New Restrictions on the Temporary Foreign Workers Program

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Jessica Young

The Federal Government has announced new changes this year to the Temporary Foreign Workers Program that will make it increasingly more difficult for Canadian employers to hire foreign workers on a temporary basis.

The purpose of the temporary foreign workers program is to fill immediate labour shortages where Canadian citizens and permanent residents are unavailable or lack the required skills.  In most cases, employers will need to apply for a Labour Market Opinion (“LMO”) in order to bring a foreign worker to Canada, unless the worker is covered by an exemption to the LMO process.

LMO applications are processed by Human Resources and Skills Development Canada (the “HRSDC”).  The HRSDC will analyze the likely impact of hiring the temporary worker on the Canadian economy when determining whether to grant a positive LMO. Through the LMO application, the employer must establish that the purpose of hiring is to fill a labour shortage and that there will be a benefit to Canada in hiring an outside worker, for example, the transfer of skills and knowledge to Canadian workers.

The Federal Government initiated these recent changes due to concerns that the LMO process is being used, not to fill temporary labour shortages, but as an alternative to hiring Canadian workers.  The temporary foreign workers program has been under increased scrutiny since it was discovered that it was being used by a major Canadian financial institution to outsource Canadian jobs.

New Changes to the Process:

The purpose of the reforms is to ensure that the LMO process is used where there are actual labour shortages. The new changes to the process include:

1. Removing the existing wage flexibility and requiring employers to pay temporary workers at the prevailing wage rate.

In the past, employers were able to pay temporary workers in higher-skilled occupations 15% less than the prevailing wage and temporary workers in lower-skilled occupations 5% less than the prevailing wage. Employers must now provide temporary workers with the prevailing wage rate for the position. The prevailing wage rate is determined by the HRSDC. It is the median wage rate paid to Canadians for the specific occupation and varies by region. Information on the prevailing wage rate can be found on the Working in Canada website.

2. Suspending the Accelerated Labour Market Opinion Process. 

The Accelerated Labour Market Opinion Process (“A LMO”) has been suspended. This will likely have the largest impact on employers who regularly use the LMO process. The A LMO Process allows employers, who meet specific eligibility requirements, to receive an LMO in around 10 days.  Only employers that have received at least one positive LMO in the previous two years are eligible to apply for an A LMO. In addition to other restrictions, the program only applies to workers in higher-skilled occupations. The program has not been terminated, but suspended.  To date, the government has not indicated whether it has plans to restart the program in the foreseeable future.

3. New powers to ensure compliance.

The HRSDC and Citizenship and Immigration Canada (“CIC”) will be given enhanced authority to suspend or revoke work permits and LMOs. The HRSDC and CIC Officers will be given authority to conduct on-site inspections without notice or a warrant in order to ensure compliance. An inspection might be triggered, for instance, where there is reason to believe that the employer is not complying with conditions imposed, the employer has been non-compliant in the past or the employer is chosen for a random audit.

During the inspection, the officer may:

  1. ask the employer and any employees any relevant questions;
  2. examine any documents found on the premises;
  3. require copies of any documents and remove these copies from the premises for examination;
  4. take photographs or make video and audio recordings;
  5. examine all things that are on the premises;
  6. examine any relevant electronic documents; and
  7. be accompanied or assisted by any person required that the officer requires.

The introduction of compliance inspections is a marked departure from historic practice. These new powers resemble the authority provided to Ministry of Labour inspectors to enforce the Occupational Health and Safety Act and the Employment Standards Act, 2000. It is important for any employer who becomes subject to an inspection to cooperate fully with the officer and ensure that all records are kept, are accurate and are up to date. Records that demonstrate the employer’s compliance with the conditions on the LMO must be kept for at least six years. If an employer is found to be non-compliant, they may be deemed ineligible from participating in the temporary foreign workers program for a period of two years.

