Service Canada Transition Plans

On June 23, 2014, we wrote about how on June 20, 2014, Citizenship and Immigration Canada (“CIC”) and the Ministry of Economic and Social Development Canada (“ESDC”) announced significant reforms to the Temporary Foreign Worker Program (“TFWP”).  One of the changes was:

Introduction of Transition Plans for High-Wage Positions

Employers seeking to hire High-Wage TFWs will now be required to submit Transition Plans to demonstrate how they will increase efforts to hire Canadians, including through higher wages, investments in training and more active recruitment efforts from within Canada.  An employer will have to provide a Transition Plan for each position that it is seeking a LMIA for. The requirement that employers provide a Transition Plan has taken effect immediately.

Employers may be exempt from the Transition Plan requirement if they are hiring TFWs for positions which:

  • require unique skills (ESDC has stated that two examples include nuclear physicist and senior executives such as Chief Executive Officer);
  • have a limited duration of between:
    • 1 and 120 days (ESDC has stated that two examples include emergency or warranty work repair technicians / mechanics); or
    • more than 120 days to a maximum of 2 year (ESDC has stated that two examples include project-based business consultant, specialized construction engineer).

As part of the Transition Plan, employers are required to conduct the all of the following:

  • General Requirements – Employers must conduct at least 3 distinct activities that are designed to recruit, retain, and train Canadian citizens and permanent residents;
  • Underrepresented Groups requirement – Employers must conduct at least 1 distinct activity to work with an organization serving underrepresented groups (Aboriginal peoples, youth, immigrants and persons with disabilities) to identify potential candidates for recruitment or training. This activity is additional to that conducted for the minimum recruitment and advertisement requirement. If the underrepresented group is the same, the activities must be different. If the activities are for the same group, they must be substantially different.
  • Permanent Resident Requirement – Employers must conduct at least 1 distinct activity that supports a TFW’s permanent transition to Canada. This activity could include assisting with language training.

Employers will be required to report on the results of the commitments they have made in their Transition Plan if they are selected for an inspection, or choose to re-apply for a subsequent LMIA for the same occupation and work location.

In today’s post, I wish to elaborate on the above.

www.servicecanada.gc.ca eforms forms esdc emp5594 2014 09 003 e.pdf

On June 20, 2014, ESDC introduced the Transition Plan requirement for High-Wage Labour Market Impact Assessments (“LMIAs“).  The definition of High-Wage has changed numerous times since, however, it is currently any position where the employer commits to paying the prospective foreign worker(s) at or more than the provincial / territorial median hourly wage rate.  Although such employers are not subject to Temporary Foreign Worker (“TFW“) caps, such employers do have to have a plan in place to transition to a Canadian workforce over the period of time covered by the LMIA’s duration of employment.  The legislative authority for this requirement can be found in r. 203(3)(g) of the Immigration and Refugee Protection Regulations (“IRPR“), which states (emphasis added):

An opinion provided by the Department of Employment and Social Development with respect to the matters referred to in paragraph (1)(b) shall, unless the employment of the foreign national is unlikely to have a positive or neutral effect on the labour market in Canada as a result of the application of subsection (1.01), be based on the following factors:

(a) whether the employment of the foreign national will or is likely to result in direct job creation or job retention for Canadian citizens or permanent residents;

(b) whether the employment of the foreign national will or is likely to result in the development or transfer of skills and knowledge for the benefit of Canadian citizens or permanent residents;

(e) whether the employer will hire or train Canadian citizens or permanent residents or has made, or has agreed to make, reasonable efforts to do so;

(g) whether the employer has fulfilled or has made reasonable efforts to fulfill any commitments made, in the context of any opinion that was previously provided under subsection (2), with respect to the matters referred to in paragraphs (a), (b) and (e).

Transition Plans

The Transition Plan is a Schedule C form to the Application for a LMIA.  The Transition Plan represents commitments that an employer has agreed to undertake specific to the occupation and work location for which they are seeking TFWs. The Transition Plan will provide the employer and ESDC with a benchmark of the employer’s current workforce, set out a ratio of Canadian citizens and/or permanent residents (herein referred to together as “Canadians“) to TFWs, and establish the employer’s proposed business plans and activities that should result in the increased hiring of Canadians and reduced reliance on TFWs.

