Corporate restructuring is a complicated endeavour, and you may be concerned about how it will affect you and your staff. In particular, restructuring may affect the work eligibility of certain foreign employees. Temporary foreign workers may lose their work eligibility in a merger or acquisition if certain conditions are not met regarding both intra-company transfers and foreign employees working pursuant to labour market opinions.
Canadian law allows the foreign employees of parent companies to work for their subsidiaries, branches, or affiliates in Canada. These foreign workers are known as intra-company transfers. However, if a Canadian company acquires the subsidiary or branch, that severs the relationship to the parent company, and the transfer no longer qualifies to work in Canada.
Here’s an illustration. Imagine Company A is based in France, and it owns Subsidiary B located in Canada. The parent company sends over a manager from France to spearhead operations in Canada, as allowed under Canadian law. Eventually Company A decides to sell Subsidiary B to Company C, which is headquartered in Canada. Now the temporary foreign worker no longer qualifies to work at Subsidiary B. That employee must return home or apply for a new work permit pursuant to labour market opinions, possibly with the help of Company C.
Labour Market Opinion Workers
To hire an employee pursuant to a labour market opinion, your company must essentially prove that no Canadian citizen can do that job. If one company buys another company that employs workers with these types of work visas, the workers may lose their eligibility. These workers only retain their work eligibility if the new owner is a successor in interest.
To be a successor in interest, the purchasing company must assume all the assets and liabilities of the company it is acquiring. This includes everything from equipment and trademarks to short-term debts and deferred income tax liabilities. Of course, it also includes human resources.
If the purchasing company does not acquire all the necessary assets and liabilities, foreign temporary workers lose their legal work status. In contrast, if the purchasing company meets the criteria to be considered a successor in interest, the foreign worker’s eligibility is not affected.
New Work Permits
If you’re a temporary foreign worker working under a labour market opinion or as an intra-company transfer — or if you’re concerned about staff members who fall into those categories — the first step when the employer’s name changes is to apply for a new work permit, ideally within 90 days of the corporate restructure. The application should include a signed declaration from a corporate officer attesting to the name change and the type of corporate restructure involved. It should also include a copy of a corporate press release announcing the merger or acquisition.
Dealing with a merger or an acquisition can be a complex and busy time. To ensure you retain your company’s talent pool, you need to pay special attention to the work eligibility of temporary foreign workers. If you anticipate they won’t be able to transfer seamlessly to the new corporation, help them apply for a new work permit under the new circumstances. Helping your employees to handle these issues makes the restructuring process easier for everyone involved.