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Aug. 10—Employers are worried Canada’s tough new penalties for misusing the Temporary Foreign Worker Program, including fines of up to C$1 million ($770,000) in a calendar year, will “chill” access to skilled workers needed to fill gaps in the labor force.
The compliance program, part of amendments to the Immigration and Refugee Protection Regulations finalized July 1, don’t take effect until Dec. 1, 2015, but employers have known for more than a year that the tough penalties were coming, Sarah Anson-Cartwright, director of skills policy with the Canadian Chamber of Commerce, said July 22.
The government introduced regulatory amendments in June 2014 to impose a C$1,000 ($770) fee on employers for applications under the Temporary Foreign Worker Program and in fall 2014 published a discussion paper outlining its intentions to assess administrative monetary penalties for noncompliance with the program’s rules, Anson-Cartwright told Bloomberg BNA.
“That puts a pretty big chill on the whole system,” she said. “There’s a lot of concern.”
The government ultimately decided to set the maximum penalty at C$100,000 ($77,000) per violation and to limit the maximum accumulation of penalties to C$1 million ($770,000) per year, but rejected the business community’s concerns that the lack of an appeal process was unfair.
“They’re penalizing employers and giving them no recourse at all,” Anson-Cartwright said. “There’s a lack of due process.”
The final regulations include minor concessions permitting employers to respond in writing before a final determination of noncompliance is issued, but that and a provision that errors made in good faith, such as administrative mistakes, will not be penalized are the only “reprieves” employers have from the new penalties, Anson-Cartwright said.
“That seems to put a lot of power in the hands of bureaucrats,” she added. “We’ll have to see how it plays out.”
The government is fully within its rights to ensure that the TFWP responds to abuses, but its “hugely punitive” response goes beyond what is needed to address ongoing issues with the program, Anson-Cartwright said: “It really sort of undermines the effectiveness of the program. Businesses are being caught in the cross-hairs.”
The “chilling effect” of the compliance program will particularly affect Canada’s natural resources sector, where investments are long-term and the significant risks created if employers are unable to find the highly skilled workers they need can undermine the industry’s capacity to undertake projects, Anson-Cartwright said. Problems are also extending to highly skilled jobs such as sheet metal work.
The compliance program could significantly reduce the flow of workers between the U.S. and Canada and limit the impact of ongoing efforts to make borders more transparent to skilled workers, Anson-Cartwright said. Differences in demand in the U.S. and Canada for construction workers, for example, offer an opportunity for an ebb/flow response that helps employers on both sides of the border meet their labor needs. Canada also continues to negotiate major free trade agreements with its trading partners, which always include a chapter on labor mobility, but the chilling impact of an excessive compliance program could well undermine those potential benefits.
The Chamber of Commerce will continue to consult its membership and bring their ongoing concerns on administration of the Temporary Foreign Worker Program to the government’s attention, but it is difficult to get the issue on the government’s radar with a federal election due in October 2015, Anson-Cartwright said. The issue is part of the chamber’s election platform, but supporting calls for hiring of more foreign workers isn’t something any of the major political parties want to discuss during an election campaign. Once the election is over, however, it will be time for whoever forms the next government to reconsider the program’s goals and how they can best be met.
“It will be really important for everyone to take stock of the program and how it can be improved,” Anson-Cartwright said. “The process has overtaken the policy objectives.”
Data for the third quarter 2014 (the latest available) show that the number of applications by employers for highly skilled foreign workers decreased by nearly 50 percent compared to the third quarter 2013, Anson-Cartwright said.
Employment and Social Development Canada published final amendments July 1 to the Immigration and Refugee Protection Regulations to implement a program to address noncompliance with the Temporary Foreign Worker Program and the International Mobility Program. The penalties of up to C$100,000 ($77,000) per violation and C$1 million ($770,000) per year per employer add to the two-year ban on applying for new foreign workers that was previously the only consequence for noncompliance, the department said in a regulatory impact analysis statement published with the final amendments in the July 1 issue of the Canada Gazette.
“The objective of these amendments is to increase the government’s ability to encourage employer compliance with TFWP/IMP conditions and deter noncompliance by implementing a range of consequences to enable a proportionate response to varying degrees of noncompliance,” the department said. “This will help protect foreign nationals who require a work permit to work in Canada and protect the Canadian economy and labor market.”
The compliance program follows the June 2014 overhaul of the TFWP that divided it into two distinct programs—the TFWP overseen by Employment and Social Development Canada and the International Mobility Program overseen by Citizenship and Immigration Canada—and highlights the Canadian government’s unwillingness to tolerate any abuse of the TFWP, Employment and Social Development Minister Pierre Poilievre said.
“We are committed to protecting the Canadian labor market and economy, as well as foreign workers,” Poilievre said in a statement. “Employers who break the rules will face the full force of the law.”
The statement noted that Employment and Social Development Canada has conducted thousands of inspections since 2013 to verify employer compliance with TFWP requirements, including in response to the thousands of complaints of alleged violations received since the launch in April 2014 of the Confidential Tip Line and in June 2014 of the Online Fraud Reporting tool. If the new compliance program had been in force for those cases, the employers would likely have been subject to significant financial penalties and/or a ban from the program.
