Overcoming Labour Shortage: Power and Process of Hiring Foreign Workers

How Labour Shortage is Negatively Affecting Your Business

Are businesses struggling to grow due to skills and labour shortages? Are they working overtime, unable to take on additional orders, or expand their teams beyond a few employees? In fact, many businesses are facing this problem, especially if they operate in industry sectors such as construction, manufacturing, retail trade, healthcare and social assistance, technology, transportation, agriculture and agri-food, accommodation and food service. Recruiting or retaining skilled employees and dealing with labour shortages may well be ongoing problems requiring a solution. According to Statistics Canada, labour challenges are affecting over 40% of businesses in Canada operating in these sectors.

Hiring foreign workers is a solution to the labour shortage problem in Canada, and the trend is that Canadian businesses, especially those operating in the above sectors, have been heavily relying on foreign workers.

You may have heard about the Labour Market Impact Assessment (LMIA) process or exemption from it and are looking to dive deeper in that direction, or perhaps you've assumed that the process of hiring foreign labour is complex, obligation-intensive, and that you don’t qualify.

In this post, we shed light on this by helping you understand better the options, requirements, process, misconceptions, obligations, and benefits of using temporary foreign workers either through applying for an LMIA or being exempt from needing one. This helps to resolve misunderstandings about the process and remove unnecessary blocks that prevent your business from growing, and assesses if you need legal assistance or can apply on your own for authorization to hire foreign workers in Canada.

Hiring Foreign Workers: A Practical Option for Eligible Employers

Skills and labour shortages are nationwide problems in Canada, particularly in certain industry sectors. Being well aware of this issue and closely monitoring Canadian labour market trends across all occupations, the Canadian government allows firms to hire temporary foreign workers. This is a right, not a privilege, that businesses can exercise under qualified circumstances. The primary criterion that the government checks before permitting the hiring of foreign workers is whether Canadians and permanent residents are unavailable for the job. This is determined through local recruitment and a labour market impact assessment.

The recruitment process is generally fair, though there are rules to be followed. For some occupations that are in high demand, recruitment may be waived. In other situations, a labour market impact assessment may not be required at all, such as under international agreements or in certain defined situations where Canadian interests are served.

Therefore, if the need is genuine and a business has sufficient financial resources to support the hiring of foreign workers, they are likely to be granted permission to hire or retain temporary foreign workers. This could be achieved either by obtaining a positive labour market impact assessment or without needing one under one of the exemptions.

Demystifying the Process of Hiring Foreign Workers

For new employers, the process of hiring foreign workers can seem very complex, discouraging them from utilizing all the benefits of hiring foreign labour. They resist shortages, assuming it is too hard to qualify or that taking on the obligations of hiring foreign labour is not worth the outcome. While legal support in the Labour Market Impact Assessment process is highly beneficial and should not be underestimated, here is a simplified process and the most popular misconceptions to help you decide if hiring a foreign worker is a solution for your business at this particular stage.

Debunking Common Misconceptions about Hiring Foreign Workers

• Misconception: There is a set revenue requirement to hire a foreign worker. There is no threshold set by the Canadian government. For a Labour Market Impact Assessment, a company needs to prove it can financially support hiring a foreign worker. For instance, if they want to hire a Software Developer with an annual wage of CAD 82,000, providing financial statements showing net income or retained earnings equal to or above this amount for the requested employment period would suffice. An attestation letter from a chartered professional accountant can also help to prove financial ability.
• Misconception: There is a set time period during which a business must have operated before they apply to hire foreign workers. Instead, the requirement is that a firm must be operational and indeed in need of a worker either to continue providing services without disruption or to grow. Only employers looking to support the permanent residence visa of a foreign worker need to prove they operated for at least one year at the time of application.
• Misconception: Foreign workers can be paid less. For the majority of occupations requiring a Labour Market Impact Assessment, foreign workers must at least be paid a median occupational wage in the job location, except for agricultural jobs (for which a minimum wage set in a province would be acceptable). Jobs exempted from a Labour Market Impact Assessment would necessitate at least meeting the minimum wage in the destination province or median occupational wage in the job location for specialists. In any case, wages paid to foreign workers should not be less favourable compared to what other employees in the same occupation and skill set earn.
• Misconception: It is impossible to prove that Canadians or permanent residents are not available for a job. ESDC rules for job advertisements are straightforward and quite fair regarding employment terms. Following them will allow a firm to test the Canadian labour market within a month and genuinely determine the availability of local labour for the vacant job.
• Misconception: Hiring foreign workers involves too many responsibilities. Below is a table comparing the benefits of hiring foreign workers against employer obligations and responsibilities. We leave it for you to decide.

Comparison of Employer Obligations and Benefits Associated with Hiring Foreign Workers

