Canada: How Not To Fill A Labour Shortage

Last Updated: October 10 2014
Article by Christopher M. McHardy

Most Read Contributor in Canada, September 2018

New Challenges for Employers under the Temporary Foreign Worker Program

Since we last posted about the Temporary Foreign Worker Program ("TWFP") here and here, the federal government has, in the face of political pressure, introduced significant changes to the program. Employers now face greater challenges and cost in addressing labour shortages through the use of temporary foreign workers ("TFWs").

First, employers are now subject to a cap on the proportion of their workforce which can be filled by low wage TFWs. A "low wage" job is any job which pays below the provincial or territorial median wage. Employers with ten or more employees can employ only 10% of their workforce  as low wage TFWs. Those employers which currently employ more than 10% of their workforce as low wage TFWs are capped at 30% or their current level (whichever is lower); this cap will be reduced to 20% beginning July 1, 2015, and further reduced to 10% on July 1, 2016.

Second, employers face a more rigorous Labour Market Impact Assessment ("LMIA") process to hire TFWs, in place of the former Labour Market Opinion ("LMO") process. Employers must now provide more information about the number of Canadians that applied for the required position, the number of Canadians interviewed, and explain why those Canadians were not selected for the position.

Third, certain applications to hire TFWs will not be processed at all. Employers will not have their applications processed if they are 1) in an economic region with an unemployment rate of 6% or more; and 2) either operating in the Accommodation and Food Service or Retail Trade industries or applying to hire a TFW in the following occupations:

  • Food Counter Attendant, Kitchen Helpers and related occupations (NOC 6641);
  • Light Duty Cleaners (NOC 6661);
  • Cashiers (NOC 6611);
  • Grocery Clerks and Store Shelf Stockers (NOC 6622);
  • Construction Trades Helpers and Labourers (NOC 7611;
  • Landscaping and Grounds Maintenance Labourers (NOC 8612);
  • Other Attendants in Accommodation and Travel (NOC 6672);
  • Janitors, Caretakers and Building Superintendents (NOC 6663)
  • Specialized Cleaners (NOC 6662); and
  • Security Guards and related occupations (NOC 6651).

All pending applications under these categories have or will be cancelled, and the application fees refunded.

Fourth, employers seeking to hire a TFW for a job which pays more than the provincial or territorial median wage (a "high wage" job) must, with few exceptions, submit a Transition Plan to show their efforts to hire Canadians or permanent residents for the job. These efforts may include paying higher wages for the position, investing in training Canadians and permanent residents, more active recruitment efforts (including engaging organizations to identify and hire underrepresented groups such as aboriginals and youth), or supporting the TFW's permanent residency.

Finally, all employers face tougher enforcement, and higher fees and fines under the TFWP.  The LMIA application fee has increased from $275 to $1,000 per worker. ESDC has also promised that one in four employers using the TFWP will be inspected each year for compliance with the conditions of their LMIA letters and, if applicable, the Transition Plans. ESDC may now impose a fine of up to $100,000 for violations.

There is one bright spot to the changes to the TFWP. For employers who need TFWs in skilled trades, highly paid jobs (top 10% wages) or for very short projects (120 days or less), ESDC is aiming to process LMIAs within ten business days.

As a result of these changes, it will undoubtedly be more difficult for employers to use TFWs to meet labour shortages. Employers can minimize their risk of fines and challenges under the TFWP by taking the following steps:

  1. Make your best case for a TFW, including applying for shorter or limited duration projects (if possible) and keeping good records of your efforts to recruit and hire Canadians for the position;
  2. Take advantage of arranged permanent employment programs for foreign nationals you wish to employ on a longer term basis, such as Provincial Nominee Programs;
  3. Keep all documents necessary to show compliance with any LMIA and, if applicable, Transition Plan, including time sheets, pay and benefit stubs, and ongoing recruitment, training and other efforts to identify and hire Canadians;
  4. Contact legal counsel if you are notified about an inspection by ESDC or need to make any changes to a TFW's employment.

We will keep you posted on any further changes to the TFWP.

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