Canada’s new rules on Temporary Foreign Worker Program explained; its impact on employers & jobseekers

These changes are intended to ensure that employers make a greater effort to hire available Canadian workers before turning to foreign labour. The government has cited concerns over the misuse of the TFW Program to bypass hiring Canadian talent, especially in the low-wage stream.

What is Temporary Foreign Worker Program?
The Temporary Foreign Worker (TFW) Program allows Canadian employers to hire foreign workers to fill temporary jobs when qualified Canadian workers are not available. This program is regulated by the federal government to ensure that it addresses genuine labor shortages and is not misused by employers.

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Employers using the TFW Program are required to obtain a Labour Market Impact Assessment (LMIA) to demonstrate that hiring foreign workers will not negatively impact the Canadian labor market. The LMIA ensures that no qualified Canadians are available to perform the same job

Key updates to the Temporary Foreign Worker Program
On August 26, 2024, Randy Boissonnault, Minister of Employment, Workforce Development, and Official Languages, announced important changes to the TFW Program, effective September 26. These updates aim to decrease the reliance on low-wage foreign workers and promote investments in training and hiring domestic talent.

Here are the key changes announced:

Cap on low-wage foreign workers
The government will enforce a 10% cap on low-wage temporary foreign workers across Canada, including in Quebec under the Traitement Simplifié or Simplified Processing program. It allows the hiring of temporary foreign workers in specialized occupations listed in the government of Quebec website.

However, employers in the healthcare, construction, and food processing sectors, which face critical labor shortages, will be allowed a higher 20% cap on hiring low-wage foreign workers.

Duration of Labour Market Impact Assessments (LMIA)
All Labour Market Impact Assessments (LMIAs) approved for the Low-wage Stream will be limited to a work duration of one year, even under the Traitement Simplifié program. This restriction aims to ensure that foreign workers are used for temporary purposes only. An exception will be made for the Primary Agriculture Stream, which is exempt from this limitation.

Refusal to Process Policy (RTP)
A Refusal to Process (RTP) policy will apply to all Census Metropolitan Areas (CMAs) with unemployment rates above 6%. This means employers in these areas will not be allowed to hire foreign workers unless they are in sectors with critical shortages such as healthcare, construction, and food processing. The unemployment data will be updated four times a year, in line with the Labour Force Survey results.

Why the changes?
The Canadian government is pushing employers to prioritise Canadian talent by investing in local workers, particularly those who are often overlooked, such as youth, immigrants, and individuals with disabilities. There is also an emphasis on retraining and upskilling the existing workforce to meet the demands of a changing economy.

This push aligns with efforts to recalibrate the Temporary Foreign Worker (TFW) Program, which saw a surge in low-wage positions during the COVID-19 pandemic, increasing from 21,394 in 2018 to 83,654 in 2023.

Government concerns about misuse of the TFW Program—where some employers bypassed Canadian labor in favor of foreign workers—have led to tighter regulations. These changes aim to ensure that local talent is prioritized, promoting a more inclusive workforce and addressing labor shortages sustainably.

TFW: Business owners voice concerns
While the federal government is eager to implement stricter regulations, many business owners contend that it is difficult to find local workers before resorting to the TFW Program. A CBC News report highlights that these owners fear the new restrictions could significantly affect their operations, potentially driving them out of business.

More trouble for foreign workers
The new restrictions on Canada’s Temporary Foreign Worker (TFW) Program will make it more difficult for foreign workers to find low-wage jobs in Canada, as employers face tighter caps and shorter work periods. Those looking for work through the TFW Program may have fewer options, particularly in sectors with high unemployment. However, there will be a high demand for foreign workers in the healthcare, construction, and food processing sectors.

Next steps and future adjustments
The Canadian government will continue to monitor labor market conditions and may introduce further adjustments to the TFW Program in the coming months. Within the next 90 days, a review will be conducted, which could lead to changes to the High-Wage Stream of the program or to existing LMIA applications that have not been fulfilled. This could include adjustments to sectoral exceptions and restrictions for rural areas as well.


(With TOI inputs)