Canada overhauls temporary foreign worker program: Wage assessments end, LMIA-based processing moves forward

In a broad shift aimed at tightening oversight and clarity, Canada has ended wage assessments under the Temporary Foreign Worker Program (TFWP). Moving forward, work permit applications will be processed under the Labour Market Impact Assessment (LMIA) framework.

What changes

The existing wage assessment requirements under the TFWP have been removed. Authorities will continue to process work permit applications through the TFWP, but using the wage data embedded in the LMIA.

An LMIA is a document that Canadian employers may need to hire a foreign worker, signifying that there is a need for the temporary worker and that no Canadian worker or permanent resident is available to fill the position. A positive LMIA is often referred to as a confirmation letter.

How the LMIA works

Employers seeking to hire temporary workers must obtain an LMIA from Employment and Social Development Canada. Once granted, the LMIA enables the worker to apply for a work permit.

To apply for a work permit, a foreign worker must provide a job offer letter, a contract, a copy of the LMIA, and the LMIA number.

Context and reforms

The Temporary Foreign Worker Program has been under scrutiny for alleged misuse and fraud, with the government emphasising reforms to ensure Canadians are prioritised in the labour market.

Since September 26, 2024, several measures have limited LMIA processing in low-wage streams, particularly in metro areas with unemployment at or above 6%, with some exceptions for seasonal and non-seasonal roles in food security sectors, construction, and healthcare.

The cap on TFWs has been reduced, with employers restricted to hiring no more than 10% of their total workforce through the TFWP (applied to the Low-Wage stream). The maximum duration for Low-Wage employment was reduced from two years to one year.

Earlier steps included adjustments to LMIA validity (from 18 months to 6 months) and a reduction in the temporary worker cap (from 30% to 20%). Montreal also saw a temporary freeze on approving new TFWs in the low-wage stream, and there was a pause in LMIA processing for Montreal-based offers under certain wage thresholds.

What this means for applicants and employers

• Employers must secure an LMIA (where required) before a foreign worker can apply for a work permit.
• Workers will apply for permits with the LMIA number and supporting documents, including a job offer and contract.
• The reforms aim to balance the needs of Canadian employers with protections against exploitation and ensure domestic labour is prioritised.