Canada: Major Changes to Canada's Temporary Foreign Worker Program

On April 1, 2011 major changes to Canada's Temporary Foreign Worker Program become law.   Amendments to the Regulations of Canada's Immigration & Refugee Protection Act will affect the ability of employers to hire and retain foreign workers, and will place greater emphasis on employer compliance. The Labour Market Opinion application requirements and form have also changed. 

To ensure that businesses comply with the new rules, it is imperative that employers and HR professionals understand the changes and adopt strategies to deal with the new regime.

New 4-year Time Cap on Some Foreign Workers

The bad news is that the new Regulations limit the maximum term that some temporary foreign workers (TFWs) can remain in Canada to a cumulative total of 4 years. Once a TFW has reached the 4 year limit, they will not be able to obtain another work permit in Canada for a period of four years.

However, the goods news for employers is that the time cap has many exceptions, and more than anticipated when the new Regulations were announced in August 2010. Initially it was thought that the time cap might apply to all LMO-based work permit holders, but it appears that it will only apply to TFWs who have LMO-based work permits in NOC B, C and D skill level occupations (the NOC is Canada's National Occupations Classification).

The new time cap is not retroactive. Therefore, the time a TFW spent on an LMO-based work permit prior to April 1, 2011 will not be counted toward the cumulative 4 year time cap.

In addition, it appears that the 4 years of cumulative time will be calculated based on the days the TFW actually spent working in Canada, not on the validity period of the work permit itself.  Examples of legitimate breaks from work include extended unpaid leave, parental leave and periods of unemployment. Consequently, if TFWs can document such breaks from work during the validity of their work permit, an officer may take that into consideration when calculating whether the 4 year time cap has actually been reached.

Many TFWs will be exempt from the 4 year time cap, including:

  • TFWs in managerial (NOC 0) or professional occupations (NOC A). Therefore, LMO-based work permit holders in occupations at these two NOC skill levels are not affected by the 4 year time cap.
  • TFWs who are exempt from the Labour Market Opinion process. This includes two key work permit categories used by many Canadian employers: (1) the intra-company transferee work permit category; and (2) work permits issued under international agreements (such as NAFTA, CCFTA, the Seasonal Agricultural Worker Program etc.)

Further information on the time cap and the exceptions is here: CIC Backgrounder on New 4 Year Time Cap.

While the 4 year time cap has many exceptions, employers will still need to consider what their long-term plans will be for their foreign employees relatively soon into their tenure, and consider initiating the permanent residence process for their TFWs. This is especially so for TFWs in Canada in NOC B positions who have an LMO-based work permit, as these TFWs will face the 4 year time cap so it is imperative to move them to permanent resident status well before the time cap is reached.

Genuineness of Job Offers to TFWs to be Assessed

The genuineness of an offer of employment to a TFW will receive more scrutiny under the new Regulations. This review will be done by Service Canada during the LMO application process, or by CIC/CBSA during the work permit application process for LMO exempt categories.

Four factors will be reviewed:

  • Is the employer actively engaged in the business?
  • Is the job offer consistent with the needs of the employer?
  • Is the employer reasonably able to fulfill the terms of the job offer?
  • Has the employer complied with federal/provincial/territorial laws regulating employment and recruitment in the province/territory where the worker will be employed?

The last factor suggests that an employer's breach of employment legislation such as employment standards legislation could cause a negative decision.

Two-Year Ban on Hiring TFWs for Non-Compliant Employers

The new Regulations place a greater emphasis on compliance and enforcement, thereby placing a greater onus on employers.

Non-compliant employers may face a 2 year ban on being able to hire TFWs, and the non-compliant employer's name and address will also be listed on CIC's website. While this change is stated to be aimed at protecting TFWs from a very small number of problem employers, all employers utilizing the Temporary Foreign Worker Program need to ensure that they are compliant.

As of April 1, 2011 if an employer is found to be in breach of any of a TFW's employment conditions, the new rules will hold the employer accountable. Employers must provide TFWs with substantially the same wages, working conditions, and position offered to them. This must have been done over the two years prior to the application. Therefore, when hiring a new TFW, employers may face not only a review of their current compliance, but a review going back two years.

