Work in Canada
Canada Strengthens Temporary Foreign Worker Program: New Wage Standards and Approval Processes
On October 21, 2024, Canada’s Minister of Employment, Randy Boissonnault, announced significant reforms to the Temporary Foreign Worker (TFW) Program. The program aimed at enhancing protections for Canadian workers while addressing ongoing labor market demands. Set to take effect on November 8, 2024, these changes will introduce a higher wage threshold for high-wage Labour Market Impact Assessments (LMIAs) and implement stricter verification processes for employer legitimacy.
Key Reforms to the TFW Program
One of the most impactful changes is the 20% increase in the wage threshold for high-wage LMIA applications. Under the new guidelines, foreign workers must now earn at least 20% more than the provincial or territorial median wage. Depending on the region, this could result in hourly wage increases ranging from $5 to $8, potentially affecting numerous job offers in the high-wage category.
Consequently, many employers will find themselves needing to comply with the more rigorous low-wage stream, which mandates stricter requirements, including housing and transportation provisions for foreign workers.
While the government anticipates an increase of 34,000 applications under the low-wage LMIA stream, it also projects a reduction of up to 20,000 approved positions due to enhanced oversight and regulatory tightening. This dual approach aims to balance the need for foreign labor with the protection of local employment opportunities.
Prioritizing Canadian Workers
The recent reforms place a strong emphasis on prioritizing domestic talent over foreign workers. During his address at the 21st Century Workforce Summit on October 17, 2024, Minister Boissonnault highlighted the potential of untapped talent within Canada, particularly among youth, who face an unemployment rate significantly higher than the national average. The reforms aim to ensure that Canadian workers, including underrepresented groups such as Indigenous peoples, women, and persons with disabilities, are given preference for job openings before foreign workers are considered.
Stricter Employer Verification Measures
Another key change to the TFW Program involves enhanced verification of employer legitimacy. Beginning October 28, 2024, employers will no longer be permitted to use attestations from accountants or lawyers as proof of their business legitimacy. Instead, the government plans to strengthen data-sharing agreements with provincial and territorial authorities, ensuring that only credible employers are authorized to hire foreign workers. This initiative is designed to combat fraud and enhance protections for temporary foreign workers.
Understanding the Structure of the TFW Program
The TFW Program is divided into two primary streams:
- Low-Wage Stream: This category is designated for jobs that offer wages below the provincial or territorial median wage plus 20%. Employers utilizing this stream must adhere to stricter regulations, including providing transportation and housing for workers, conducting additional recruitment efforts to hire Canadian residents, and ensuring that foreign workers do not exceed 10% of their total workforce. Moreover, the Census Metropolitan Area (CMA) unemployment rate must be below 6% for an LMIA application to be considered.
- High-Wage Stream: This stream is intended for jobs that offer wages exceeding the provincial or territorial median wage by 20% or more. While this category has historically featured fewer restrictions, the new reforms may limit the number of employers qualifying for it.
A Shift Towards Domestic Employment
The Temporary Foreign Worker Program plays a vital role in addressing labor shortages across Canada. However, the recent changes indicate a strategic shift toward prioritizing Canadian workers. By increasing wage standards and enforcing stricter verification processes, the government aims to ensure that the TFW Program remains a temporary solution for labor market gaps while compelling employers to prioritize local hiring.
