Changes to Canadian Immigration Benefit Employers

The federal government has recently made several significant changes to Canadian immigration policies that will result in benefits to employers.

In respect of temporary workers, changes have been made to allow certain workers to receive a North American Free Trade Agreement (NAFTA) work permit for a duration of three years, instead of one year. American and Mexican workers who want to work in Canada temporarily and who meet the eligibility criteria in one of over 60 identified professions will be able to apply for the new, longer permits. This change will make it easier for Canadian employers to employ skilled temporary workers for longer periods of time.

Important changes have also been made to permanent worker programs. One such change arises from the introduction of the Canadian Experience Class (CEC). The CEC creates a new way for temporary foreign workers and international students with Canadian work experience to continue their employment by securing permanent residency in Canada.

The CEC sets up a pass-fail system, rather than a point system, for workers who meet certain work or student experience requirements. The pass-fail system means that applicants possessing benchmark language skills and the requisite work and/or student experience will pass, and obtain permanent residency shortly thereafter. The CEC ensures that Canadian work experience is the key selection factor for applicants in the class.

Under the CEC, temporary foreign workers who have had at least two years of Canadian professional, managerial or skilled work experience will qualify for permanent residency. International graduates from certain Canadian post-secondary programs will also be entitled to apply for immigration if they have had at least one year of full-time work experience in a professional, managerial or skilled position. Qualified applicants may apply while still living in Canada, or within one year after having left the country.

The creation of the CEC provides many benefits to the Canadian labour market in general, and to employers that employ skilled foreign workers specifically. By making it faster and easier for certain temporary workers to attain permanent residency, the CEC encourages skilled and educated workers to remain in Canada and helps employers retain the talent they need. In addition, since qualified applicants may now apply for permanent residency without leaving Canada, their employers can enjoy the benefit of a continuous employment relationship, uninterrupted by a lengthy application process.

In addition to creating a new class for workers with Canadian experience, the federal government has also introduced changes to the point system for other skilled workers who do not have Canadian experience. Bill C-50 reintroduces an occupation list, and creates three categories of workers whose applications will receive expedited processing. The categories include workers with at least one year of experience in one of 38 high-

demand occupations in management or the skilled trades, workers with pre-arranged employment, and workers who have been working or studying in Canada for at least one year. The introduction of an expedited process should result in immigration being more responsive to the needs of the Canadian marketplace and Canadian employers.

Employee Who Changed Positions Not Bound by Original Contract When Terminated

In Ling v. Unity Builders, the Alberta Court of Queen’s Bench held that, when there has been a significant change to the nature of a person’s employment, a contract entered into before the change will cease to govern, and the termination of the employee will accordingly be governed by common law principles.

Ling entered into an employment contract for the position of General Manager with a house building company that operated within a group of companies. The contract provided for a bonus worth five percent of the company’s net income, and for termination at any time with two months’ notice. Eventually, Ling became General Manager of two more companies in the group, and received a bonus of ten percent from each company. However, no written agreement was entered into to reflect these changes. Finally, Ling was promoted to President of the three companies, received a salary increase, and began to receive his pay from the companies’ management company, and not from the company that had originally employed him. At no point did Ling receive a new employment contract, despite his request for one.

A dispute arose and Ling was terminated without cause. He received three months’ salary in lieu of notice. Ling subsequently commenced a wrongful dismissal action.

The Alberta Court of Queen’s Bench allowed Ling’s action. The Court reasoned that privity of contract existed between Ling and his original employer. However, at the time of Ling’s dismissal, he was not employed by his original employer, but rather by the group of companies. Therefore, the contract initially entered into was no longer enforceable at the time of Ling’s termination. Since no contract was in place, his termination was governed by the common law.

The Court awarded Ling four months’ notice. The Court based its conclusion on the fact that he was fifty years old at the time of trial and had been in an upper management position notwithstanding that his employment had been of relatively short duration and that, for over half of this employment, his entitlement to notice had been limited to two months.

This decision highlights for employers the importance of having an employee sign a new employment contract whenever there has been a promotion or other change in position. If the employer fails to do so, the employee’s entitlement to notice on termination may not be limited by the terms of the original contract, and may instead be determined by the common law.

Workers’ Compensation Coverage to be Mandatory in Construction Industry

On November 27, 2008, Bill 119, the Workplace Safety and Insurance Amendment Act, 2008, received Royal Assent. The Act makes workers’ compensation coverage mandatory for independent operators, sole proprietors, partners and executive officers of corporations working in the construction industry.

Members of the construction industry will be required to register with the Workplace Safety and Insurance Board (WSIB), and contractors will be required to obtain a clearance certificate stating that any independent operators working for them are registered with the Board and have complied with their own obligations under the Act. In addition, a contractor who directly retains a member of the industry to perform construction work may be liable to pay premiums in respect of that worker. However, the Act does create an exemption for members of the industry who only do home renovation work directly for homeowners.

In addition to the above requirements, the Act may also impose additional responsibilities on employers in the industry. The Act empowers the WSIB to create a system to identify all construction workers which, if established, may require employers to provide detailed information to the Board, including the names of workers and information about their earnings.

While the Act is not expected to come into effect until 2012, employers are invited to contact the lawyers at Bird Richard to discuss whether and to what extent these changes will affect their operations.

Employment Standards Update: Increased Protection for Temporary Workers

One recent amendment and one proposed amendment to the Employment Standards Act, 2000 (ESA) will have a significant impact on employers who employ elect to work and temporary help employees.

