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Putting Canadians first

20-Oct-14

Troubled foreign worker program revamped to boost local hiring, tighten up on compliance

By Lori Brienza and Erin Crosley

On June 20, Citizenship and Immigration Canada and Employment and Social Development Canada announced an overhaul of the Temporary Foreign Worker Program (TFWP). Given the heightened scrutiny on employers resulting from several abuse scandals in the retail and food services sectors, this announcement came as no surprise to practitioners in this area. What was not anticipated was the extent of the overhaul and its immediate impact on employers who rely on the recruitment of foreign nationals in industries faced with significant labour shortages. The changes send a clear message to Canadian employers that the TFWP is not to be relied upon by employers as a labour model, and that employers must make a more concerted effort to recruit, hire and train Canadian citizens and permanent residents.

To hire a temporary foreign worker, employers are still required to obtain a Labour Market Impact Assessment (LMIA), formerly called a Labour Market Opinion. The LMIA confirms that the employment of TFWs is likely to have a neutral or positive effect on the labour market in Canada. Under the new guidelines, however, ESDC will conduct a more comprehensive and rigorous assessment of the TFWs’ effect on the Canadian labour market. More employers can expect to be subject to the impact assessment process, particularly with the recent closure of several provincial/ territorial programs that established certain LMIA exemptions.

TFWs will now be categorized as either low-wage or high-wage. Employers seeking to hire low-wage TFWs (those offered a wage that is below the provincial/territorial median hourly wage) must establish that they are meeting a maximum 10 per cent cap on the proportion of low-wage TFWs per worksite. The cap will be phased in over the next two years to provide employers who currently have a low-wage TFW workforce time to transition to a mostly Canadian workforce by July 1, 2016. Effective immediately, ESDC will also refuse to process LMIA applications in the accommodation, food services and retail trade sectors, and certain positions that require little or no education or training, in economic regions with an unemployment rate at or above six per cent.

Employers of high-wage TFWs (those offered a wage that meets or exceeds the provincial/territorial median hourly wage) must submit a transition plan that identifies activities the employer agrees to undertake during the employment of the TFW to recruit, retain and train Canadian citizens and permanent residents and to assist foreign workers to become permanent residents. Employers reapplying for a new LMIA, or selected for an inspection, must report on the success of their transition plan. Exemptions from the transition-plan requirement are rare and limited to short duration and non-recurring project-based positions.

As part of the LMIA application, employers must now attest that the employment of the TFW(s) will not lead to job loss or reduction in work hours for any Canadian or permanent resident during the period of employment for which the work permit is issued. Employers are told that compliance with this attestation will be monitored on a worksite basis, however there has been limited guidance with respect to how a worksite is to be defined.

The processing fee for a LMIA was also increased from $275 to $1,000 for each position an employer seeks to fill, significantly impacting cost and timing considerations. One positive change, however, is that impact assessments for the highest-demand occupations (skilled trades), highest-paid occupations (top 10 per cent of wages in the province/territory where the job is located), or short-duration work periods (120 days or less), will have priority processing and an assessment will be provided within 10 business days from the date processing is started (20 days).

The government’s announcement also prioritized employer compliance with the program requirements. Under the Immigration and Refugee Protection Regulations, CIC and ESDC have been granted significant powers to monitor compliance and to implement penalties, fines and bans on employers abusing the TFWP. In addition to employer compliance reviews conducted as part of the LMIA application process, 25 per cent of employers using the TFWP can anticipate a random and unannounced inspection for compliance with any of the program’s requirements. Increased communication between federal and provincial/ territorial government branches, such as employment standards, will assist in identifying employers abusing the TFWP. Furthermore, a strengthened compliance system for employers of LMIA-exempt TFWs is expected to be introduced as early as the summer of 2015.

The one constant in the area of immigration law is change itself. The CIC and the ESDC continue to provide guidance to employers that clarify and redefine the recent changes, as well as directions internal to the ESDC that are typically inaccessible by the public. The changes are often provided without prior warning to be applicable immediately, and subject to further revisions at any time. As a result, this period of change can be extremely challenging for employers relying on the TFWP to fill labour shortages.

 

This article originally appeared in the October 24th, 2014 issue of The Lawyers Weekly.

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