Written on August 8, 2024 by Brooke Finlay
Last updated on October 22, 2024
What Canadian Employers Need to Know:
The Temporary Foreign Worker Program (TFWP) helps fill skills and knowledge gaps in Canada’s labor market. Canadian employers use the program to address labor shortages when they can’t find Canadian citizens or permanent residents with the right skills, knowledge, or availability. This program is intended to be a last resort and employers must implement a plan to transition away from relying on temporary foreign workers.
Context: Temporary Residents in Canada
Temporary residents in Canada include international students, temporary workers, and asylum seekers. In 2023, the number of temporary residents increased to 2.5 million, making up 6.2% of Canada’s population. In March 2024, the Hon. Marc Miller, Minister of Immigration, Refugees and Citizenship Canada, announced the government’s intention to reduce the temporary resident population to 5% within the next three years.
To achieve this, several measures have already been implemented:
- Cap on International Students: A two-year cap on the number of international students allowed to enter Canada was implemented, which included the introduction of the Provincial Attestation Letter (PAL) system.
- Restrictions on Spousal Open Work Permits: Open work permits for spouses of international students have been limited.
- Limited Eligibility for Post-Graduation Work Permits: Tightened criteria for international students to qualify for post-graduation work permits will reduce the number of work permits issued to international graduates upon completion of their studies.
- Changes to Visa Requirements for Mexican Citizens: Temporary Resident Visa (TRV) requirements were re-introduced for Mexican citizens to regulate the influx of asylum seekers from Mexico.
Changes to the TFWP were introduced in May, and further updates are now being communicated, which we will detail in this blog.
Myth Busting
Before we dive into the most recent changes, let’s clear up common misconceptions about the TFWP. The TFWP accounts for just 9% of all temporary residents in Canada, representing less than 1% of the labor market.
Although access to the TFWP may become more restricted, employer will still have access to the International Mobility Program (IMP), which accounts for the majority of Canada’s temporary foreign worker base. The IMP includes open work permits, free trade agreements (FTAs), youth mobility agreements, and other LMIA-exempt work permits. We’ll provide tips and suggestions for using the IMP and TFWP together with permanent residency programs, empowering your company to implement effective foreign worker strategy that allow your organization to thrive.
Changes to the TFWP Effective May 1, 2024
The TFWP already underwent changes this year. In May, Hon. Miller rolled back measures that were introduced during the COVID-19 pandemic. These changes included:
1. Reduction of LMIA Validity:
The validity period of Labor Market Impact Assessments (LMIAs) was reduced back to six months. This ensures labor market conditions assessed are current and relevant. Temporary Foreign Workers (TFW) named on an LMIA must apply for a work permit within the LMIA validity period (the work permit can be issued and the foreign worker arrive after the LMIA expires).
2. Reduction of Low-Wage Foreign Worker Cap:
The cap on low-wage foreign workers was reduced back to 20% of a business’s workforce. Exceptions include the construction and healthcare sectors, acknowledging the critical need for workers in these industries.
Changes to the TFWP Effective September 26, 2024
On August 26, 2024, the Hon. Randy Boissonnault, Minister of Employment, Workforce Development and Official Languages, confirmed additional changes coming for the TFWP.
ESDC clarified that these changes will affect the LOW-WAGE LMIA stream as well as “DUAL-INTENT” LMIA APPLICATIONS IN SUPPORT OF PERMANENT RESIDENCY THAT ARE FOR LOW-WAGE positions.
Enforcing a 10% Cap
This cap is a further reduction of the May update, and restricts Employers to hiring no more than 10% of their entire workforce through the Low-Wage LMIA Stream and the ‘Dual-intent’ LMIA Stream for low-wage positions.
Maximum Duration of Employment
For workers hired through the Low-Wage Stream and “Dual-intent” LMIA Stream for low-wage positions is reduced from two years to one year.
Refusals
Similarly to the past, LMIAs submitted in the Low-Wage Stream and “Dual-intent” LMIA Stream for low-wage positions will be refused in census metropolitan areas with an unemployment rate of 6% or higher.
How to determine whether this is applicable for your location:
Check the Work Location:
Head to the Census of Population website and enter the postal code of your work location.Identify the Area Type:
If no information appears after you enter the postal code, or it does not show a Census Metropolitan Area at the third geographic level, your LMIA application will be processed. If the result shows Census Metropolitan Area (CMA), proceed to the next step.Confirm the Unemployment Rate:
Refer to the unemployment rate for your CMA. If it’s 6% or higher, your LMIA application for that location won’t be processed.Multiple Work Locations?
If your LMIA application involves multiple locations, you must check the unemployment rate for each location. Even if one of the locations has an unemployment rate of 6% or higher, your application might be refused.
Exceptions regarding the Cap and Refusals will be granted for:
- seasonal and non-seasonal jobs in food security sectors (primary agriculture, food processing and fish processing);
- construction; and
- healthcare.
Changes to the TFWP Effective November 8, 2024 Affecting Also High-Wage LMIA
Increased Wage Thresholds:
The starting hourly wage for high-wage stream positions will increase to 20% above the provincial or territorial median wage.
Impact on Low-Wage Stream
Many jobs will shift from the high-wage to the low-wage stream, which comes with stricter regulations. Employers will now need to meet additional requirements related to housing, transportation, and recruiting workers already in Canada, along with the stricter rules specific to the low-wage stream.
Special Measure for Montreal Region
Quebec’s proposal to temporarily freeze new Temporary Foreign Worker approvals in Montreal’s low-wage stream will come into effect on September 3, 2024. LMIA applications for jobs in Montreal paying below $27.47 per hour will not be processed for six months.
Reasons for the Changes
The changes aim to address:
- Fraud and Abuse: LMIA fraud has surged, with unscrupulous actors exploiting vulnerable individuals by selling job offers for tens of thousands of dollars.
- Unsustainable Volume: The TFWP has seen a flood of applications, which Minister Boissonnault emphasized must be managed.
- Compliance Issues: Fines for non-compliance rose by 36% in the 2023-24 fiscal year, mainly due to employers failing to provide requested documents, not necessarily due to program violations.
Multiple factors are increasing pressure on the TFWP, including stricter limits on study permits, higher Express Entry and provincial nominee points, and growing demand for Canadian immigration.
What can you do?
As an employer, consider leveraging multiple immigration programs to meet your workforce needs. This safeguards you against the dangers of relying on a single solution so you can build a resilient, stable workforce. We’ve included a list of suggestions below:
- International Mobility Program (IMP);
- Professionals and technicians: recruitment focused on countries with reciprocal labour mobility agreements can help you fill skilled positions, including trades and other professional and technical roles.
- Francophone workers: foreign workers with French language skills and a job offer in any occupation may apply for a work permit. The job does not need to be performed in French, but the location of work must be outside Quebec.
- Young professionals: target recruitment efforts for skilled workers in countries that have bilateral youth mobility agreements in place.
- Permanent Residency Pathways: Supporting your staff with their applications for permanent residency can help attract and retain workers for the long term. Most provincial nominee programs involve employer support. As immigration becomes more competitive, employees will appreciate the support and help increase employee retention.
What's Next?
The Government will actively monitor labour market conditions and may implement further adjustments to the program, potentially affecting the High-Wage stream and existing LMIA applications. Stay tuned for upcoming updates.
TL;DR
Announced changes to the TFWP may restrict your access to the program. Having a multi-pronged immigration strategy built into your HR policies and programs will help your organization access the talent it needs to excel.
Curious about how strategic immigration planning can boost your business's success and employee satisfaction?
Check out our article "The Most Important Immigration Facts for Canadian Employers"
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