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The HR Space: Offshoring and the IT Worker - Where are we at?

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Labour, Employment and Human Rights Bulletin

The HR Space is edited by Louise Béchamp, Karen M. Sargeant and Brian P. Smeenk 

As we reported in May, Canada’s Temporary Foreign Worker Program (“TFWP”) has been under fire in recent months. Receiving much attention from the Prime Minister, the Minister of Citizenship and Immigration and the media is the use of the TFWP to facilitate offshoring arrangements.  The immediate reaction of the government was to put a hold on all the Labour Market Opinion (LMO) applications that concerned Information Technology (IT) workers. Although the LMO freezing measures have been relaxed since, there is still a lot of confusion. 

The Confusion Begins

In May 2013, the government froze all LMO applications involving IT workers. Soon thereafter, Service Canada (the federal entity that examines LMO applications) started sending a questionnaire to all employers asking for an LMO for an IT worker. The questionnaire asks whether the LMO application is for a worker who will facilitate “offshoring”. What is “offshoring”? Service Canada defines it as:

“the relocation by a company of a business process from one country to another – typically an operation process, such as manufacturing, or supporting processes, such as accounting or IT services. More recently, offshoring has been associated primarily with technical and administrative services supporting domestic and global operations from outside the home country, by means of internal (captive) or external (outsourcing) delivery models”.

Where does that Leave Employers wishing to Hire IT workers?

1. Labour market opinions for IT workers are being processed normally only if:

a) they are going to work in a non-IT firm; and

b) they are not being hired to facilitate offshoring.

2. Employers who acknowledge that an offer to an IT foreign worker is made in the context of a contractual arrangement that “will facilitate offshoring” are being impacted. They are being asked several additional questions regarding the scope of the arrangement, its impact on Canadian workers, etc. These questions lead us to believe that all the circumstances of the arrangement will be taken into consideration before refusing the application. However, so far, these LMO applications are still on hold.

3. Labour market opinions solicited by IT consulting companies (for IT workers) are also on hold. We have not had express confirmation from Service Canada, but it seems clear that if the IT worker is not in an employment relationship with the non-IT company to which the services are provided, the application will not be processed.

4. Since not all work permits need an LMO (there are also LMO-exempted work permits), IT workers are still entitled to LMO-exempted work permits under certain circumstances, the most common being: 

a) engineers (including Computer and Software Engineers) and Computer Systems Analysts, who are LMO-exempt under the North America Free Trade Agreement; and

b) employees being transferred within the same group of companies (intra-company transfers), either because they fill senior managerial positions or because they possess specialized knowledge (as long as certain conditions are met). 

As said, IT professionals are not excluded from these provisions. To date, we are unaware of any measures that would affect issuance of work permits to IT workers when they can benefit from an LMO exemption. 

Where does that Leave Employers wishing to Engage in Offshoring?

1. If the offshoring involves jobs in areas other than IT, employers are not being impacted for now. So far, no policy changes have been made concerning offshoring of jobs, except in information technology. This could change in the future, but, once again, for jobs in non-IT fields, LMOs are still being processed. No questions are asked on whether the hire of the foreign workers is related to a contract or subcontract that will (eventually) facilitate offshoring.

2. Again, since not all work permits need an LMO, LMO-exempted applications are not (yet) being affected. In these cases, no questions are being asked about offshoring.

3. Offshoring, either of IT processes or of other processes, can be put in place without ever using the TFWP. None of these processes are affected by the recent decision of the government to scrutinize LMO applications for IT workers. Canadian employers only need work permits if foreign workers are going to work in Canada. Usually, in an offshoring situation, these workers only come to Canada during a transition period (until the process is sent abroad). But if there is no transition period in Canada, offshoring can occur without ever having to make an LMO application and/or a work permit application. 

Further Developments to Come…

In addition to the above, we know that there will be further developments when it comes to IT temporary foreign workers working in Canada - to facilitate offshoring or otherwise. We are only hopeful that any future measures will acknowledge that IT workers contribute to the Canadian economy and often fill knowledge or skills gaps. We will continue to keep you updated as the federal government makes further changes.

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