Last Updated on
Canada’s Temporary Foreign Worker Program (the “TFWP“) allows employers to bring foreign workers to Canada to temporarily fill jobs for which qualified Canadians are not available. After the program became increasingly controversial in 2012-13, the Department of Employment and Social Development Canada (“ESDC“) on June 20, 2014 imposed a cap limiting the proportion of low-wage foreign workers that businesses can employ.
How the Cap Works
Employers with a company-wide business size of 10 or more employees are subject to the cap. The cap percentage is determined for each individual worksite location and is based on paid positions and total hours worked at that worksite.
Employers that are new to the TFWP or returning employers who did not have any foreign workers on staff on June 20, 2014 are capped at 10% low-wage foreign workers for each work location.
The cap, implemented on June 20, 2014, was phased in to provide employers time to transition to a Canadian workforce which means that they are limited to a:
- 20 percent cap on the number of foreign workers in low-wage positions, or the employer’s established estimated cap (whichever is lower), if the employer hired a TFW in a low-wage position prior to June 20, 2014; or
- 10 percent cap on the number of foreign workers in low-wage positions if the employers did not employ a TFW in a low-wage position prior to June 20, 2014.
Effectively, companies are limited to a 10% cap on the proportion of low-wage foreign workers that they can have. The low-wage is based on a province’s median wage, which as of writing is as follows:
|Province/Territory||Wages prior to
May 3, 2018
2016 Wage ($/hour)
|Wages as of
May 3, 2018
2015 Wage ($/hour)
|Newfoundland and Labrador||$20.31||$21.98|
|Prince Edward Island||$18.44||$19.00|
The calculation of the cap can be complicated, and is perhaps best summarized by this portion of ESDC’s Schedule E – Cap for Low-Wage Positions.
The Schedule E also contains sections on how the addition of foreign workers would impact the cap.
The cap does not apply to:
- Employers with a company-wide business size of fewer than 10 employees;
- Employers hiring foreign workers for positions related to on-farm primary agriculture, including the Seasonal Agricultural Worker Program;
- Positions that are truly temporary (e.g. emergency and warranty positions);
- Positions that are highly mobile or truly temporary and no more than 120 calendar days. This duration
can be extended if an employer can demonstrate that their peak season, project or event operates
beyond 120 days;
- Applications supporting permanent residence under any Express Entry programs (e.g. Federal Skilled
Worker Program, Federal Skilled Trades Program); and
- Certain seasonal positions.
It is also important to note that employers who are subject to the cap do not have to include the following types of low-wage foreign workers when calculating the cap:
- LMIA-exempt foreign nationals working under Immigration, Refugees and Citizenship Canada’s International Mobility Program;
- Foreign nationals who have received a nomination certificate from a Provincial Nomination Program; and
- Foreign workers working in low-wage positions that are exempt from the cap.
Frequently Asked Questions
The following are samples of frequently asked questions that were reproduced from the TFWP Wiki below. Please note that the information below was obtained through an Access to Information Act request, and may not be up to date.
Question – When considering the impact cap percentage, should an officer ’round’ to the nearest decimal point? Example, established cap is 10% and the impact cap is percentage is 10.1 to 10.5. Does ESDC round down to 10% and accept it, or does it just determine it exceeds the 10% cap?
Answer -When calculating the Cap or the Impact on Cap comparison calculations, the percentage should be recorded up to two decimal points, rounding accordingly.
Question – What should be done with LMIA applications where the employer has identified more than one location on the application – i.e. Employer A has applied for 15 workers for 3 different locations on 1 LMIA form? How will the cap be noted to ensure a cap rate is captured for each location on the LMIA form?
Answer – The employer must complete a separate application for each location of work in order for a cap to be established for each location; and each location will also have an individual cap comparison calculation to determine the effect of hiring requested TFWs based on the employer’s current staffing complement at the time of the submission of the application.
Question – How does previously confirmed but unfilled LMIAs (i.e. hired but who have not started work) affect the determination of business size and cap calculation?
Answer – Previously confirmed but unfilled LMIAs (that are not expired) are to be included as employees for determining the business size. Pending applications should not be included in these numbers.
Question – Should owners count themselves when determining their business size?
Answer – When determining if a business has 10 or more employees company-wide, the count should include all employees on payroll and the vacant position. If the owner has a paid position, they should be included.
Question – When calculating “Determining the Effect on the Cap”, does the 4 consecutive weeks prior to LMIA submission have to be the 4 weeks prior to the application date or can there be a gap?
Answer – Ideally there should be as small a gap as practically possible for the purposes of this calculation. According to the CAP Directive the employer should provide data from the 4-week period “immediately prior” to the date the application was signed. W-T is interpreting “immediately prior” as allowing up to a 2 week gap between when the application is signed and the four consecutive weeks used by the employer for determining the effect of the CAP. In addition, two weeks may also be allowed between when the application is signed and when the application is received.
Question – If the staffing complement listed on Schedule E changes between the date of signature and the date of assessment, how does the officer proceed with assessing the cap?
Answer – The effect calculation will be assessed based on the four-week period used prior to the date of signature, and NOT the date of assessment.