Temporary foreign workers are vital to the Canadian economy. Businesses with foreign workers on staff are likely aware of the process involved from visiting the Government of Canada website. But while the various application types and ongoing requirements are quite accessible, it can be difficult to source information related to the administration of employee benefits for foreign workers.
This blog touches on frequently asked questions that come up in our day-to-day lives as benefit and group savings specialists. After reading it, you’ll feel all the more confident in preparing and implementing your benefits strategy to accommodate temporary foreign workers.
Who’s eligible to participate?
Employee benefits plans are designed to complement provincial healthcare plans. Any conversation about benefits coverage should begin with confirmation that the temporary foreign worker, and any dependents they intend on adding to their coverage, will actively maintain the core coverage offered in their province of residence.
Assuming they meet these basic requirements, the employee and their dependents will be in a position to participate in your employee benefits plan, though there may be some limitations (more on that below).
Determining whether someone is eligible to participate in a group savings plan hinges on the type of plan you have in place at your organization. Given RRSPs require that the individual has contribution room, the employee would need to have worked and filed a Canadian tax return in a previous year. This isn’t an issue for a pension plan or deferred profit sharing plan where a member can join in the year they’ve come to Canada. The same can be said for TFSAs, however, caution should be exercised by U.S. citizens because the favourable tax treatment of these accounts is not recognized by the U.S..
What plan design considerations should you be aware of?
While preparing to enroll a temporary foreign worker in your benefits plan you should inform your insurer of the individual’s residency status to ensure your plan’s contract accommodates the employee. This often necessitates the creation of a temporary foreign worker class of coverage that is held separate from classes reserved for permanent full-time employees. Overlooking this vital step and simply enrolling a temporary foreign worker into a class they’re not eligible to participate in poses real and potentially significant risks to your business and the worker.
Once all parties are in the know, you’ll likely be informed of any limitations to the temporary foreign worker’s class of coverage. There are exceptions, but insurers are typically reluctant to provide group long-term disability coverage to non-permanent residents given the likelihood that a temporary worker would more likely leave the country and return home if they were unable to work for an extended period of time.
As mentioned, exceptions can be made depending on the nature of the work involved. If you’re planning to employ numerous temporary foreign workers, then having a plan that includes group LTD can help differentiate your plan. In these cases, it’s best to partner with an experienced LTD specialist capable of helping you navigate the various offerings of the Canadian group benefits marketplace.
What comes next?
As time passes, you’ll go through the natural progression of seeing the residency/citizenship status of your employees change, and with it, their employment status within your organization.
As these employees become permanent fixtures at your business, they may become eligible for benefits that weren’t previously an option due to the temporary nature of their work arrangement. Like any other major life change, you’ll want to stay on top of these developments by having sound procedures as your plan’s administrator.
Offering benefits to your temporary foreign worker employees can be a huge difference maker that serves to galvanize your company’s long-term relationship with that individual (and their family). Being aware of the key differences that come with administering benefits and savings plans for temporary workers help put you in a position to clearly establish expectations with all parties involved and will serve to boost your benefits communication skills.
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