When does an employer become responsible for their recruitment agency's conduct?
The Supreme Court of British Columbia recently dealt with a class action involving temporary foreign workers who were recruited overseas to work at Mac's Convenience Stores.
The workers argued that a recruitment agency charged them prohibited fees and that some arrived in Canada to find their promised positions weren't available.
The decision addressed whether an employer could be held vicariously liable for a recruitment agency's breach of fiduciary duty, and whether workers on fixed-term contracts had a duty to mitigate their losses when their positions didn't materialise.
A recruitment agency charged fees of about $8,000 to temporary foreign workers, split into two payments: around $2,000 before introduction to the employer and around $6,000 after job acceptance.
The agency maintained these payments were for immigration and settlement services, not job placement.
Under Canada's Temporary Foreign Worker Program (TFWP), employers needed a labour market opinion from Service Canada confirming they couldn't find local workers.
Employers had to cover recruitment costs, return airfare, assist with accommodation, provide medical coverage, and enrol workers in compensation insurance.
When submitting labour market opinions, the employer acknowledged through signed forms: "I declare that all recruitment done or that will be done on my behalf by a third party was or will be done in compliance with federal/provincial/territorial laws governing recruitment. I am aware that I will be held responsible for the actions of any person recruiting temporary foreign workers on my behalf."
The employment contracts specified: "Both parties agree that this contract is conditional upon The EMPLOYEE obtaining a valid work permit pursuant to the Immigration Regulations, and his/her successful entry to Canada."
Workers faced strict employment limitations. As noted in evidence, when jobs weren't available, workers were "technically legally permitted to remain in Canada, but could not work other than as was indicated on their work permits."
The court found that obtaining new work permits was time-consuming, requiring "a new labour market opinion or a labour market impact assessment... [taking] six to eight months for work other than farm jobs."
The two-year employment contracts required specific steps for job changes: "Temporary foreign workers who change jobs must ensure that their work permits are modified accordingly and EMPLOYERS who hire temporary foreign workers already in Canada must apply to HRSDC/Service Canada for a Labour Market Opinion."
One worker testified she stayed in Canada for six months pursuing her promised position without success. During this time, she was homeless and relied on community members for accommodation.
The court found: "these contracts must be interpreted taking into account that the worker could only work as specified on the work permit... If [the employer] did not have employment for [the worker], then [the worker] could not work in accordance with the work permit."
On employer responsibility for the recruitment agency's actions, the court determined: "vicarious liability for breach of fiduciary duty of an agent undertaking the enterprise of the principle under actual or apparent authority is available subject to the modified Bazley factors I have set out."
Regarding workers' duty to mitigate losses, the court concluded: "given the context in which the contract was made, that [the workers] were travelling to Canada for jobs with [the employer] arranged through the TFWP and were legally restricted to working for [the employer], the employment contracts must be interpreted as not imposing a duty to mitigate if [the employer] did not provide employment that was in accordance with the work permits."
The court also addressed earnings during the notice period, finding: "there is no basis to interpret the contract to conclude that the parties agreed that if [the workers] were able to mitigate their damages, their earnings during the notice period would be non-deductible." This meant any earnings during the notice period would be deductible from damages.
