New Restrictions on Canada’s Temporary Foreign Worker Program: What Employers Need to Know

Canada’s Temporary Foreign Worker Program has had many years of success by helping to boost the Canadian economy and fill unemployment gaps. Unfortunately, due to a rise in reports of employer fraud and misconduct, the government has introduced new restrictions to the Temporary Foreign Worker Program.

In Fall of 2024, the Employment and Social Development Canada (ESDC) reduced the number of low-wage temporary foreign workers that businesses can hire. Modifications to Canada’s Temporary Foreign Worker (TFW) Policy affects employers and foreign workers alike.

Why did Canada introduce new restrictions on the TFWP?

The new restrictions are in response to the increase in misuse and fraud within the Temporary Foreign Worker Program (TFW), particularly the Low-Wage Stream. Additionally, the changes reflect the evolving economic conditions and a renewed focus on strengthening Canada’s domestic workforce.

What changes have been made to the Temporary Foreign Worker Program in Canada?

On September 26, 2024, the following changes came into effect:

• Labour Market Impact Assessments (LMIAs) applications will be rejected for Canadian employers in metropolitan areas where the unemployment rate is 6% or higher. Exceptions apply for seasonal and non-seasonal jobs in construction, healthcare, and food security sectors (primary agriculture, food processing, and fish processing).
• Employers are allowed to hire no more than 10% of their total workforce through the TFW Program (Low-Wage Stream). This is a reduction from the original 30% total workforce permission. Exceptions apply for seasonal and non-seasonal jobs in construction, healthcare, and food security sectors (primary agriculture, food processing, and fish processing). In these sectors, TFW – Low-Wage Stream workers cannot represent more than 20% of the total workforce.
• The maximum duration of employment for workers hired through the Low-Wage Stream has been reduced to one year from the previous allowance of two-year periods.

What are the changes to the High-Wage Stream? 

Starting November 8, 2024, employers who hire temporary foreign workers in the high-wage stream must pay them at least 20% above the median wage for their position. Salary minimums may vary based on the industry and province the employer operates in. Based on this increase, temporary foreign workers will see an hourly wage increase between $5-$8 depending on the industry.  

Changes to the LMIA application process  

In the past, employers would submit an attestation letter to prove business and job offer legitimacy and support their LMIA application. These attestation letters were able to be signed by a lawyer or chartered professional accountant (CPA). However, as of October 28, 2024, employers can no longer use attestations to prove business legitimacy. Instead, they must use existing information-sharing agreements with provincial and territorial partners and employment registries.  

What should employers know about the changes to Canada’s Temporary Foreign Worker Program?

On August 6, 2024, the ESDC outlined the following changes to the TFW program:

• Enforcement of the 20%cap policy for temporary foreign workers. This includes the policy for the “Dual Intent sub-stream,” which applies to temporary foreign workers who intend to apply for permanent residency.
• Stricter, more rigorous oversight in high-risk jobs when processing Labour Market Impact Assessments (LMIAs) and conducting employer inspections.
• Possible future regulatory changes regarding employer eligibility (factors such as a minimum number of years of business operations or lay-off history).

Penalties for noncompliance range from monetary fines between $500 to $100,000 per violation, or permanent ban from hiring temporary workers through the Temporary Foreign Worker Program or the International Mobility Program. Monetary penalties for violation to the Policy may go as high as $1 million over 1 year.

Who is impacted by the new TFWP restrictions in Canada?

Employers and temporary foreign workers are both be greatly impacted by the restrictions and changes to the TFWP. Following the changes were introduced on August 6 and September 26:

• Enhanced scrutiny: Closer monitoring and inspections on employers located in high-risk areas and who have previously shown non-compliance.
• Increased penalties: As a response to a 36% increase in fines against non-compliant employers for the 2023-2024 period compared to the previous year, employers may now face penalties ranging from warning letter to fines of up to $1 million annually and a potential ban from the program.
• Changes to recruitment strategies: Employers must reassess and implement changes to recruitment strategies directed towards foreign nationals. Employers in sectors with low-wage positions may need to fill more vacancies with Canadian citizens, permanent residents, or other residents.
• Increased burden/pressure on foreign nationals and employers: A shorter duration of the TFW program once they receive a positive Labour Market Impact Assessment (LMIA) means increased pressure in filing immigration applications and documentation on time. It may also increase uncertainty related to a foreign worker’s “maintained status” and their ability to legally work in Canada.

Employers may have to review recruitment processes to monitor and keep track on the progress of immigration applications and ensure foreign workers have status to legally work in Canada.

Do you need help understanding the changes to the Temporary Foreign Worker Program?

Our experts can help you understand these changes and develop company policies in accordance with the law to avoid noncompliance. Our experts can also assist you with any other HR, health and safety, and employment law matters that arise. To learn more about how our services can benefit your business, call an expert today at 1 (833) 247-3652.