On April 29, the Canadian government announced major changes to the Temporary Foreign Worker Program (TFWP).

Some reforms were expected based on an announcement in the recent Economic Action Plan 2013. However, changes have been introduced sooner than expected in response to recent criticisms of the TFWP, and the reforms appear to be more significant than anticipated.

Overview of Main Changes

The government’s news release states that legislative, regulatory and administrative changes will be introduced which will:

  • Effective immediately, require employers to pay temporary foreign workers at the prevailing wage by removing the prior wage flexibility;
  • Effective immediately, temporarily suspend the Accelerated Labour Market Opinion (A-LMO) process;
  • Increase the government’s authority to suspend and revoke work permits and Labour Market Opinions (LMOs) if the program is being misused;
  • Add questions to employer Labour Market Opinion (LMO) applications to ensure that the TFWP is not used to facilitate the outsourcing of Canadian jobs;
  • Ensure employers who rely on temporary foreign workers have a firm plan in place to transition to a Canadian workforce over time through the LMO process;
  • Introduce fees for employers for the processing of LMOs and increase the fees for work permits so that the taxpayers are no longer subsidizing the costs; and
  • Identify English and French as the only languages that can be used as a job requirement.

The Seasonal Agricultural Worker Program and other primary agricultural occupations will generally not be affected by these changes.

The details of the changes have not yet been set out, and it is unclear whether the A-LMO program will be brought back, revamped or scrapped entirely.

Further Information on Changes

Although details on the changes have not yet been provided, it is clear that requirements of the TFWP are being tightened up. The LMO regime has always been about balancing the needs of Canadian employers to address temporary labour shortages by hiring foreign nationals, with the need to protect and enhance the Canadian labour market.

For example, employers were always required to try to recruit qualified Canadians before applying for an LMO. The new rules will place more emphasis on this by requiring employers using the LMO program to provide human resource plans to address how positions will be filled by Canadians in future. The LMO process will therefore become more complicated, given the need to provide transition plans when an application is made.

Details of what will be required in providing a transition plan, and what exceptions (if any) may apply, have not yet been provided. The news release sets out that:

The details of a transition plan will vary depending on whether the employer is seeking to fill a lower- or higher-skilled position, the type and size of the industry and the regional unemployment rate, as well as the particular job being advertised.

Amendments to the LMO application form will ensure that the TFWP is not used to facilitate the outsourcing of Canadian jobs. It remains to be seen what those changes will be, and what sort of criteria Service Canada will use to determine whether a situation represents an instance of outsourcing. It has always been the case that an LMO was not supposed to be issued where it would have a negative effect on the local Canadian labour market.

Given that legislative changes will provide the government more ability to rescind LMOs and work permits, Service Canada will have increased tools to use to punish non-compliant employers. The parameters of these new powers have not been set out yet.

As mentioned earlier, the A-LMO program is suspended, immediately. This program allowed eligible employers to obtain an LMO within a couple of weeks, which is much faster than the regular LMO process. All employers will now need to use the regular LMO process, which will likely increase processing times for everyone.

Implications for Employers

The full impact on employers seeking to hire foreign nationals in Canada will need to be assessed once the details of the proposed changes are provided.

In the meantime, for employers using the LMO regime to hire foreign nationals, we note the following:

  • Average processing times will likely increase with the suspension of the A-LMO program, even if the suspension is temporary. Therefore, it will take longer to obtain LMO-based work permits;
  • LMO applications will become more complicated given the new requirement to provide transition plans outlining the employer’s intended actions in the areas of recruitment and training;
  • Subsequent LMOs may be more difficult to obtain, as the employer will be assessed on its progress under its transition plan;
  • Presumably, LMO applications that have been filed already will continue to be processed under the current rules. Service Canada has not yet announced its transition plans, and it has not yet posted a full set of directives on its website; and
  • Employers should continue to monitor Service Canada’s website for details of the changes and to learn when the new LMO application forms will be required.