If a 2 year ban is placed on an employer, this will obviously significantly impact the employer's human resources options, as skilled TFWs will not be available. 

The Regulations provide some defenses to employers that fail to provide substantially the same employment conditions, and employers may also be given the opportunity to rectify any breach before facing sanctions. 

Employers and HR professionals should implement internal policies and practices to ensure that they remain compliant at all times. 

More information on the changes is available here:  CIC Backgrounder on Regulatory Changes.

New LMO Procedures and Forms as of April 1, 2011

Not surprising, the emphasis on employer compliance and the assessment of the genuineness of the job offer has led to some changes to the LMO application process. 

There will be additional factors assessed by Service Canada. Service Canada has announced some changes and additional supporting documentation that may be required, especially for employers that have not applied for an LMO in the past:  New LMO Application Requirements as of April 1, 2011.

In addition, new LMO application forms must be used as of April 1, 2011. Employers therefore must avoid inadvertently using the old form on future LMO applications. 

The new LMO form for high skill positions (NOC skill level 0, A or B) is here: New LMO Form.

Other LMO application forms are here - Service Canada's LMO Application Forms Page

The new form has some new questions, and also requires a more detailed declaration to be made by the employer when signing off on the form. This includes an undertaking to "immediately inform" Service Canada of "any subsequent changes related to the TFW's terms and conditions of employment." Therefore, an onus is placed on employers to keep Service Canada informed of changes as they occur during the TFWs tenure.

More of the terms of employment are required in the form. This will protect foreign workers to a greater degree, and also put Service Canada in a better position to assess employer compliance on future applications. 

The form also now asks employers to provide a rationale for the job offer and to explain how the offer to the TFW will meet employment needs.

The form warns employers that the information they put into the form may be shared with provincial governments for the purpose of administration and enforcement of provincial legislation, including employment standards and occupational health and safety legislation.

The on-line LMO application system will be temporarily unavailable. It is expected to be available again in June 2011.

Strategies for Dealing with the New Regime

What should employers and HR professionals be doing to deal with the changes introduced on April 1, 2011?

  • Know what is happening - all employers, foreign workers and HR professionals need to have a clear understanding of the new rules. It is expected that further information will be issued by CIC and Service Canada on the changes over the next while.
  • When hiring a TFW, determine whether the 4 year time cap will apply to that TFW. Also, review any current TFWs to see if the time cap is applicable to them going forward. As noted, this will consist of TFWs on CMO-based work permits in NOC B, C and D positions.
  • Transition TFWs to permanent resident status to avoid potential time cap problems.
  • Put in place internal policies and procedures to ensure that you continue to be compliant at all times with the rules and requirements.
  • If you are hiring a TFW, conduct a review to ensure that the terms and conditions of employment of current TFW employees have remained substantially the same over the last two years.
  • Carefully assess well in advance any changes to the terms of employment of a TFW, to determine if the changes may cause a breach of IRPA's Regulations. For LMO-based work permits, Service Canada may have to be informed of the changes. Depending on the type and degree of change, a new LMO or work permit may be required.
  • If you have TFWs covered by the 4 year time cap (especially those in NOC B occupations under an LMO-based work permit) track the time they are actually working in Canada as some gaps in work may not be held against the cumulative 4 year time cap.
  • Make sure you use the new LMO application forms on applications made after April 1, 2011.
  • Companies involved in mergers and acquisitions involving Canadian entities that have TFW employees will want to make sure as part of any due diligence process that the target company is compliant with IRPA's requirements. Otherwise, there may be a risk of inheriting a compliance problem which may then affect the acquiring company's own ability to hire TFWs.


The amendments to the Regulations reflect the trend over the last few years to tighten up Canada's Temporary Foreign Worker Program, and to place more emphasis on employer compliance and enforcement mechanisms. However, the good news is that Canada's Temporary Foreign Worker Program remains a useful way for Canadian employers to access key skilled TFWs. As well, with advance planning, Canadian employers should be able to transition most TFWs they hire to permanent resident status, which will avoid any potential time cap issue.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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