The employer’s committments listed in the Transition Plan must create a reasonable expectation that will result in Canadians replacing TFWs over time.  The employer’s activities should be consistent with the staffing efforts that employers would otherwise make to recruit and invest in training individuals for the requested position(s) if they could not access TFWs.  In other words, if the Temporary Foreign Worker Program did not exist, what would the employer do to meet its employment needs? Possible activities under a Transition Plan include, but are not limited to:

  • increase wages offered;
  • employee referral incentive program;
  • offer part-time or flexible hours as an option;
  • offer health insurance or other benefits;
  • job fairs;
  • financial support for relocation of Canadian citizens or permanent residents;
  • hire a headhunting firm to identify prospective candidates;
  • partner with unions and/or industry associations to identify potential candidates;
  • ongoing advertising/modified advertising plan beyond the minimum recruitment requirements (e.g. use different sources, target different audiences);
  • apprenticeship/internship/co-op;
  • financial support for individuals to include training;
  • paid leave for education;
  • on-the-job training;
  • financial investments in training infrastructures (eg. post-secondary institutions).

It is also possible to meet ESDC Transition Plan requirements by supporting a TFW’s permanent residency.  However, ESDC is currently taking the position that if the TFW does not obtain permanent residency during the relevant LMIA’s duration, then the employer will be considered to have not met its Transition Plan requirement and may be found non-complaint during a compliance audit.  As such, ESDC, is often requesting contingency Transition Plans at the time of the initial LMIA application.

All employers must commit to undertake at least three distinct activities to recruit, retain, and train Canadians in the occupation specified in the LMIA application. They must also conduct one additional distinct activity to engage an organization serving under-represented groups in the labour market such as youth, persons with disabilities, Aboriginals, or new immigrants.

When assessing Transition Plans, ESDC officers will consider the number of positions, the type of occupation, and whether the proposed activity is applicable to the local labour market.  For example, an employer who needs a large number of workers or a continuous supply of workers may be required to conduct ongoing advertising.  Or, employers of forestry workers may be required to increase wages, or identify forestry workers from other regions of Canada willing to participate in a fly-in/fly-out program.  Or, employers of engineers may be required to offer co-op placements to local university students. Etc.

Returning Employers

A returning employer is an employer who has previously received a positive LMIA for a given position at a given location, has a Transition Plan in place, and is now applying for a new LMIA for the same occupation at the same work location.  ESDC will assess a returning employer on its progress in hiring more Canadians, and assess whether the employer has decreased its reliance on the Temporary Foreign Worker Program.  A returning employer needs to submit its original Transition Plan’s interim results as well as a new Transition Plan for the subsequent LMIA application.  ESDC will only assess the new Transition Plan if the employer has successfully demonstrated the completion of originally committed activities and reduced its reliance on TFWs.  Any subsequent LMIA applications for the same occupation at the same work location could result in a negative assessment(s) until the employer can demonstrate that it has both completed the activities in the previous Transition Plan and reduced its reliance on TFWs.

A returning employer that submits an LMIA application for the same occupation at the same work location six or more years after the expiry of the previous LMIA’s duration of work has elapsed will not be required to demonstrate the outcomes of its original Transition Plans.

As can be extrapolated from the above, the first part of ESDC’s Transition Plan assessment of returning employers is to determine whether the employer has made a reasonable effort to complete all the activities that it committed to.  The second part is for the employer to demonstrate a reduced reliance on TFWs, which is defined as a reduction in the ratio of TFWs to Canadians employed in the requested occupation at the work location based on the Canadian/TFW ratio determined during the initial assessment of the employer’s Transition Plan.  A reduction in TFW reliance will generally demonstrate that an employer’s Transition Plan activities were successful.

ESDC has internally produced the following tables demonstrating how the reduction in reliance works:

Demonstration of Reduction in Reliance on TFWs

Employer that employs 100 Canadian engineers that requests 10 TFW engineers would have an initial ratio of 10% TFWs to Canadians
Initial Ratio Scenario # of Canadians employed in same occupation at time of subsequent application #of TFWs (# currently employed + # requested + # unfilled positions on previously confirmed positions) Subsequent Ratio Reduction in Reliance?

