Canada changes work permit rules: Staffing agencies barred from sponsoring foreign workers

Canada has tightened rules governing the hiring of temporary foreign workers, with staffing and employment agencies facing new restrictions on applying for Labour Market Impact Assessments (LMIAs) when workers will ultimately be employed by another business, according to a report by global immigration services firm Fragomen.

The changes, effective September 18, 2026, are aimed at ensuring that the company that actually employs and controls a foreign worker is responsible for meeting the requirements of Canada's Temporary Foreign Worker Program (TFWP).

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Staffing agencies cannot act as the employer

Under the revised rules, an employer is defined as the entity that hires the temporary foreign worker, determines working conditions and directly pays the worker.

Canada's Employment and Social Development Canada (ESDC) will assess factors including who controls where, when and how the employee works, who determines job duties, supervises performance, pays wages and has the authority to dismiss the worker.

Staffing or employment agencies that recruit workers for another business are not considered employers under the TFWP. As a result, they cannot obtain approval to hire temporary foreign workers on behalf of another company where the required employer-employee relationship does not exist.

What it means for foreign workers

The change is particularly relevant to foreign nationals whose Canadian job arrangements involve staffing companies or Employers of Record (EORs). Instead of relying on an intermediary to obtain an LMIA, the business that actually employs and controls the worker must meet the programme's requirements.

The government also says employers cannot classify temporary foreign workers as independent contractors when an employer-employee relationship exists. Such misclassification can result in administrative monetary penalties and bans from the TFW Program.

Recruitment fees remain prohibited

Canada's rules also put responsibility on employers to ensure that recruitment fees are not charged or recovered from temporary foreign workers, either directly or indirectly.

These costs can include fees paid for assistance in finding or securing employment, as well as certain third-party recruitment expenses. Failure to comply can result in a negative LMIA decision.

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Employers face wider compliance requirements

Businesses applying for an LMIA must demonstrate that the job offer and business are legitimate. They must also comply with requirements covering wages, working conditions, employment agreements and, where applicable, limits on low-wage foreign workers.

For employers applying through LMIA Online, applications can be submitted up to six months before the expected job start date, according to the Canadian government.