Canada: Government Announces Significant Reforms To Canada’s Temporary Foreign Worker Program

Last Updated: May 10 2013
Article by Brian Dingle

As part of its Economic Action Plan 2013, the Federal Government signalled that it would be taking action in the coming months to reform the Temporary Foreign Worker Program (TFWP) to ensure that Canadians citizens and permanent residents were given the first chance at available jobs.

Subsequently, on April 29, 2013, the Minister of Human Resources and Skills Development and Minister of Citizenship and Immigration, announced sweeping changes that has effectively reversed the course of the program and will make it more difficult and expensive, for Canadian employers to employ Temporary Foreign Workers (TFWs).

The reforms include the following legislative, regulatory and administrative changes:

  • Prevailing Wage – effective immediately, employers are now required to pay TFW at the prevailing wage. Previously, the TFWP allowed employers to pay TFWs wages up to 15% below the prevailing wage for high-skilled occupations, and 5% below the prevailing wage for lower-skilled occupations, where it could be demonstrated that Canadian employees were receiving the wage in the same job and in the same location.

    This change is significant because the labour market information used by Human Resources and Skills Development Canada (HRSDC) and Citizenship and Immigration Canada (CIC) to assess labour market information, including wage rates, has often been cited by employers as being incomplete or unrepresentative of the labour market, particularly where a role does not fit squarely within a specific National Occupational Classification.
  • Accelerated-Labour Market Opinion (A-LMO) Process Suspended – effective immediately, the A-LMO process has been suspended temporarily while bureaucrats determine whether it is meeting its original objectives. Designed for employers with a clean compliance records (no complaints or violations), A-LMO applications were to be processed within 10 business days of application.

    This change is significant because regular Labour Market Opinion (LMO) applications often take in excess of two months to process, if not more, depending on the circumstances of the case.
  • Increase Government Authority to Suspend and Revoke Work Permits and LMOs – the Government has proposed legislative amendments as part of the Budget Implementation Bill, Bill C-60 (Economic Action Plan 2013 Act, No.1), that would allow HRSDC and CIC to suspend, revoke or refuse to process an LMO application if it was determined by an officer that the TFWP was being abused based on public policy considerations specified in Ministerial Instructions from the Minister of Human Resources and Skills Development or the Minister of Citizenship and Immigration. This amendment requires parliamentary approval.

    While it may be desirable for an officer to be able to revoke a work permit if an LMO is gained by fraud, the proposed changes further erode transparency and accountability by granting the Ministers the authority to issue instructions that are not subject to review without prior public debate.
  • New Questions on LMO Forms to Ensure that Canadian Jobs are Not Being Outsourced – the Government will require additional information from employers and their "partner companies" before issuing an LMO, including questions about outsourcing and whether Canadian employees are to be replaced by TFWs.

    The Government has not indicated what constitutes a partner company and what information would be required from it to adjudicate an LMO. Companies may be unwilling to share information that is confidential regardless of whether they are "partners". It is difficult to assess what impact this change will have on employers, other than additional administrative burden demonstrating what impact the TFWs will have on the Canadian labour market.
  • Transition Plan to a Canadian Workforce – the Government will require employers that rely on TFWs to develop and implement a plan to transition to a Canadian workforce as part of the LMO application process. The announcement did not specify what criteria HRSDC would use to determine whether an employer was reliant on TFWs, nor is it clear whether this requirement would apply to employers whose employees obtained work permits on a LMO-exempt basis, such as the intra-company transferee category.

    Employers that use a Global Delivery Model, especially those in the IT consulting and services delivery sector, are likely to face significantly increased scrutiny of LMO applications. Similarly, employers that rely on LMO-exempt work permits, especially intra-company transferees who possess specialized knowledge, are likely to find the threshold for establishing specialized knowledge significantly higher than before.
  • Fees – Bill C-60 proposes to introduce fees for LMO applications and increase the fees payable for work permit applications. These amendments require parliamentary approval. If approved, the fees for the various application types will be set by regulation at a later date.

    The proposed changes will make it more expensive for employers to access the TFWP. At present, there is no fee payable by employers to file an application for an LMO. Employers may gladly accept the increased fees, if the proposed fees were used to be used for the processing of LMO and work permit applications expeditiously.
  • Language – the Government has indicated that English and French will be the only languages that can be used as a job requirement.

These reforms are designed to ensure that TFWs are used by employers only when Canadians are genuinely not available for jobs. Not mentioned in the announcement is the fact that Government will be seeking to increase the mandatory minimum recruiting requirements that an employer must take when seeking to hire a TFW, including increased length and reach of advertising.

For more information on the announced changes to the TFWP, contact your regional Business Immigration Leader. The Federal Government's news release on the changes can be found here.

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