Canada: Overhaul of Canada's Temporary Foreign Worker Program

Canada's Temporary Foreign Worker Program was overhauled on June 20, 2014.  Many of the changes were effective immediately, while others will be phased in.

The changes represent the most significant reforms in some time and affect nearly all aspects of the program.  Employers must be aware of the changes to ensure that they remain compliant with the rules.

Some details of the changes are set out in this government publication:  Overhauling the TFWP / ESDC Publication.  Page 30 of that document sets out the timetable for some of the future changes.

We have set out some of the main changes below. 

Renamed Program

The Temporary Foreign Worker Program (TFWP) now only refers to what was formerly known as the Labour Market Opinion (LMO) system. LMOs are now called Labour Market Impact Assessments (LMIAs). The TFWP is administered by ESDC/Service Canada.

The new name for non-LMIA work permits is the International Mobility Program (IMP).  IMP deals with work permit categories such as NAFTA Professionals, Intra-Company Transferees and the International Experience Canada program.

The New LMIA Regime

Significant changes have been made to the reconstituted LMIA program.

Highlights of the changes are set out below:

  • The application fee is now $1,000 per worker (up from $275);
  • There is now a concept of "high-wage" versus "low-wage" occupations.  

    This is determined by comparing the wage being offered to the TFW to the provincial/territorial median wage. If the wage being offered for the position is above the provincial/territorial median wage, it will be considered a high-wage position. If it is not, then it is a low-wage position.

    The applicable provincial/territorial median wages are set out in the LMIA application form, and are also available at this link:  Provincial Median Wages. This provincial median wage figure needs to be compared to the wage being offered to the TFW for the position.

    Whether an occupation is "high-wage" or "low-wage" will dictate the path an employer must follow to transition to a Canadian workforce.
  • If the employer is applying for a high-wage occupation, the employer must provide a Transition Plan in most situations. A Transition Plan is not required when applying for an LMIA for a low-wage occupation.  

    There are some exemptions to the requirement to file a Transition Plan with a high-wage LMIA application. One exemption is where the position requires "unique skills" but no guidelines on how ESDC will interpret "unique skills" have yet been provided. The other exemption relates to situations where the request is for a limited duration which means that the "job is time-limited and will no longer exist after the TFW leaves". 

    To meet the Transition Plan requirements, employers must conduct:
    • At least three distinct activities to recruit, retain and/or train Canadians/permanent residents in the occupation specified on the application;
    • One additional distinct activity to engage an organization serving underrepresented groups to identify potential candidates for recruitment or training (e.g. immigrant settlement offices, Aboriginal, youth, or provincial/territorial unemployment centres).
    • Employers may also choose to do the following:  "One activity which facilitates the permanent residency of a TFW (e.g. making a permanent job offer or offering language training to the foreign worker to support the individual's permanent resident visa application).  However, if the employer chooses only to support the permanent residency of a TFW, and does not proceed with it, the employer will be in breach of the Transition Plan and may be found non-compliant if inspected."
  • Employers should carefully review the form and Transition Plan requirements before filing an LMIA as the form has been changed from time to time, and will likely be changed again as further clarifications on the requirements are provided.

    It will be important to ensure that the Transition Plan is updated if necessary (for example, if a planned activity does to take place).  Otherwise, if the employer faces a review of the Transition Plan on a subsequent LMIA application, or if there was an inspection and the Transition Plan activities were not conducted, an employer could face a finding of non-compliance.

    Employers also need to ensure that they record the results of the activities in terms of how many Canadians or permanent residents apply, are interviewed and/or are hired as a result of the activity, as this will need to be reported in Transition Plans filed with subsequent LMIA applications.

    Transition Plans create more compliance requirements. The Transition Plan should not be taken lightly, as failure to complete the activities will negatively affect future LMIA applications.
     
  • There is now supposed to be a 10 business day LMIA processing timeline for three situations.  If none of these situations apply, the LMIA will be processed under regular processing times, which are much longer.
    • Highest paid occupations: Where the TFW candidate will be in anoccupation/NOC where the prevailing wage is at or above the top ten percent wage threshold for the economic region where the job will be located. 

      Each province and territory has a different top ten percent wage threshold figure. That figure is available at this website:  Top 10% Provincial Wage Thresholds.  The figures will change from time to time based on new labour market data.

      For example, the top ten percent wage threshold for Ontario is $45.00 per hour (as of September 2014), which equates to $81,900 annually based on a 35 hour week and $93,600 based on a 40 hour work week.  

      Therefore, if the TFW candidate was going to work in Toronto, the LMIA application is supposed to be assessed in ten business days if the TFW is going to work in an occupation/NOC code where the median wage according to the Job Bank wage report ( Job Bank Wage Report) for the occupation in the Toronto region is at or above $45.00 per hour.  Very few occupations qualify.

      Occupations that may qualify for the top 10% highest wage occupations will vary depending on the province and the particular economic region within the province where the job will be located.
    • Highest demand occupations:  This is limited to certain skilled trades, where the wage to be paid to the TFW is at or above the provincial median wage.  The eligible trades are set out here:  List of Highest Demand Occupations.
    • Short duration occupations:  Where the TFW is required for no more than 120 calendar days and where the wage being paid to the TFW is at or above the provincial median wage.  A renewal of this type of LMIA will not be permitted except in exceptional circumstances.
  • Employers that meet the criteria for processing under the 10 business day service standard will not receive this service if:  (i) the application is missing information; (ii) additional time is required to consult the employer on details contained in the application; or (iii) the employer is selected for an Employer Compliance Review or inspection.