10%

1

100

5

5%

Yes

2

110

10

9%

Yes

3

101

10

9.9%

Yes

4

100

10

10%

No

5

90

10

11.5

No

6

95

15

15.7%

No

 

According to the same internal ESDC document, the following is how Transition Plans will be assessed based on the “all completed activities” and “reduced reliance” criteria:

Previous Transition Plan Scenarios

All Activities Completed

Reduced Reliance

Result

YES

YES

Positive assessment for fulfilling commitments. New Transition Plan can be similar to previous.

YES

NO

Negative assessment for fulfilling commitments under Transition Plan.

NO

YES

Negative assessment for fulfilling commitments, however, this does not necessarily result in refusal as employer has reduced reliance on TFWs.

NO

NO

Negative assessment for fulfilling commitments under Transition Plan requirement.

NO

NO/YES

Positive assessment for fulfilling commitments under Transition Plan requirements if the employer has provided reasonable rationale and strong mitigating factors for not completing all activities.

 

Presumably the current notion that an employer will be deemed non-compliant if the employer completed the activities of the Transition Plan but was unable to reduce its reliance on TFWs will change. It is not clear why an employer completing a Transition Plan with unsuccessful results produces a less beneficial outcome than not completing the Transition Plan with justification.  As well, given that IRPR r. 203(3)(g) requires that officers consider whether the employer has fulfilled or has made reasonable efforts to fulfill any commitments made in the context of a previous LMIA applications, it is difficult to see how an employer completing the Transition Plan with unsuccessful results was not a reasonable effort to fulfill commitments pursuant to IRPR r. 203(3)(g).

Exemptions from the Transition Plan Requirement

Transition Plans are not required for:

  • the Live-in Caregiver Program;
  • the Seasonal Agricultural Worker Program Stream, Agricultural Stream, and other on farm primary agricultural occupations;
  • Low-Wage LMIA applications;
  • LMIA applications in support of permanent residency under the Federal Skilled Worker Program and Federal Skilled Trades Program (although, the Department is now generally requesting that employers provide backup Transition Plans in case the foreign worker does not obtain permanent residency);
  • LMIA applications for specialized occupations that qualify for Quebec’s facilitated LMIA application process;
  • truly temporary positions;
  • limited duration positions; and
  • positions involving very unique skills that are not readily available in Canada (they are being granted very, very rarely, and as of writing all public references to this exemption have been removed from the Service Canada website).

A “truly temporary position” is one where the employment duration is more than 120 days but less than two years, and where the job will no longer exist after the worker leaves.  In other words, the job cannot be filled by any other individual and there is no reasonable expectation that the employer could transition the position to a Canadian citizen or permanent resident.  If an employer is granted a “truly temporary position” LMIA and they subsequently re-apply for the same position at the same work location, then the employer will be required to provide a Transition Plan in the next application.

It is important to note that ESDC takes a very strict approach as to what constitutes a “truly temporary position.” Below we have reproduced an internal ESDC request from an ESDC officer to a Business Expertise Consultant in which the BEC overrules the officer’s recommendation that Transition Plan exemption be given.  Besides demonstrating what in my opinion amounts to fettering of discretion, the document shows how stringent ESDC is. Please note that what we have reproduced below should not be viewed as legal advice by ESDC. The reproduction of the material below has not occurred with the affiliation of the Government of Canada, nor with the endorsement of the Government of Canada. As well, given the nature of relying on internal documents, some of the information may be out of date.

A “limited duration” position is one where the job is time-limited and the employment duration is for 120 days or less.

Significance

Along with meeting prevailing wage and recruitment requirements, the Transition Plan is arguably the most important aspect of a LMIA application.  As the Administrative Monetary Penalty regime approaches, the importance of carefully crafted, and feasible, Transition Plans, will become paramount.  It is also clear that the current Transition Plan system is way too onerous, and, as outlined above, may not be compatible with IRPR.  As such, any future changes will be updated to this post.

Below we have reproduced Service Canada’s internal operational directive regarding Transition Plans. Please note that what we have reproduced below should not be viewed as legal advice by ESDC.  The reproduction of the material below has not occurred with the affiliation of the Government of Canada, nor with the endorsement of the Government of Canada. As well, given the nature of relying on internal documents, some of the information may be out of date.

Relying on Permanent Residency

With the introduction of Express Entry, many employers are applying for LMIAs and stating that they only want to support their candidate’s permanent residency application. Initially, it was unclear whether this was permissible.  However, the current policy is as follows:

NHQ1 NHQ2


Leave a Reply

Your email address will not be published. Required fields are marked *