The department noted in the regulatory impact analysis statement that it received submissions from stakeholders during consultations on the new compliance program raising concerns that the proposed consequences for noncompliance were overly punitive. The department highlighted amendments to the compliance program based on the submissions, including:
• replacement of the proposed administrative review process that would have taken place after a finding of noncompliance with the opportunity for the employer to present written submissions before a final determination is made,
• retaining the possibility of reduced penalties for good faith and unintentional errors,
• a new option for reduced penalties after voluntary disclosure of noncompliance,
• publication of the names of noncompliant employers to maximize transparency for foreign nationals seeking employment in Canada and
• capping penalties at C$1 million ($771,000) to ensure that total penalties remain in line with the administrative nature of the penalty regime.
The compliance program provides for penalties ranging from C$500 ($405) to C$100,000 ($81,000), depending on the severity and type of violation, the employer’s compliance history and the size of the business. In addition, the previous mandatory two-year ban from filing TFWP applications has been replaced with bans of one, two, five and 10 years or a permanent ban for the most serious violations. The bans are not cumulative, and in cases of bans for multiple violations, the longest ban would apply. Employers banned from using the program are ineligible for the duration of the ban to employ foreign nationals who require a work permit. The names of employers assessed financial penalties or bans will continue to be published on the department’s website, along with information on the size of the penalty and the duration of the ban.
“Employers will be encouraged to self-monitor their compliance with program conditions and to correct and voluntarily disclose noncompliance as soon as it is discovered,” the department said in a background document. “Where applicable, employers could have their consequences reduced as a result of the voluntary disclosure.”
The graduated penalties vary on the basis of employer size, the type of violation and an assignment of points based on certain conditions. The largest penalties are assessed for points totaling 15 or more, with points assigned based on the following criteria:
• employer derived competitive or economic benefit from the violation, 0-6 points;
• violation involved physical, psychological, sexual or financial abuse, 0-10 points;
• the violation negatively affected the Canadian labor market or economy, 0-6 points;
• the employer did not make reasonable efforts to minimize or remediate the violation’s effects, 0-3 points; and
• the employer did not make reasonable efforts to prevent a recurrence, 0-3 points.
• an employer underpaying five foreign pipefitters would be assessed five violations and mid-range penalties of C$3,000-35,000 ($2,310-26,950) per violation plus a potential ban and publication of the employer’s name and penalties;
• the same scenario with voluntary disclosure by the employer would lead to no violations if the employer had an acceptable justification such as a good faith error or to a reduced consequence (possibly only a warning letter and no disclosure) if there were no acceptable justification;
• an employer with two foreign workers as managers found not to have made any efforts to recruit Canadians or permanent residents would be assessed one violation with a mid-range penalty of C$3,000-35,000 ($2,310-26,950), likely no ban but publication of its name and penalty;
• an employer with one foreign worker with specialized knowledge seconded to Canada through an intracompany transfer who does work other than that approved would be assessed two violations with a high-range penalty of about C$50,000 ($38,500) per violation, a potential five-year ban and publication of the employer’s name and penalties; and
• an egregious violation in which an employer has physically abused an agricultural foreign worker, causing serious injuries, would be assessed one violation with a C$100,000 ($77,000) penalty, a permanent ban, publication of the employer’s name and penalties and notification to law enforcement for criminal action.
Alongside the changes since June 2014 in the Temporary Foreign Worker Program, Employment and Social Development Canada has significantly increased inspection levels to detect noncompliance by employers, Julia Sullivan, a spokeswomen for the department, told Bloomberg BNA July 23.
Department officials are now inspecting annually fully 25 percent of employers using temporary foreign workers, Sullivan said in an email. Employers will be selected for inspection based on tips and their designation as high-risk for noncompliance and through random selection.
“Enhanced monitoring and compliance activities and proportionate consequences for noncompliance will discourage employers from abusing the programs and ensure that employers under each program are subject to the same compliance and enforcement regime,” Sullivan said.
To date, the department has carried out more than 4,000 employer inspections, of which 37 percent resulted in further action. The regulations authorize inspections to include employer site visits, orders compelling employers to produce documents and interviews with foreign and Canadian workers.
The Temporary Foreign Worker Program allows entry into Canada of foreign workers by request of an employer following a Labor Market Impact Assessment finding there are no Canadian citizens or permanent residents available who could perform the work. The International Mobility Program provides for the employment of foreign nationals whose entry into Canada is not deemed to require a labor market assessment with a primary objective of advancing Canada’s broader economic and cultural national interest rather than filling particular jobs. The TFWP has particularly come under criticism for its use in hiring low-wage service workers and skilled construction workers from low-wage jurisdictions such as India to work on large-scale energy projects in western Canada.
To contact the reporter on this story: Peter Menyasz in Ottawa at email@example.com
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The final Temporary Foreign Worker Program regulations are available at http://www.gazette.gc.ca/rp-pr/p2/2015/2015-07-01/html/sor-dors144-eng.php.
For more information on Canadian HR law and regulation, see the Canada primer.
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