• Government Approval Process. Employer Obligation: Hiring foreign workers involves a prerequisite, such as approval from the government, a process from which local staffing is exempt. Benefits: Filling a shortage with foreign workers helps meet business needs in a variety of ways. The skills and knowledge of foreign workers enable businesses to operate steadily and efficiently, and to grow by expanding, improving, or creating new services, goods, and clientele.
• Response to Labour Shortages. Employer Obligation: Businesses must meet minimum eligibility requirements to qualify to hire foreign workers. Generally, this involves undergoing a process of assessing the impact of hiring a foreign worker on the Canadian labour market, called a Labour Market Impact Assessment (LMIA). Jobs exempted from this assessment still need to submit an official offer of employment enumerating all terms through the dedicated government portal. Benefits: Relatively fast response to labour shortages. Firms can begin the application process to hire a foreign worker six months before the expected start date. Even if not acting proactively, the time required to bring in foreign labour for high-demand jobs is generally shorter compared to continuous attempts to recruit locally with no success.
• Management of LMIAs. Employer Obligation: Employers should closely monitor the validity of their approved LMIAs. It is the employer’s responsibility to add, remove, or change the names of foreign workers on their approved LMIA in a timely manner. Benefits: Balanced risk. Within about six months, firms with approved LMIA(s) (if a job requires it) have the flexibility to substitute a foreign worker (if) whose work permit application was refused. This ensures the employer’s efforts to obtain a positive assessment are not wasted.
• Terms of Employment. Employer Obligation: When employers apply to hire foreign workers, they are required to specify and commit to certain terms of employment, such as job position and duties, salary, vacation time, work hours, address, and other essential terms. Employers can be inspected by the government to ensure they are following the terms under which they were permitted to hire foreign nationals. Benefits: Reasonable employment terms for in-demand jobs of any skill level. The minimum employment requirements for foreign workers are clear and known to an employer from the outset. They meet Canadian minimum employment standards and certainly do not exceed what Canadians or Permanent Residents would agree to, if available.
• Labour Turnover. Employer Obligation: If a firm wishes to lay off or fire a temporary foreign worker, they may do so just as with any other employee. However, employers are obligated to keep records relevant to temporary foreign worker employment for at least six years. Previous layoffs and dismissals may be taken into consideration if they wish to employ foreign workers again in the future. Benefits: Lower labour turnover. Foreign workers can only work for the firms that offered a job and for an approved duration. This is a strict rule that temporary foreign workers must follow. Thus, the chances of frequent job switching or no-shows without notice are minimized.
• Employment Terms Modifications. Employer Obligation: Employers cannot unilaterally change the terms under which they employ a foreign worker. For any essential changes, they need to obtain new approval. For instance, a new location, promotion with additional job duties, or job change would require this. Some salary increases due to inflation or changes to the required minimum wage are permitted with only the consent of the foreign worker. Benefits: Fewer sudden requests to change employment terms. Essential employment terms such as salary, work hours, leave, benefits, etc., are set for the duration of employment and included in documents, such as the work permit and LMIA letter or online job offer. Foreign workers appreciate these rules and typically don't request changes during their approximately three-year employment term.
• Retention Rates. Employer Obligation: The confirmation letter (LMIA) for foreign worker hiring and the work permit (max 3 years) issued based on a positive LMIA or an exemption have predetermined durations. An employer would need to secure a new confirmation letter if they wish to retain a foreign national as an employee. Benefits: Higher retention rates. Canadian employers can assist foreign workers with permanent residence by offering a permanent job or renewing their work permit. This contributes to higher loyalty and appreciation due to immigration incentives, which foreign workers often value highly.
• Knowledge Transfer. Employer Obligation: If a particular labour market benefit or Canadian economic interest was an essential criterion allowing the employer to bring in a foreign worker, the employer would need to keep track of this benefit's achievement and may even be required to report progress to the government. Benefits: Knowledge transfer to other employees and the company. Highly skilled workers bring expertise and best practices from top companies and developed countries to their teams and corporate policies.
• Corporate Image. Employer Obligation: Employers need to foster and maintain a culture of inclusivity and respect for different cultural backgrounds. This may require investing in training, developing policies and guidelines regarding cultural sensitivity, and possibly engaging consultants or diversity specialists. Benefits: Improved corporate image among organizations, competitors, and prospective employees for being a diverse workplace.
• Understanding of Labour Market. Employer Obligation: Ongoing reliance on temporary foreign workers requires progressive reporting to the approving body each time a firm wants to use the program again. Companies that, due to the nature of their industry or business operations, heavily rely on foreign workers would need to work closely with a firm that can help them stay up-to-date and comply with the program. Benefits: A better understanding of the Canadian labour market and potential future business needs. Companies that employ both local and foreign labour have a better understanding of the market and can proactively plan business growth with or without reliance on temporary foreign workers, depending on what they find beneficial.

A Simplified Guide to Hiring Foreign Workers: Navigating the Complex Process

For businesses that have never applied to hire foreign workers before, or those that have applied in the past but for different positions, the following seven steps can serve as a guide to understanding the requirements and processes involved.

• Assess the need for LMIA. Action: Determine if you need to undergo an assessment of your business's impact on the Canadian labour market. Outcome: This leads to three possible options: LMIA application, LMIA-exempt offer of employment, or no action if the foreign worker already has an open work permit.
• Understand LMIA requirements or exemption conditions. Action: If an LMIA is required, meet employer requirements and determine suitable LMIA stream. If LMIA-exempt, identify the exemption and ensure your business and job meet all conditions. Outcome: Business meets requirements to proceed to the next step.
• Prepare and file your application. Action: If LMIA required, prepare and file an application. If LMIA-exempt, prepare and file an online offer of employment. Outcome: Business proceeds with application process.
• Respond to the application outcome. Action: If approved, provide foreign worker with LMIA Confirmation Letter for work permit application. If LMIA-exempt, provide offer number for work permit application. Outcome: Business facilitates work permit application for foreign worker.
• Onboarding foreign workers. Action: Welcome temporary foreign workers to Canada, ensure a smooth start, and make them aware of their rights. Outcome: Foreign worker starts work.
• Compliance with job offer terms. Action: Comply with terms of LMIA-based or exempt job offer and respond to compliance requests from the government if inspected. Outcome: Business maintains compliance with government requirements.‍
• Support for foreign workers' permanent residence or work permit renewal. Action: Support foreign workers' permanent residence visa application (if eligible) or assist with renewing work permit by extending LMIA-based or exempt job offer. No action required if not retaining a foreign worker. Outcome: Foreign worker's work permit or permanent residence status is maintained or renewed.