In our March 22, 2010 article, we explained the simplified and expedited processes for obtaining a temporary work permit for foreign employees transferred from outside Canada to a Canadian parent, subsidiary, branch or affiliate company. These intracompany transfers provide a significant benefit for companies — they exempt them from demonstrating their reasonable efforts to fill the position with a Canadian citizen or permanent resident.
One of the requirements to meet the intracompany exemption is that both the Canadian and the foreign company are doing business at the time of the application. They must be regularly, systematically and continuously providing goods and services in their respective countries. What about when the Canadian company is being set-up and not yet doing business in Canada at the time of the application? In that case, special guidelines for a start-up may apply.
Special Guidelines for Start-Ups
In order to qualify for the special guidelines of a start-up, the project must be advanced enough and must have passed the initial feasibility study or exploratory stage. To demonstrate that, the following will be considered:
- Evidence that a Canadian company has been incorporated is a good start but does not suffice.
- The employer must have a credible business plan for the establishment of the company in Canada, describing
- the goods or services that the company will provide,
- the targeted market,
- how and when the Canadian operation will be staffed,
- the projected expenses and revenues for the first two years of operation, and
- the investment commitment and financial resources the company will have at its disposal to commence business in Canada and provide adequate compensation to its employees.
- Arrangements to secure physical premises for the Canadian business. A lease or ownership deed should be provided.
- Other evidence that the business has been established, such as confirmation of employer registration number with Revenue Canada, telephone number, a Canadian corporate bank account, etc.
- For executive or senior management positions, proof that the new Canadian company will be large enough to require and support such a function, in spite of the absence of subordinates during the first months of operations.
- For non-managerial positions (employees possessing specialized knowledge of the company’s products and activities), proof that the foreign employee will be performing his/her activities under the guidance and direction of a Canadian manager.
Both the Canadian and the foreign company must continue to do business during the entire duration of the foreign worker’s intended stay in Canada. As a result, this category is not suitable for “single operator” companies unless it can be clearly established that the foreign company would retain the capacity to continue its operations abroad after its sole employee is transferred to Canada.
Permit Renewals
While initial work permits are usually issued for up to 3 years, first permits in the context of a start-up will be for a maximum of 1 year. Should the company wish to extend the stay of the foreign employee, an application for renewal must be filed. In that case, the company will have to show that
- the initial project has been implemented,
- operations have started,
- staff is in place in accordance with the initial plan, and
- the Canadian and the foreign company have maintained their qualifying business relationship (as parent, subsidiary, branch or affiliate).
The Exploratory Stage
It is important to note that visits at the exploratory stage of a Canadian start-up do not require a work permit as long as:
- the operation has not started,
- the representative of the foreign company remains employed abroad, is not yet holding a position in the Canadian entity and is not actively involved in its day-to-day operations nor acting on its behalf.
When frequent visits to Canada are required, however, we recommend a letter of introduction from the foreign employer explaining the context. It may facilitate the admission process and avoid extensive examination at the time of entry. A worthwhile effort that will save time and frustration to your employee and the risk of a denied entry!
