March 27, 2024

Canada Announces Tightening of Temporary Foreign Worker Program Amidst Changing Labour Market Conditions

In a move to adjust to the evolving dynamics of the Canadian labour market, the Government of Canada has announced significant changes to the Temporary Foreign Worker (TFW) Program. These adjustments come in response to the shifting demands of the post-pandemic economy, which initially saw a surge in the utilization of the TFW Program due to low unemployment rates and high job vacancy rates in 2022.

Key Changes to the TFW Program

Effective May 1, 2024, the following modifications will be implemented to ensure the TFW Program aligns with the current labour market conditions:

• Labour Market Impact Assessments (LMIAs) will have a validity period of 6 months, reduced from the previous 12 months.

• Reduction in the Percentage of Temporary Foreign Workers: Employers who were identified in the 2022 Workforce Solutions Road Map will see a decrease in the percentage of their total workforce that can be hired through the TFW Program under the low wage stream, from 30% to 20%. However, exemptions will be made for sectors deemed critical, such as construction and healthcare.

• Mandatory Exploration of Domestic Workforce Options: Employers will be required to thoroughly explore all available domestic workforce options, including the recruitment of asylum seekers with valid work permits, before applying for an LMIA.

Furthermore, a policy that came into effect on January 1, 2024, mandates employers to conduct annual wage reviews for temporary foreign workers. This ensures that wages reflect the prevailing rates for their occupations and regions, thereby protecting the rights and ensuring fair compensation for temporary foreign workers.

Implications for Employers

These changes signify a shift in the Canadian government's approach to managing its workforce, highlighting a greater emphasis on leveraging domestic talent pools. Employers will need to adapt to these new regulations by:

• Enhancing their recruitment strategies to tap into the local labour market more effectively.

• Navigating the shortened LMIA validity periods, which may require more frequent processing.

• Ensuring compliance with the updated wage review policies to maintain the rights and welfare of temporary foreign workers.

Employers across Canada will need to stay informed and adapt to these changes, ensuring they align with the new regulations while continuing to meet their labour needs in a manner that supports the broader economic and social goals of the nation.