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Canada has clarified that only the entity actually employing and managing a foreign worker can seek an LMIA, restricting staffing agencies and Employers of Record from sponsoring workers for third-party businesses
Canada tightened rules on who can sponsor temporary foreign workers through the Labour Market Impact Assessment system, putting greater focus on the company that actually employs and manages the worker.
Under guidance issued by Employment and Social Development Canada on September 18, staffing and employment agencies cannot obtain an LMIA for a foreign worker who will ultimately work for another business.
The government has also clarified that Employers of Record, or EORs, cannot act as LMIA sponsors when the worker will work for another company. The changes focus on the entity that actually controls the employment relationship rather than the organisation that submits the application.
What has changed
An LMIA is generally required before a Canadian employer can hire a temporary foreign worker through the Temporary Foreign Worker Program. It assesses whether hiring a foreign worker is likely to have a positive or neutral effect on Canada’s labour market.
Under the new guidance, the employer must be the entity that hires the worker, sets the working conditions and pays their wages.
Officials can also consider who directs the worker’s day-to-day activities, determines their duties and working hours, benefits from their work and has the authority to supervise or dismiss them.
More from BusinessStaffing agencies and EORs
The change affects staffing agencies that recruit foreign workers for other Canadian businesses. Such agencies cannot serve as the LMIA sponsor when the worker will ultimately be employed by a third-party company.
EORs face a similar restriction. Fragomen said the clarification effectively ends the EOR model for LMIA-based work permits, although EORs can continue operating in other employment arrangements subject to provincial laws.
Canada has also reiterated that temporary foreign workers cannot be classified as independent contractors to avoid payroll, tax or other obligations under the programme.
