Examining what a Labour Market Impact Assessment is

Vimal Sivakumar
Published: September 29, 2022

Canadian employers may need to get a Labour Market Impact Assessment (LMIA) before hiring a foreign worker.

An LMIA is an employer-requested document that companies looking to hire temporary foreign workers under the Temporary Foreign Worker Program (TFWP) — a program designed to employ foreign nationals and temporarily address labour shortages at times when no qualified Canadians are available to work such positions. Employers will submit as proof that their hiring of foreign employees will not have a negative effect on the Canadian labour force.

It is vital to Canada’s maintenance and growth that the country preserves a strong and developing naturalized Canadian workforce, which necessitates the use of LMIAs to aid in achieving this goal.

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Basics of an LMIA

Understanding the concept of Labour Market Impact Assessments requires an initial understanding of how they are facilitated.

Before addressing a few nuances of LMIAs, here are a few general factors that are pertinent to these assessments. As part of this process, employers must:

  • Prove that no qualified Canadians were passed over for the job in favour of a foreign worker
  • Guarantee that the hired foreign worker will be paid a wage and provided benefits that meet federal and provincial standards
  • Prove that they have tried, prior to seeking out a foreign employee, to find a Canadian citizen or permanent resident for the vacant position

LMIAs are also not as cut-and-dry as they may seem. In other words, employers cannot just simply apply for an LMIA immediately when a job at their organization is open. Canada requires that employers advertise a vacant job opportunity for a minimum of four weeks prior to applying for an LMIA. In those four weeks, the employer must also have advertised the position using at least three recruitment methods — one specifically being the Canada Job Bank.

Nuances regarding the LMIA process

The variance, or nuance, that exists regarding the LMIA process surrounds whether the foreign worker that a company is looking to hire will be classified as a “high wage” or “low wage” employee.

The primary difference between LMIAs for these two classifications is the added requirement of a “transition plan,” but that will be addressed in each of the following sections, as required.

LMIAs for high-wage workers

A transition plan will be mandatory as part of the LMIA submission process if an employer will be paying the hired foreign worker at a rate equal to or above the median provincial/territorial wage.

Designed to ensure that there is a progressively decreasing reliance on temporary foreign workers, transition plans aid the Canadian government in determining that a company’s hiring practices regarding foreign employees align properly with the goals and intentions of the TFWP.

As mentioned previously, the Canadian government prioritizes giving Canadian nationals the first chance at available jobs. Transition plans assist with this goal by proving that the TFWP is being utilized in a limited capacity and as a last resort to fill employment gaps temporarily when no other options exist.

LMIAs for low-wage workers

Conversely, the LMIA process for hiring foreign workers that will be paid under the median wage for a particular province or territory — otherwise classified as “low wage” workers — does not necessitate the submission of a transition plan.

In its place, and largely to restrict the exploitation of the TFWP by an employer, the Canadian government has capped the number of temporary foreign workers that a business can employ under this “low-wage” worker category. Any company with 10 or more employees can have no more than 20% of their workforce be classified as “low-wage temporary foreign workers”.

Moreover, not all low-wage occupations are eligible for LMIA processing.

Additionally, there are still certain requirements that employers hiring low-wage workers must fulfill in place of submitting a transition plan.

Employers hiring low-wage foreign workers must:

  • Pay for the worker’s round-trip transportation
  • Ensure affordable housing is available
  • Pay for private health insurance until workers are eligible for provincial coverage
  • Register the temporary foreign worker with the provincial/territorial workplace safety board
  • Provide an employer-employee contract

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