Setting Up or Expanding Your Business in Canada – Bringing Your Key Employees into Canada


In the January edition of Business Matters, we discussed the advantages of incorporating in British Columbia for foreign enterprises wishing to establish a Canadian subsidiary corporation, although it is open for them to incorporate federally or under equivalent corporate legislation in any province or territory in Canada. Regardless of the foreign enterprise’s chosen jurisdiction in which to incorporate its subsidiary, the foreign enterprise will likely have executives or other key employees outside Canada who may need to visit or temporarily work in Canada to oversee the set-up and expansion of the business in Canada.

In the case of foreign enterprises who are just setting up their business in Canada through a subsidiary, the process usually begins with meetings and assessing prospects and gradually leads to the foreign parent incorporating in Canada and then bringing key employees into Canada to work temporarily for the subsidiary during its initial stages of expansion. In this scenario, depending on the country of the intended employee’s origin, there are a number of options available to companies wishing to temporarily bring employees to Canada.

As a general rule, subject to several available exemptions, all individuals wishing to “work” in Canada require a work permit. The definition of “work” under immigration regulations is quite broad and could cover even unpaid activities that compete directly with activities of Canadian citizens or permanent residents in the Canadian labour market. As such, proper advice should be sought regarding each proposed visit of a foreign national to Canada to perform any services in connection with the set-up or expansion of a business.

While a thorough discussion of the exemptions and work permit requirements is outside the scope of this article, a number of common scenarios faced by foreign enterprises who are expanding in Canada and wish to bring their employees into the country are discussed below. It should be noted that although the focus of the discussion is on set-up and expansion into Canada, the issues discussed in this article may be equally applicable to foreign enterprises that are already established in Canada.

Business Visitors to Canada

If a foreign enterprise wishes to send one of its employees to enter Canada temporarily to look for business opportunities, to invest or to advance existing business relationships, such individuals may qualify to enter Canada as business visitors without the need to obtain a work permit (a visa will be required if the foreign national is not from a visa exempt country).

To qualify, the foreign national must be entering Canada to engage in international business activities without directly entering into the Canadian labour market and may qualify if the purpose of coming to Canada is one or more of the following:

  • to attend conferences, conventions, meetings or trade fairs;
  • to provide training to employees of a Canadian subsidiary of a foreign company;
  • to receive training within a Canadian parent or subsidiary of the corporation that employs them outside Canada (provided any production of goods or services that results from the training is incidental);
  • to represent a foreign business for the purpose of selling goods for that business (if the foreign national is not engaged in making sales to the general public in Canada);
  • to purchase Canadian goods or services for a foreign business or receiving training or familiarization in respect of such goods or services.

Special rules apply for nationals of the United States or Mexico wishing to enter Canada as business visitors as they may qualify to enter Canada under the North American Free Trade Agreement (“NAFTA”). A discussion of all the available options under NAFTA is outside the scope of this article but businesses should seek advice to explore their options.

Generally, the determination of whether a foreign national qualifies as a business visitor will involve the consideration of a number of factors including the following:

  • whether or not the primary source of remuneration for the business activities is outside Canada;
  • whether or not the location of the principal place of business remains outside of Canada;
  • whether or not the actual place of accrual of profits remains outside of Canada;
  • whether or not there is any intention of gainful employment in Canada.

In addition to the limitation on the nature of their activities while in Canada, the duration of time for which business visitors may remain in Canada is also limited. Typically, they stay in Canada for a few days or a few weeks. While the circumstances of each case must be examined, generally, business visitors must be able to show that they intend to stay in Canada for less than six months and do not plan to enter the Canadian labour market. In addition, the foreign employees must also meet Canada’s basic entry requirements in terms of carrying the necessary travel documents, having sufficient funds for their stay, plans to leave Canada following the end of their visit and the lack of criminal, security or health risks to Canadians.

Intra-Company Transferees – Executives, Senior Managers and Specialized Knowledge Workers

If a foreign enterprises wishes to send one or more of its employees to Canada to work for a Canadian subsidiary, another entry option that may be available for such individuals is to obtain a work permit as an intra-company transferee.

The key elements that must be present to qualify under this category are as follows:

  • the requirement that the transfer of the employee be temporary in nature;
  • the existence of the required “qualifying relationship” between the foreign entity sending the employee to Canada and the Canadian entity. For example:
    • the entry must be to work in a parent, subsidiary, branch or affiliate of a multi-national company and the entry should be to undertake employment at a legitimate and continuing establishment of that company; and
    • both the foreign entity and the Canadian entity must be doing business or be able to establish that the entity will be doing business.
  • the transferee must be taking a position in an executive, senior managerial or “specialized knowledge” capacity;
  • an employer-employee relationship must exist between the Canadian entity and the employee being transferred and evidence of this must be provided;
  • the transferee must have been employed by the foreign entity in a similar full-time position for the requisite amount of time (subject to some exceptions, generally, one year in the three-year period immediately preceding the date of application);
  • the transferee must be able to transfer back to the foreign company at the end of the Canadian assignment.

There are special guidelines that apply in the case of “Start Up Companies” and companies that have been subject to a recent merger or acquisition who wish to temporarily bring into Canada an employee from a foreign entity. Also, the assessment of whether the foreign or Canadian entity are “doing business” or whether the intended transferee actually meets the criteria of being an executive, senior manager or specialized knowledge worker, involves the examination of a number of factors and documents which must be submitted as evidence of active involvement in business both in the foreign jurisdiction and in Canada.

Also, much like business visitors, the foreign employees must also meet Canada’s basic entry requirements in terms of carrying the necessary travel documents, having sufficient funds for their stay, plans to leave Canada following the end of their visit and the lack of criminal, security or health risks to Canadians.

How Can We Assist

Since the examination of whether an intended foreign employee who wishes to enter Canada for business is complicated, it is important to seek advice from qualified experts who can assess the proposed entry into Canada before plans are finalized and to avoid surprises such as being denied entry. In such cases, we can:

  • navigate the application process with the Canadian authorities;
  • help you assess whether your key employee’s intended entry in Canada would likely qualify as a business visit;
  • assist companies in identifying the supporting documents they will likely require if they intend to invite an employee into Canada;
  • advise on whether a “qualifying relationship” exists between a foreign entity and the Canadian entity if the temporary transfer of a foreign employee to Canada is being considered;
  • draft and advise on employment agreements between the Canadian entity and the intended employee/transferee;
  • assess whether an employee’s existing position in the foreign enterprise and the intended position in the Canadian enterprise would meet the criteria for the position the intended transferee must occupy in Canada.

We would also be happy to discuss the possibility of transferring employees into Canada on a permanent basis.

The matters discussed above are general in nature, are guidelines only and even if all the factors described above are met, an application may be denied for any number of reasons. Each situation must be assessed independently and in light of all available information about the employers involved and the candidate (employee). Also, as noted earlier, in addition to the two options discussed in this article, there may be other options available to a foreign enterprise or Canadian entity wanting to bring an employee into Canada. We would be pleased to explore the available options with you.