    While Service Canada states that eligible LMIA applications will be processed in 10 business days, it appears at present (September 2014) that this target is not being met in all regions.

Low-Wage Positions

Additional changes have affected low-wage occupations.  Some of those changes are:

  • A cap on low wage TFWs. There is a transition period, but the cap will be reduced to 10% by July 1, 2016.  The cap applies per work site.
  • There are three exemptions to the low-wage cap:
    • If an employer has fewer than 10 employees nationally including the positions they are applying to staff with TFWs.
    • Low wage workers destined for Quebec.
    • Where an employer is hiring the TFW for a job that is "truly temporary".  That phrase is not defined, but the examples on the ESDC site include emergency or warranty work repair technicians or mechanics.
  • ESDC will refuse to process LMIAs for the Accommodation, Food Services and Retail Trade sectors for certain positions that require little or no education or training in geographic locations where the unemployment rate is at or above 6 percent.  This effectively kills access to TFWs for these sectors in most of Canada as unemployment is more than 6% in most regions.
  • Work permit durations for Low-Wage LMIAs will be limited to a maximum of 12 months (instead of 2 years).

These changes have significantly increased the difficulty of using TFWs for low-wage positions in Canada.  The policy intention is clearly to lower reliance on TFWs in low-wage positions.

New LMIA Forms

A new LMIA application form has been introduced and must be used on any LMIA application.  Here is a link to the new form for higher skilled occupations:  LMIA Application Form / High-Skilled Occupations. Employers must make sure they use the current version of the form.

The new form has a number of new questions and sections.  For example, there is a section where employers are required to summarize the results of recruitment.  This includes providing the number of applications received from Canadians and permanent residents.  Employers must also provide an explanation as to why Canadian and permanent resident candidates did not meet the requirements of the position.

The Declaration section of the LMIA form has been expanded as well.  Employers must make numerous current and future representations.  Ongoing compliance is critical in order to avoid the potential loss of access to the TFWP and the IMP.

Employers seeking an LMIA for a high-wage occupation must also usually file a Transition Plan.  A form has been created for the Transition Plan:   Schedule C - Employer Transition Plan.

Stronger Compliance and Enforcement Mechanisms

Prior to the June 20 announcement, the government made a number of regulatory changes to the Immigration and Refugees Protection Act on December 31, 2013 which significantly increased compliance requirements on employers that hire foreign workers.  Those statutory changes placed many more statutory conditions on employers.  As well, broad inspection powers were set out, such that government officials may now show up at an employer's premises, without a warrant, and conduct an inspection to investigate compliance.

The  Overhauling the TFWP / ESDC Publication contains a list of the many compliance requirements under the program that employers face (see pages 18 and 19).

The June 20 announcement continued the trend of toughening compliance requirements. The changes provide for stronger enforcement and tougher penalties. Going forward, resources have been provided to government agencies to increase the number of inspections, with the stated goal of eventually inspecting one in four employers using TFWs each year.

Given the severe consequences of a finding of non-compliance, employers need to ensure that they remain compliant and they should implement policies and procedures to ensure ongoing compliance.

Changes to the IMP

LMIA exempt work permit categories are now under the International Mobility Program (IMP).
Changes to the IMP announced on June 20, 2014 will include:

  • A new "compliance fee" of $230 per work permit;
  • A new "privilege fee" of $100 for open work permits.
  • An enhanced compliance system featuring inspections of employers hiring LMIA-exempt TFWs.

The expected dates of implementation of these changes are set out in the  Overhauling the TFWP / ESDC Publication.

Conclusion

The changes announced on June 20 represent a continuation of the policy pendulum swinging towards employer compliance. These changes were designed to ensure that Canadians have the first opportunity for positions in Canada. 

While the changes have had a greater effect on the ability to hire TFWs in low-wage positions, employers seeking to hire high-wage TFWs under either the TFWP/LMIA program or the IMP program also face more requirements and compliance obligations.

Compliance requirements and penalties have been toughened.  The future emphasis on inspections will mean that more employers will face some sort of compliance review, whether they are utilizing TFWs based on LMIA work permits, or under LMIA-exempt work permits under the IMP. 

Employers need to have policies, practices and systems in place to ensure compliance with all aspects of the TFWP and the IMP, as well as with all statutory requirements. This must be in place at all stages of the employment cycle, and beyond, starting at the recruiting phase. Employers must be able to provide documentation to confirm compliance if they face any review or inspection, for up to 6 years from the date a TFW starts employment.

Employers should also be aware that, given the recent introduction of some of these changes, it is still not clear how some of the changes will be implemented or interpreted by government officers.  Hopefully further clarification and transparency will be provided over time.  Forms and processing requirements and rules may also be changed from time to time by the government, without notice, so employers also need to make sure that they check for updates prior to filing LMIA or work permit applications.

Gowlings' Immigration Group can help employers develop policies and practices to support compliance, as well as providing advice on navigating the TFWP and IMP rules in order to obtain work permits for TFWs that employers need to address human resource needs.

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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