Low-Wage Caps

Meurrens LawImmigration Trends

Employers offering wages to prospective foreign workers that are below the provincial/territorial median hourly wage will subject to a maximum 10% cap on the proportion of low-wage foreign workers. The cap is being phased in over 2 years.Employers that have a low-wage foreign worker workforce will be:

  • limited to 30% or frozen at their current level, whichever is lower;
  • reduced to 20% beginning ; and
  • further reduced to 10% on .

Cap Exemptions

There are a few exemptions to the low-wage cap requirement, including employers that:

  • have fewer than 10 employees nationally, including the vacant positions they are applying to staff with TFWs.
  • are hiring TFWs for jobs that are truly temporary (e.g. emergency or warranty work positions).
  • are hiring TFWs for low-wage positions located in Quebec.

Calculating the Cap

To calculate the cap, employers need to follow a complicated 2-step process that includes:

  1. Establishing the cap for the specified work location; and
  2. Determining the effect of hiring TFWs on the cap.
Establishing the cap for the specified work location
The first step of the cap calculation is to determine the percentage of foreign workers in low-wage positions at the work location where the TFW will be employed. The steps towards calculating this are:
  1. Select 4 consecutive weeks between  and . This time period will be used to calculate the number of workers at the specified work location. The 4 week period used is: _______________ to _______________
  2. Provide the total number of all the hours of work (including overtime) for all employees at the specified work location in all positions, including Canadians, permanent residents, and all foreign workers (including students working off-campus).   overtime, and the hours worked for all positions occupied by Canadians, permanent residents, current TFWs and all other workers on open work permits, student visas, etc.) for the selected 4 week period: __________.  This amount becomes [A].
  3. Calculating the average weekly hours of work for all workers at the specified work location: A ÷ 4 = __________. This amount becomes [B].
  4. Calculate the total number of all the hours of work (including overtime) for all foreign workers who require a LMIA at the specified work location for the selected 4 week period.  This becomes [C].
  5. Calculate the average weekly hours of work for all foreign workers at the specified work location: C ÷ 4 = __________.  This becomes [D].
  6. Calculate the overall percentage of all staff that are foreign workers currently employed in low-wage positions.  This amount is equal to (D ÷ B) x 100 = __________, or [E].

ESDC will refuse to process LMIA applications for employers whose [E] value is above the cap.

Determining the effect of hiring TFWs on the cap

The second step that employers must follow is to determine the effect that hiring foreign workers will have on the established cap at the specified work location. Employers must ensure that the number of low-wage foreign workers that they are requesting on the LMIA application does not exceed the identified cap for the year. The cap for the next 2 years has been identified as:The calculation to determine the effect of hiring a foreign worker on the cap includes:

  1. Calculate the total number of all the hours of work (including overtime) for all employees at the work location and all positions staffed by Canadians, permanent residents, and current foreign workers for the previous 4 consecutive weeks prior to the application being submitted. Employer should exclude from this calculation any low-wage foreign workers whose work permits are expiring within the next 90 days and will not be renewed: __________. This becomes [A].
  2. Calculate the average weekly hours worked, at the specified location: A ÷ 4 = __________.  This becomes [B]
  3. Calculate the total number of all the hours of work (including overtime) for all foreign workers, who are currently employed in low-wage positions, at the specified work location, for the previous 4 consecutive weeks, prior to the application being submitted. Employers should exclude any current low-wage TFWs, whose work permits are expiring within the next 90 days and will not be renewed: __________. This becomes [C]
  4. Calculate the average weekly hours of work for foreign workers who are currently employed in low-wage positions at the specified work location: C ÷ 4 = __________. This will be known as [D]
  5. Calculate the total weekly hours of the low-wage foreign workers applied for on the LMIA application. This becomes [E]
  6. Provide the total weekly hours of all low-wage foreign workers that the employer has applied to hire at the location that have not started work (include pending LMIA applications and previously confirmed LMIAs). This becomes [F].
  7. Calculate the percentage of low-wage TFWs: ((D + E + F) ÷ (B + E + F)) x 100 = __________. This becomes [G]
  8. Enter the cap that has been established for the specified work location (Refer to Schedule E, Box 7 under the Establishing the Cap section): __________