Bill MacGregor
Partner
Certified Specialist - Citizenship & Immigration Law (Immigration)
Article
5
On Sept. 26, 2024, Canada implemented major changes to the low-wage Labour Market Impact Assessment (LMIA) stream, aiming to tighten the program by reducing employer use and decreasing the number of temporary foreign workers (TFWs) in Canada.
The changes are not retroactive; therefore, low-wage LMIA applications filed before Sept. 26 will be assessed under the prior rules.
Employers will need to understand the new rules. Many employers that previously obtained low-wage LMIAs will no longer be able to do so. However, locations with low unemployment, and some sectors with perceived labour shortages, will continue to be able to access the low-wage LMIA stream.
The LMIA regime has a number of streams. If an employer obtains a LMIA from Employment and Social Development Canada (ESDC), the LMIA can be used to obtain a work permit for a TFW.
The low-wage stream applies where the wage being offered to the TFW is below the provincial or territorial wide median wage. ESDC updates provincial median wage data every April.
The main changes to the low-wage LMIA stream are:
ESDC updated its guideline on program requirements for low-wage LMIAs to reflect the new rules. ESDC also made the same update to the instructions for low-wage dual LMIAs.
1. Refusal to process due to unemployment rate
ESDC will refuse to process low-wage LMIAs where the job is located in a census metropolitan area (CMA) where unemployment is six per cent or more, unless there is a sectoral exemption. This applies to both seasonal (270 days or less) and non-seasonal positions.
Employers therefore need to confirm if the work location is in a CMA. CMAs are larger urban areas with a population of more than 100,000.
ESDC's guidance on refusals to process low-wage LMIAs sets out how to confirm whether the work location is in a CMA, the applicable unemployment rate, and sets out sectoral exemptions.
If the job is located outside a CMA, ESDC will not refuse to process a low-wage LMIA due to the unemployment rate.
The CMA unemployment rate data will be updated quarterly.
As of Sept. 2024, the majority of CMAs in Canada, including most of the largest cities, have an unemployment rate of six per cent or more. Therefore, this change effectively ends the ability to use the low-wage LMIA stream for positions in those locations, unless the position is under one of the exemptions.
If the TFW is to work in multiple CMA locations, the unemployment rate needs to be checked for all CMA locations. If any location has an unemployment rate of six per cent or more, the low-wage LMIA may not be processed.
The refusal to process review should be done by ESDC at the time of filing the low-wage LMIA application, not at the time it is assessed, which can be months after the filing.
The refusal to process based on the unemployment rate will not apply to several sectors/occupations, including:
The refusal to process based on the unemployment rate will also not apply where the employer is seeking a permanent LMIA to help support the permanent residency of a TFW. A permanent LMIA can provide a foreign national with more Express Entry points, which may help them be invited to apply for PR status. A permanent LMIA does not provide a work permit.
2. Low-wage cap
Employers hiring in a work location that has an unemployment rate of less than six per cent can hire TFWs in low-wage positions under a low-wage LMIA for up to 10 per cent of their total workforce in a specific location. The 10 per cent cap applies to low-wage LMIA positions eligible for facilitated processing in Quebec.
Employers with less than 10 employees will be allowed to have one TFW under the low-wage LMIA stream and therefore may exceed the 10 per cent cap.
The cap will be up to 20 per cent (down from 30 per cent) for positions in food manufacturing (NAICS 311), construction (NAICS 23), and healthcare (NAICS 622 and 623), as well has specific occupations in caregiving.
Low-wage positions in the Primary Agriculture stream, seasonal positions of less than 270 days, and highly mobile or truly temporary positions (120 calendar days or less) are exempt from the cap.
Calculating the cap is quite complicated. Legal advice should be sought when trying to determine if you have cap room to pursue a low-wage LMIA at a specific workplace.
3. Duration of employment reduced to one year
The maximum duration for the period of employment for workers hired under low-wage LMIAs will be one year (reduced from two years). This applies to low-wage positions eligible for facilitated processing in Québec.
A practical effect of this is that if an employer successfully hires a TFW on a one-year low-wage LMIA work permit, the employer will need to start preparing the next LMIA application only a few months after the TFW’s start date if they want to try to keep the TFW, due to lengthy LMIA and work permit extension processing times.
Low-wage positions in the Primary Agriculture Stream are exempt from this one-year rule. That stream currently provides for up to two year work permit.
The changes to the low-wage LMIA stream will significantly reduce its availability and use by employers.
Employers facing shortages of workers in these types of positions will not be able to apply for low-wage LMIAs if their workplace is in a CMA location where unemployment is six per cent or more, unless their business or the occupation is under one of the refusal to process exemptions.
Some employers that already employ TFWs under low-wage LMIA work permits may face some tough situations as those work permits reach their expiration. If they are in a location where they cannot seek a new low-wage LMIA, they may have no options to retain the TFW. Other employers may be exempt from the refusal to process rule, but with the reduction to the cap they may have to choose which low-wage TFWs they try to extend.
One potential solution to consider is to increase wages to be at or above the median wage for the province or territory. If that can be done, the employer could apply for a high-wage LMIA. The refusal to process due to the unemployment rate, and the cap, do not apply to high-wage LMIA applications.
Our immigration team can provide advice on LMIA matters and can assist employers in reviewing their specific situations.
NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.