Canada Implements New LMIA Rules to Support Local Workers

On September 26, 2024, Canada introduced new regulations for the Labour Market Impact Assessment (LMIA) as part of an overhaul of the Temporary Foreign Worker (TFW) Program. This significant update is aimed at addressing the current labour market conditions and prioritizing employment opportunities for Canadian citizens.

The revised rules target metropolitan areas with unemployment rates of 6% or higher, a strategic move to reduce reliance on foreign labour while encouraging the hiring of local talent. The changes, which were initially announced on August 26, bring several key updates that employers and potential workers must understand.

The following modifications are now in effect under the TFW Program:

1. Suspension of LMIAs in High Unemployment Areas: The government will no longer process LMIAs in census metropolitan areas where unemployment exceeds 6% under the low-wage stream. However, critical sectors such as agriculture, food processing, construction, and healthcare are exempt from this suspension to ensure that their labour needs are met.
2. 10% Cap on Foreign Workers: Employers can now hire a maximum of 10% of their total workforce from the TFW Program, reduced from the previous cap of 20%. This change aims to encourage more employers to seek out Canadian workers first, although essential industries like agriculture and healthcare will continue to have exceptions.
3. Reduced Employment Duration: The length of employment for workers hired through the low-wage stream has been shortened from two years to one year. This adjustment is intended to create a more dynamic labour market and prevent long-term dependence on temporary foreign workers.

The Canadian government previously introduced measures on August 6, 2024, to tackle concerns regarding fraud and misuse within the TFW Program. These measures are designed to uphold the program's integrity and ensure it serves its intended purpose of addressing genuine labour shortages when qualified Canadian workers are unavailable.

Key initiatives from the August update included:

• Regulatory Changes: New regulations will scrutinize employer eligibility more closely. Employers found to be abusing the system could face severe penalties, including fines and bans from the TFW Program.
• Enforcement of Existing Caps: The government will strictly enforce the cap limiting low-wage temporary foreign workers to 20% of an employer’s total workforce. This initiative is meant to deter the overuse of foreign labour in low-wage positions.
• Enhanced Monitoring: The government will increase inspections in industries and areas identified as high-risk for TFW misuse, aiming to ensure compliance with the new rules.
• Proposed Fee Increase: To deter frivolous applications, the government is considering raising LMIA fees. This proposed increase aims to discourage employers from submitting multiple or non-serious applications.

The Canadian government plans to monitor the impact of these changes closely and will conduct a comprehensive review of the TFW Program within the next 60 days. This assessment may result in further adjustments, particularly concerning the high-wage stream and sector-specific exceptions.

The recent rise in the unemployment rate to 6.6% highlights the need for these changes. The government has already reduced the validity of LMIAs from 18 months to 6 months and decreased the cap on temporary foreign workers from 30% to 20%. Additionally, Quebec’s request to freeze new TFW approvals for low-wage jobs in Montreal reflects a growing commitment to prioritize local workers.

The new LMIA rules mark a crucial step in Canada’s effort to protect job opportunities for Canadians while ensuring that the TFW Program effectively addresses the labour market’s evolving needs. With these adjustments now in effect, the government is focused on maintaining a balanced and fair job market for all Canadians.