As an employment and immigration lawyer, I often encounter employers grappling with the complexities of managing foreign workers whose work permits are expiring or cannot be renewed. Unfortunately, we are in a new political and legislative environment where many work permits will not be able to be renewed in the coming years despite the best intentions of employers and employees.
It is important to handle these situations well to be fair to employees, while managing legal risk to the organization. Here's what employers need to understand.
The Concept of Frustration of Contract
When a work permit expires or cannot be renewed, it may lead to what we call "frustration of contract." This legal concept applies when it becomes impossible for the employee to fulfill their contractual obligations due to circumstances beyond either party's control. In such cases, the usual requirement of notice or pay in lieu of notice does not apply. However, the legal threshold for frustration is high and requires a careful consideration of the facts of each case to ensure that it meets the legal test.
What This Means for You
- You cannot legally allow an employee to continue working without a valid work permit.
- If frustration Is established, the employment relationship can end without the usual obligations of notice or severance pay.
However, tread carefully. Frustration of contract doesn't give you carte blanche to terminate employment without consideration. Even if there is an argument to be made, there may be good reasons to provide termination pay. Each case should be assessed individually to ensure compliance with employment standards and human rights legislation.
In any event, it is recommended that employees have as much notice as possible that there employment will end if they do not maintain legal authorization to work. This should be outlined in an original offer letter or employment contract and reiterated as the date of expiry draws near.
Your Legal Obligations and Risks
As an employer, you bear significant responsibilities:
1. Compliance with Immigration Laws: Allowing an employee to work with an expired permit is a serious offence. You could face hefty fines and be banned from hiring foreign workers in the future.
2. Compliance with Employment Laws: Before concluding that a contract is frustrated ensure that it meets the legal test and consider if there are any alternatives.
3. Termination Process: Even in cases of frustration, follow a fair and documented process. Communicate clearly with the employee about the situation and its consequences.
Best Practices for Employers
To protect your business and maintain compliance:
1. Implement a Robust Tracking System: Keep meticulous records of work permit expiry dates for all foreign workers.
2. Start Early: Initiate conversations about permit renewals at least 6 months before expiration. This gives ample time for the renewal process or to plan for alternatives.
3. Understand Maintained Status: If an employee applies for renewal before their current permit expires, they may be allowed to continue working under the same conditions until a decision is made on their application.
4. Regular Verification: Implement a system to regularly verify the work authorization status of all employees.
5. Clear Communication: Ensure your foreign workers understand their responsibilities in maintaining valid work authorization.
When Renewal Isn't Possible
Unfortunately, we are in a new reality where there will be many cases where a work permit cannot be renewed despite the best efforts of employers and employees. In these cases:
1. Cease employment immediately upon permit expiration.
2. Provide a clear, written explanation to the employee about why the employment is ending.
3. Fulfill any final pay obligations promptly (including providing an ROE within the required timelines).
4. Consider offering support services, such as career counseling or assistance with relocation back to their home country.
Conclusion
Managing work permit expirations requires a delicate balance between maintaining business operations, treating employees compassionately and ensuring legal compliance. By staying proactive and informed, you can navigate these challenges effectively, minimizing risks to your business.
Remember, each situation is unique and frustration cases are highly fact dependent. As employment lawyers, we're here to help you navigate these complex situations and find solutions that minimize risk and meet employment and immigration laws.
Confluence Law provides articles for informational, educational, and research purposes only. The content herein should not be construed as legal advice. The information provided does not establish a solicitor-client relationship, nor does it constitute a retainer agreement. If you require legal advice, please consult a lawyer directly.
