There are two scenarios here:I don't think they are allowed to this. Check out this link: https://www.cic.gc.ca/english/helpcentre/answer.asp?qnum=1505&top=17
1. You applied for Work Permit, SIN was valid when you started a job and after sometime SIN expired but you are allowed to work as per the rules and your SIN information was entered in the employer system for pay and all before SIN expiry.
2. You applied for Work Permit, waited for 2-3 months without a job and SIN expired before starting a job. In this case, the employer won't be able to enter your SIN information in the system for pays as this is directly linked to CRA which won't allow expired SIN in their system.