees, the penalties are increased to $100,000 and terms of imprisonment of up to five years.
BACKGROUND
Many employers know that there are penalties for illegally employing foreign nationals in Canada. However, few employers are aware of just how harsh these penalties can be – both for the employer and the foreign national.
OBLIGATION TO OBTAIN A WORK PERMIT
Under Canadian immigration law, only Canadian citizens and Canadian permanent residents are permitted to work in Canada. A foreign national who wishes to work in Canada, will normally be required to obtain a work permit except where the work in question is one of the limited number of work permit-exempt activities which are permitted under Canada’s Immigration and Refugee Protection Act (IRPA).
The term “work” is broadly defined to mean any activity for which wages are paid or commission is earned, or that is in direct competition with the activities of Canadian citizens or permanent residents in the Canadian labour market. This is a very broad definition which is capable of capturing a wide range of work and work-related activities and occupations.
PENALTIES
Employers who illegally employ foreign nationals are liable to fines of up to $50,000, and employees who knowingly participate in the illegal hiring are liable to terms of imprisonment of up to two years. If there is evidence of misrepresentation on the part of the employer or its employees, the penalties are increased to $100,000 and five years.
Foreign nationals who are illegally employed in Canada can be arrested and deported from Canada. They can also be prohibited from re-entering the country for two years if there is evidence of misrepresentation.
DUE DILIGENCE OBLIGATION
Employers are under a legal obligation to use due diligence in determining whether a prospective employee has the right to work in Canada. This means that if an employer engages a foreign national to work in Canada in a job which is not a work permit-exempt activity, the employer must take steps to make sure that the foreign national obtains a work permit prior to the commencement of employment in Canada. If the employer fails to exercise due diligence, and is prosecuted under the IRPA, the employer will be presumed at trial to have known that a work permit was required but failed to take steps to make sure that the foreign national obtained one. Where this occurs, it may be very difficult for the employer to avoid imposition of the penalties described above.
IMPLICATIONS FOR THE EMPLOYER AND THE FOREIGN NATIONAL
The due diligence obligation creates extremely serious legal risk exposures for employers who use undocumented foreign nationals to work in Canada. One important consequence of this is that an employer who fails to perform due diligence will not be able to build a defense based on urgency or inadvertence. For example:
FACT SITUATION #1: The Canadian employer urgently needs the foreign national’s skills. It knows that a work permit is required but is not prepared to wait for one to be issued. The employer encourages the foreign worker to enter Canada as a business visitor and to start working without a work permit.
OUTCOME: The employer would be found to have made a deliberate misrepresentation and employees who knowingly participate in the scheme would be liable for a fine of up to $100,000 and/or a term of imprisonment of up to five years.
FACT SITUATION #2: The employer is not sure whether a work permit is required. It decides to ignore the issue and “look the other way” and tells the foreign worker that a work permit is not required.
OUTCOME: The employer’s negligence in failing to determine whether a work permit is required would be treated as a failure to perform due diligence. By telling the foreign worker that a work permit is not required, the employer is committing a misrepresentation and would be liable for a fine of up to $100,000. Employees who knowingly participate in the scheme would be liable for to a term of up to five years term imprisonment.
MINIMIZING THE RISK OF EXPOSURE
Employers who employ foreign nationals to work in Canada must take steps to determine whether the foreign national’s intended activities in Canada require a work permit. Failure to do this may result in a large fine and/or a term of imprisonment for the employer and for those employees who knowingly participate in the hiring of the foreign worker. It may also result in the removal of the foreign national from Canada and a prohibition on future entry for up to two years.