4. Including new questions on the employer’s LMO application.

The LMO application has new questions that are directed at ensuring that the LMO process is not being used to outsource Canadian jobs. For instance, employers are asked whether the use of temporary foreign workers will lead to job loss for Canadian workers as a result of layoffs, outsourcing or offshoring.

5. Ensuring that employers who use the LMO process have a plan regarding an eventual transition to a Canadian workforce. 

This will require employers to have a plan in place for transitioning the work to Canadian workers. The plan will need to be submitted along with the LMO application. The plan will vary depending on the skill level of the position, the industry and the regional unemployment rate. Failure to provide enough detail in the plan may lead to the HRSDC issuing a negative LMO. In addition, employers will be required to document their ongoing efforts to transition to Canadian workers.

6. Imposing new fees on employers’ for LMO applications as well as increasing the fees for work permits. 

Previously, there was no processing fee for filing an LMO. The government has now introduced a processing fee of $275, which applies to each position being applied for in the LMO. There is no refund if a negative LMO is received, or if the application is withdrawn.

7. Providing that the only languages that can be required on a job application are French and English.

This requirement will apply to all jobs with the exception of cases where the use of a foreign language is essential to the performance of the job. For instance, a foreign language may be necessary for a tour guide or translator. Where it is asserted that a foreign language is essential, the employer must prove that the foreign language is necessary for performance of the work. Otherwise, an employer could avoid hiring Canadian workers by providing a foreign language requirement. This was a topic of debate last year in the media when a mine in British Columbia applied for an LMO for 201 foreign workers and indicated that speaking Mandarin was a necessary job requirement.

8. Imposing new advertising requirements. 

Employers are required to advertise the position in order to ensure that there are no Canadian workers available to perform the work prior to applying for an LMO.  Previously, employers in most cases were required to advertise on the national Job Bank or equivalent provincial or territorial website and one additional method of recruitment for at least two weeks within a three month period. With the new changes, all employers will now need to advertise for at least four weeks.

Employers must also engage in additional recruitment activities. Employers must now use two additional recruitment methods, not just one. With respect to high-skill occupations, the additional method must be on a national level.  Examples of additional recruitment activities include, for example, advertising in a journal or magazine with national coverage or on an employment website like Workopolis.com. With respect to low-skill occupations, the employer must make efforts to advertise to under-represented groups, the examples provided being youth or people with disabilities.  Employers must also retain records of their advertising efforts. These documents must be kept for a minimum of six years.

Implications for Employers:

The Federal Government has made clear that it is cracking down on the Temporary Foreign Worker Program. Employers who intend to hire temporary workers should ensure that the use of a foreign worker is truly necessary. Unless there is an actual shortage in the labour market the LMO application is likely to be rejected. Employers should treat the temporary foreign workers program as a last resort and should make sure to canvas all options within the Canadian labour market first.

Employers who are in need of temporary foreign workers should ensure that they plan ahead. The new advertising obligations and increased scrutiny of the HRSDC means that employers should give themselves plenty of time as it will be more difficult and will take longer to obtain an LMO. With the new advertising requirements employers should anticipate receiving a much larger volume of applications. Employers should ensure that this process is documented, and should be prepared to explain why the Canadian applicants did not have the necessary skills to meet the job requirements.

In some circumstances a foreign worker may be exempt from the LMO process. For instance, if the worker is a citizen of the US or Mexico they may be permitted to enter Canada through an exemption under the North American Free Trade Agreement (“NAFTA”). Employers should seek legal advice to see whether a NAFTA exemption or another exemption to the LMO process is an option. A worker who is LMO exempt will be able to enter Canada much more quickly, as they will not be tied up in the LMO process. Some employers do not plan ahead and find themselves scrambling to meet immigration requirements for workers who need immediate access to Canada. Where an exemption applies, a worker may be admissible to Canada without any significant delay provided any necessary documentation is in order.

For more information, please contact:

Ryan Conlin at rconlin@stringerllp.com or 416-862-2566

Jessica Young at jyoung@stringerllp.com or 416-862-1687

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