Canada: Government Of Canada Announces Significant Overhaul Of The Temporary Foreign Worker Program (TFWP)

On June 20, 2014, the Honourable Jason Kenney, Minister of Employment and Social Development, and the Honourable Chris Alexander, Minister of Citizenship and Immigration, announced a comprehensive overhaul of the Temporary Foreign Worker Program (TFWP).

The reforms cover three key areas: reorganizing the TFWP structure, restricting access to the TFWP to ensure Canadians are first in line for available jobs; and adopting increased enforcement measures and penalty regimes.

The Government of Canada's announcement comes after months of controversy and adverse media coverage involving the TFWP. It appears that the overhauled TFWP is attempting to achieve a balance between an adequate influx of temporary foreign workers and satisfying concerns over the protection of domestic workers' rights. However, the Government of Canada has made a point in emphasizing that the new TFWP will be a "last resort" for employers to fill jobs for which qualified Canadians are not available. The efficacy of these changes has already been questioned by several small business advocacy organizations.

To track these changes, Employment and Social Development Canada (ESDC) will publicly post data on the number of temporary foreign workers approved through the TFWP on a quarterly basis starting in the fall of 2014. The names of corporations that receive a positive Labour Market Impact Assessment (LMIA) will also be posted.

Restricting Access to the TFWP

The TFWP will now refer to only those streams under which foreign workers enter Canada at the request of employers following approval through  a new Labour Market Impact Assessment (LMIA). This is distinct from the new International Mobility Programs (IMP) which will include those streams of foreign nationals who are not subject to an LMIA.

The new LMIA is considered more comprehensive and rigorous than the old Labour Market Opinion (LMO). Employers must provide additional information, including: (i) the number of Canadians that applied for their available job, (ii) the number of Canadians the employer interviewed, and (iii) explain why those Canadians were not hired. Employers must now also attest they are aware of the rule that Canadians cannot be laid-off or have their hours reduced at a worksite that employs temporary foreign workers.

Wage levels will also replace the previous National Occupational Classification (NOC) as the main criteria for administering the TFWP. Jobs for which wages are below the provincial or territorial median wage will be considered "low-wage," while those being paid at or above the provincial/territorial median will be considered "high-wage."

LMIAs for in-demand occupations (skilled trades), highly paid occupations (top 10%) or short-duration (120 days or less) entries will be provided within a 10 business day service standard.

This contrasts significantly with the new TFWP cap to limit the proportion of low-wage temporary foreign workers that a business can employ. Effective immediately, employers with 10 or more employees will be subject to a cap of 10% on the proportion of their workforce that can consist of low-wage temporary foreign workers. This cap will be applied per employer worksite and is based on total hours worked at that worksite. Effective immediately, employers who apply for a new LMIA but have more than 10% of their employees in the low- wage TFWP category will be limited at 30% or frozen at their current level, whichever is lower. This transition measure will be further reduced to 20% on July 1, 2015 and reduced again to 10% on July 1, 2016.

ESDC will refuse to process certain LMIA applications in the Accommodation, Food Services and Retail Trade sectors. This applies specifically to applications for positions that require little or no education or training in economic regions with an unemployment rate at or above 6%. This is effective immediately.

All LMIAs will now be limited to a maximum of one year for low-wage positions, instead of the two year duration under the old TWFP.

Employers who want to hire temporary foreign workers in high-wage occupations will be required (with limited exceptions) to submit transition plans with their LMIA application to ensure that they have a firm plan in place to transition to a Canadian workforce to reduce their reliance on temporary foreign workers over time. Employers will need to report on  the success of their transition plan should they reapply to hire high-wage temporary foreign workers. Employers must also report on the results of their transition plan if they are selected for an inspection.

Raising the LMIA Fee

The LMIA fee is increasing from $275 to $1,000 for every temporary foreign worker position requested by an employer. It also appears that ESDC is seeking the authority to impose an estimated $100 privilege fee on employers processing open work permits during the LMIA process. Further fee adjustments may be expected.

Increased Inspections and Monetary Penalties

Effective immediately, ESDC is increasing the number of inspections with a target goal of inspecting one in four employers who use the TFWP each year. Inspector authority has also been expanded to include: (i) immediate inspections upon receiving complaints, (ii) warrantless on-site visits, (iii) temporary foreign worker interviews with employee consent, (iv) an extension to the time for verifying wages/ working conditions from two years to six years, and (v) TFWP bans for employers who break the rules.

The updated inspection regime requires employers to keep all documents related to applications (including recruitment documents) for six years. As of fall 2014, ESDC will also be able to compel banks and payroll companies  to provide bank records and payroll documents to ensure employer compliance with TFWP rules. Employers should be aware that since December 31, 2013, inspectors can review all 21 TFWP program requirements when conducting inspections.

ESDC also has the authority to suspend or revoke the employer's LMIA. LMIAs are suspended when an employer is suspected  of breaking the rules and LMIAs are revoked when, following an investigation, an employer is found to have broken the rules. Beginning in fall 2014, the Government will impose fines of up to $100,000 (depending on the severity of the offence) on employers who break TFWP rules. ESDC will also publicly disclose the names of employers who have been fined  and the amount of that fine on a publicly accessible Blacklist website.

Conclusions

Employers, particularly those in the Information  Technology, Telecommunications Accommodation, Food Services and Retail Trade sectors, will likely see dramatic short-term impacts in response to the  above TFWP changes. The increased risk of inspection and the expanded penalty regime (maximum $100,000 fine) will also likely require employers to critically review the decision to bring in foreign workers over local candidates. Employers should also be mindful of the expanded LMIA criteria and $1,000 application fee.

View the PDF of the government's action plan here.

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