Impact of Corporate Changes on Canadian Work Permits

Liam, an Australian professional, arrived in Canada as an intra-company transferee. He eagerly settled into his new role. However, months later, his company merged with a larger corporation and adopted a new name. Now, Liam worries whether this corporate change will affect his work permit status. Can he continue working under the same conditions, or will this change complicate his stay in Canada? Such questions often arise during corporate restructurings, and the answers are crucial for work permit holders like Liam.

Basic Terminology of Corporate Changes

Corporate restructurings can take many forms and often affect work permit holders. When companies go through such changes, it is essential to understand how different types of restructuring affect work permits and compliance obligations. Below are key terms related to corporate changes and their impact on Canadian work permits.

Acquisition

An acquisition occurs when one company takes over another by purchasing controlling interest. However, both companies continue to exist legally. During an acquisition, the new owner often assumes the responsibilities of the old company, including obligations related to temporary foreign workers.

Mergers and Consolidations

Mergers and consolidations happen when two or more companies combine into one. The resulting company, the surviving entity, takes over the previous company’s assets, liabilities, and obligations. Therefore, this new company must ensure continued compliance with work permit conditions, as it now inherits all employer obligations.

Contraction

Contraction involves reducing a company’s size through actions like divestitures, spin-offs, or split-ups. For example, a divestiture occurs when a portion of a company is sold off to a third party. However, even in such cases, compliance with work permit conditions must continue until the company formally transfers those obligations.

Successor in Interest

A “successor in interest” occurs when a new organization takes over the previous employer’s assets, liabilities, and obligations. Therefore, this new entity continues to operate the same business as the original one. Nonetheless, if the company substantially assumes the original company’s responsibilities, it can keep employing temporary foreign workers under existing work permits. However, the new organization must meet the conditions originally imposed on the employer, ensuring compliance with immigration laws and the work permit terms.

Corporate Name Change

A corporate name change happens when a company changes its legal name but retains its structure. However, this does not affect the company’s obligations to temporary foreign workers. Generally speaking, the new name does not require a new work permit or Labour Market Impact Assessment (LMIA) as long as the company continues operating under the same conditions. However, the company must update its information with the authorities.

Labour Market Impact Assessment (LMIA)

An LMIA is a document that a Canadian employer must obtain before hiring a foreign worker under the Temporary Foreign Worker Program (TFWP). The LMIA ensures that hiring a foreign worker will not negatively affect the Canadian job market. During a corporate restructuring, companies must notify Employment and Social Development Canada (ESDC) about any changes that might affect the LMIA.

Temporary Foreign Worker Program (TFWP)

The Temporary Foreign Worker Program (TFWP) allows Canadian employers to hire foreign workers to fill temporary labour shortages. However, employers must obtain a Labour Market Impact Assessment (LMIA) to demonstrate that no Canadian or permanent resident workers can fill the position. Moreover, the LMIA is specific to the job’s wage, duties, and location. During mergers or acquisitions, employers must notify Employment and Social Development Canada (ESDC)/Service Canada (SC) of the changes. Therefore, the new employer must meet the LMIA conditions to remain compliant.

International Mobility Program (IMP)

The IMP allows employers to hire foreign workers without an LMIA when it benefits Canada economically or culturally. Nonetheless, when companies restructure, they must ensure that the conditions under which the IMP was granted remain unchanged.

Employment and Social Development Canada (ESDC)/Service Canada (SC)

Employment and Social Development Canada (ESDC) and Service Canada (SC) play distinct but complementary roles in managing Labour Market Impact Assessments (LMIAs) under the Temporary Foreign Worker Program (TFWP). ESDC is responsible for policy development and oversight, ensuring that employers meet conditions such as paying prevailing wages. Meanwhile, Service Canada is the operational branch that processes LMIA applications and enforces compliance. Therefore, when corporate structure changes, employers must inform ESDC and SC to maintain regulatory compliance and ensure continued authorization to employ temporary foreign workers.

Intra-company Transferee (ICT)

An intra-company transferee is a worker transferred from a foreign branch, subsidiary, affiliate, or parent company to its Canadian counterpart under the International Mobility Program (IMP). However, corporate changes like mergers may disrupt the qualifying relationship between the foreign entity and the Canadian one. Suppose this relationship changes or ceases to exist. In that case, the new entity must ensure it qualifies as the employer under the program, or the intra-company transfer may no longer be valid. Therefore, maintaining this relationship is crucial for compliance.

Impact of Corporate Restructurings on International Mobility Program (IMP) Work Permits

When companies undergo corporate restructuring, work permit holders employed under the International Mobility Program (IMP) may be affected. Below is a breakdown of key factors to consider.

Conditions for IMP Work Permits

Unlike those under the Temporary Foreign Worker Program (TFWP), IMP work permits do not require an LMIA. However, specific conditions must be met, such as those for intra-company transferees and CUSMA professionals. These conditions apply throughout the work permit’s validity, ensuring that foreign workers remain employed under the terms set out when their permit was issued.

Intra-company transferees and Corporate Restructurings

Intra-company transferees require a qualifying relationship between the foreign and Canadian entities. This relationship may cease during corporate restructurings, such as mergers, affecting the worker’s eligibility. If the restructuring disrupts this connection, the new Canadian entity cannot continue employing the transferee unless it qualifies as a successor in interest. If not, the work permit holder must cease working in Canada and apply for a new work permit. Of course, they may resume working if they receive a new work permit.

Successor in Interest and Employment Responsibility

If the original company still exists after restructuring, it retains responsibility for its temporary workers. However, suppose the new entity qualifies as a successor in interest by assuming the predecessor’s assets, liabilities, and obligations. In that case, compliance with immigration regulations must be ensured to keep employing foreign workers under the same terms.

Corporate Name or Address Changes

If an IMP organization undergoes a simple name or address change, and the business structure remains unchanged, it is treated as the same employer. The company must update its information in the Employer Portal, but its past compliance history will apply when hiring new foreign workers or extending work permits.

Changes in Business Type

When an IMP organization changes its business type (e.g., from a proprietorship to a corporation), it must ensure that its new Canada Revenue Agency (CRA) business number is correctly reflected in the Employer Portal. This is essential to maintaining the connection between the original and ongoing business operations and employing foreign workers without interruption.

Obligations for Work Permit Holders During Corporate Changes

When an employer undergoes a corporate restructuring, temporary workers with employer-specific work permits must understand how these changes affect their status. Below is a breakdown of what work permit holders should do in such situations.

When the New Employer is a Successor in Interest

If the new organization qualifies as a successor in interest by assuming the previous employer’s assets and liabilities, temporary workers do not need to apply for a new work permit. They may continue working under their existing permit, provided the new employer meets the conditions under which the original work permit was issued. The worker’s employment conditions, such as wages and job duties, must also remain unchanged.

When the New Employer is Not a Successor in Interest

If the new organization does not assume all responsibilities from the previous employer, the worker must stop working. In this case, the new employer must apply for a new LMIA or submit a new job offer under an LMIA-exempt program. Moreover, the temporary worker must apply for a new work permit before resuming employment. The worker cannot legally work for the new organization during this time.

Employer’s Responsibility

In any corporate restructuring, the new employer must ensure that foreign workers are employed only in a role authorized by the Immigration and Refugee Protection Act (IRPA). To remain compliant with immigration regulations, the employer must also adhere to the terms outlined in the worker’s permit.

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