As of January 2, 2009, employees who work under arrangements whereby they may choose whether or not to work when requested are entitled to holiday pay, or the designation of an alternate day off in lieu of holiday pay. Family Day in February was the first holiday on which elect to work employees were entitled to public holiday pay.

Bill 139, Employment Standards Amendment Act (Temporary Help Agencies), 2008, was introduced by the Ontario government in December in an attempt to create additional protections for temporary workers. The Bill requires temporary help agencies to provide specific information to their employees, including information about the agency itself, the client to whom the employee is assigned to work, and the employee’s rights under the ESA.

In the spirit of removing barriers that prevent temporary employees from attaining permanent employment, the amendment would prohibit temporary help agencies from any of the following:

  • Charging a fee to an employee for employment, assignment to a client, or job search assistance;
  • Restricting an employee from entering into an employment relationship with a client of the agency; and
  • Charging a “finder’s fee” or “temporary to permanent fee” to an employee or a client in respect of an employee who began to work for the client at least six months earlier.

In anticipation of a future amendment that would remove the exemption of temporary employees from the ESA’s termination and severance provisions, Bill 139 also sets out the method by which termination and severance pay for temporary workers is to be calculated. The Bill states that a temporary worker will be deemed to have been terminated when he or she has not been assigned work for 35 consecutive weeks.

Bill 139 was carried after its second reading, and was referred to a standing committee on March 2, 2009. If it receives Royal Assent, it will come into force six months after that date.

The above amendments will have both positive and negative implications for employers who use temporary help agencies. On the one hand, Bill 139 will make it easier and more affordable for businesses to transition employees from temporary workers to permanent staff. However, employing temporary staff may become more expensive, given that public holiday pay is now required, and termination and severance pay may soon become applicable to temporary workers.

Organ Donor Leave Introduced

The Ontario Government introduced Bill 154, An Act to amend the Employment Standards Act, 2000 in respect of organ donor leave, which will, if passed, provide up to 13 weeks of unpaid job-protected leave for employees who undergo surgery in order to donate certain organs to other persons. Donations of the kidney, lung, liver, pancreas and small bowel are included in the current bill, while other organ and tissue donations may be added by regulation.

Employees must be employed by the same employer for at least 13 weeks in order to qualify for the leave, and are required to provide written notice of the leave at least two weeks in advance, if possible. Employers may request a medical certificate confirming that the employee has or will undergo organ donation surgery which shall be provided by the employee as soon as possible.

The leave would begin on the day of the surgery or on an earlier day as specified in a medical certificate. Leave may be extended by an additional 13 weeks if supported by a medical certificate, making the total length of leave up to 26 weeks.

During the leave, employers are required to continue making contributions to benefit plans. Seniority and length of service credits would also continue to accumulate during the leave.

Entitlement under the proposed organ donor bill would be in addition to any entitlement to emergency leave under the Employment Standards Act, 2000.

We will continue to report further developments on the status of the proposed legislation.

Supreme Court Affirms Traditional Approach to Restrictive Covenants

On January 23, 2009, the Supreme Court of Canada released its decision in Shafron v. KRG Insurance Brokers (Western) Inc. The decision confirms the traditional approach of the court to determining whether a restrictive covenant will be enforceable by an employer against an employee.

Mr. Shafron entered into a series of employment agreements with KRG, all of which contained an agreement that he would not compete with KRG anywhere in the “Metropolitan City of Vancouver” for a period of three years after the end of his employment. When Shafron left KRG to work for a competing insurance brokerage in Richmond, B.C., KRG sought to enforce the restrictive covenant. Shafron challenged the enforceability of the non-compete clause.

The trial judge dismissed KRG’s claim. After finding that there was no such legal entity as the “Metropolitan City of Vancouver”, and that the geographic scope of the restrictive covenant was therefore ambiguous, the judge ruled that the covenant was void for ambiguity. However, the British Columbia Court of Appeal set aside the trial judge’s decision. While the Court of Appeal agreed that the geographic scope was ambiguous, it read “Metropolitan City of Vancouver” to mean the City of Vancouver and surrounding suburbs, including Richmond. The Court of Appeal was then able to conclude that the scope of the covenant was reasonable and enforceable, and that Shafron was in breach of it.

The Supreme Court of Canada allowed the appeal and overturned the Court of Appeal’s decision, finding that the term “Metropolitan City of Vancouver” was ambiguous and unenforceable, and that the Court of Appeal had erred in attempting to rewrite it.

In its reasons, the Supreme Court confirmed that a restrictive covenant found in an employment contract will be subject to stricter scrutiny than one found in the context of a sale of business, due to the “generally accepted” power imbalance between an employer and employee.

The Court reiterated that, in order to be enforceable, a restrictive covenant must be reasonable in respect of three primary factors: geographic scope, temporal scope, and the activities it seeks to restrict. Since an ambiguity makes it impossible for the party seeking to enforce the covenant to demonstrate reasonableness, an ambiguous covenant will always be unenforceable. In the end, the Court refused to rewrite or sever the unenforceable part of the clause.

Restrictive covenants will only be enforceable when they are specific to the employer’s needs and are not more geographically or temporally extensive than the employer reasonably requires. Since the Supreme Court in Shafron has clearly stated that courts will not assist employers in remedying defects in restrictive covenants, employers are

reminded to draft such clauses carefully. The lawyers at Bird Richard can assist employers in drafting tailored restrictive covenants that maximize their enforceability.