Terminating an employee whose work permit ties them to your company carries more legal risk than an ordinary dismissal. Courts treat the fact that a worker on a closed work permit cannot simply take another job as a reason for a longer notice period, and they have awarded additional damages where an employer knew that ending the job would cause serious hardship. Losing a work permit may end an employment contract through “frustration,” but that is not automatic.
Key Takeaways
- A closed work permit makes finding new work difficult, which weighs toward a longer common law notice period.
- In Nishina v. Azuma Foods, 2010 BCSC 502, a six-year employee on a closed permit was awarded 12 months’ notice and $20,000 in punitive damages.
- A fundamental change to the job, possibly including refusing to support a PR application, can be a constructive dismissal.
- Loss of a work permit through no fault of either party may frustrate the contract, but courts will ask whether a new permit or unpaid leave was realistic.
- Reprisal against a worker who complains about pay or job classification can lead to human rights damages.
Why is this different from a normal dismissal?
Judges already read termination clauses in favour of employees, to offset the power imbalance in employment. The panel at the 2026 CBA Immigration Law Conference noted that the imbalance is sharper when the employee’s right to work in Canada depends on the employer. The advice given was that any termination of a foreign national should be undertaken in good faith and with particular care.
The termination clause itself deserves attention. The speakers cautioned employers against relying on the government’s template employment contract for termination terms, because it is not limited to the notice required by employment standards legislation. An employer that wants to limit notice to the statutory minimum needs a properly drafted, enforceable clause.
How much notice is reasonable?
Without an enforceable clause, an employee dismissed without cause is entitled to reasonable notice at common law. Courts apply the Bardal factors: the character of the employment, length of service, age, and the availability of similar employment having regard to the employee’s experience, training, and qualifications.
The last factor is where immigration status matters. An employee on a closed work permit who is dismissed without cause often cannot work for anyone else until they obtain a new permit.
In Nishina v. Azuma Foods (Canada) Co., Ltd., 2010 BCSC 502, a 43-year-old quality control associate on an intra-company transfer work permit was dismissed after six years, allegedly for cause. The court found she had been wrongfully dismissed and awarded 12 months’ notice. The court compared her position to that of an employee dismissed in a “one-employer town”: qualified and experienced, but with almost no alternative employment available, because her status was tied to that employer and the employer knew it.
Constructive dismissal
An employer does not have to say “you’re fired” to end the relationship. A fundamental, unilateral change to the terms of employment, such as a demotion, a salary reduction, or a significant change in reporting structure, can amount to constructive dismissal.
For a foreign national, the speakers identified an additional risk: an employer’s failure to assist with a permanent residence application may be constructive dismissal, where the employer knows the result will be the end of the employment. Whether that argument succeeds will depend on what was promised and the facts of each case, but employers should treat PR support commitments seriously.
Changes to duties, location, hours, or salary can also put the employer out of line with the LMIA or the work permit, which creates a separate compliance problem. We cover those obligations in our article on hiring work permit holders.
Does losing a work permit end the contract?
It can. Frustration ends an employment contract without notice or compensation where an event, not the fault of either party and not adequately anticipated by the contract, makes performance substantially different from what was agreed. Cancellation of a work permit through no fault of either party may qualify.
The speakers urged caution before relying on frustration. Ask two questions first:
- Can the worker realistically obtain another work permit within a reasonable time?
- Could they be placed on unpaid leave while that happens?
If the answer to either is yes, a court may be reluctant to find the contract frustrated. A contract that expressly deals with loss of work authorization is far better than relying on the doctrine after the fact.
Extra damages: moral, punitive, and human rights
Moral damages are available where the employer breaches its duty of good faith in the manner of dismissal and causes mental distress. The speakers gave failing to assist with a work permit renewal or a PR application as examples of conduct that can support such a claim.
Punitive damages require conduct that is malicious, oppressive, and high-handed, a marked departure from ordinary standards of decent behaviour, and an award must be needed for retribution, deterrence, and denunciation. In Nishina, the court found the employer had breached its obligation of good faith because it knew the termination would cause the employee grave difficulties, and awarded $20,000 in punitive damages.
Human rights damages arise where the dismissal is discriminatory or a reprisal. In Pryde v. Align Fence Inc., 2023 AHRC 42, a temporary foreign worker on a closed work permit was paid less than the prevailing wage and was dismissed after complaining about his pay and job classification. He was awarded $30,000 in general damages for injury to dignity, in addition to lost wages.
A careful process for employers
- Review the contract and the work permit conditions before deciding anything.
- Document performance or conduct issues in real time, not after the decision.
- Consider the worker’s realistic ability to find other work when assessing notice.
- Do not change duties, pay, or location as a way of easing someone out.
- Honour any commitments about PR or permit support, or address them expressly.
- Get immigration and employment advice together.
What workers should know
A dismissed worker on a closed work permit generally cannot start work for a new employer until they have authorization to do so. If you are experiencing abuse in your job, or are at risk of it, s. 207.1 of the Immigration and Refugee Protection Regulations allows an open work permit for vulnerable workers who hold, or recently held and applied to renew, an employer-specific permit. For your own employer’s obligations, see our guide to employer immigration compliance.
FAQ
Is a foreign worker entitled to more notice than a Canadian employee?
Status is not a separate entitlement, but the difficulty of finding new work on a closed permit is part of the Bardal analysis and can lengthen the notice period.
Can I end the contract immediately if the work permit is cancelled?
Possibly, if the contract is frustrated, but courts will ask whether a new permit or unpaid leave was realistic. Get advice before treating the contract as ended.
Is refusing to support a PR application a constructive dismissal?
It may be, depending on what was promised and whether the employer knew the refusal would end the employment. It can also support a claim for moral damages.
Do these cases apply in Ontario?
Nishina is a British Columbia decision and Pryde an Alberta human rights decision. The common law principles on notice and bad faith are broadly shared across common law provinces, but each province’s employment standards and human rights legislation must be checked.
Ask us about your matter
Tell us where your file stands and we will reply within two business days. Please do not send documents or identification numbers in this first message.
Disclaimer: This article is for general information only and is not legal advice. Immigration law and IRCC/ESDC policy change frequently, and every case turns on its own facts. Reading this article does not create a lawyer–client relationship. Obtain advice tailored to your situation before you act.
Talk to a Canadian immigration lawyer. BridgePoint Law advises individuals and businesses across Canada — and on Canada–US–China cross-border matters — on employer immigration compliance and the employment of foreign workers. Book a consultation with our team in Toronto and Kingston. We work in English, Mandarin, and Cantonese.