Canada Tightens Regulations on Temporary Foreign Workers

Introduction

Canada’s Temporary Foreign Worker Program (TFWP) has undergone significant changes aimed at protecting domestic workers and promoting wage growth. The federal government has implemented new regulations, including stricter minimum wage requirements and limitations on employer practices, to ensure the program is used responsibly.

Key Changes to the TFWP

• Increased Minimum Wage for High-Wage Stream: Effective November 8, employers in the high-wage stream must pay foreign workers at least 20% higher than the median wage for their position in the specific region. This change is expected to impact up to 34,000 workers across Canada, resulting in substantial wage increases.
• Restrictions on Attestations: Starting October 28, employers can no longer rely on attestations from accountants or lawyers to prove the legitimacy of their businesses. This measure aims to prevent fraudulent practices and ensure compliance with program requirements.
• Enhanced Information Sharing: The government intends to strengthen information-sharing agreements with provincial and territorial partners to detect and address misuse of the TFWP.

Impact on Employers and Workers

The new regulations have both positive and negative implications for employers and workers. On the one hand, they promote fair wages and working conditions for foreign workers. However, they may also increase costs for employers, particularly in high-wage sectors.

• Higher Wages: Employers in the high-wage stream must now pay significantly higher wages to foreign workers, which could affect their profitability.
• Increased Compliance: The stricter requirements for attestations and information sharing may increase the administrative burden on employers.
• Potential Labor Shortages: The changes could lead to labor shortages in certain sectors if employers are unable to meet the new wage requirements or face challenges in obtaining work permits.

Government’s Rationale

The Canadian government’s decision to tighten regulations on the TFWP is driven by several factors:

• Protecting Domestic Workers: The government aims to ensure that the program does not displace Canadian workers or depress wages in the domestic labor market.
• Promoting Wage Growth: By raising minimum wages, the government seeks to improve the economic prospects of foreign workers and support wage growth for Canadians.
• Addressing Program Misuse: The new regulations are designed to prevent fraud and abuse within the TFWP, ensuring that it is used for its intended purpose.

Additional Changes to the TFWP

In addition to the above changes, the government has implemented several other measures to reform the TFWP:

• Pause on Low-Wage Stream Processing: A six-month pause has been placed on processing LMIAs for low-wage stream positions in regions with high unemployment rates.
• Employer Cap: Employers are limited to hiring no more than 10% of their workforce through the TFWP.
• Reduced Employment Duration: The maximum duration of employment for low-wage stream workers has been reduced from two years to one year.

The Canadian government’s recent reforms to the TFWP represent a significant step towards ensuring the program’s integrity and fairness. While these changes may have short-term implications for employers and workers, they are ultimately intended to promote a more equitable and sustainable labor market.