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As a Canadian business, understanding the Labour Market Impact Assessment (LMIA) process and differentiating between high-wage and low-wage categories can feel like navigating through an intricate labyrinth. This comprehensive guide sheds light on the high-wage versus low-wage dilemma within the context of LMIA, providing practical insights for employers seeking to hire foreign workers. We delve into each category’s defining aspects, requirements, and impacts on your business, offering a clear path through the complex world of Canadian immigration policy. Get ready to unlock the mystery of LMIA and step into the world of informed decision-making.

High-Wage and Low-Wage in LMIA

Let’s begin with defining the two pivotal terms in our discussion: high-wage and low-wage positions. In the realm of Canadian immigration, a position is deemed ‘high-wage’ when the offered wage is at or above the median hourly wage for a particular occupation in a specific region where the job is located. Conversely, a ‘low-wage’ position is one where the offered salary falls below the median.

These wage categories, defined by Employment and Social Development Canada (ESDC), guide the LMIA process, determining factors such as the application procedure, advertisement requirements, and employer obligations. With this understanding, it’s clear that an employer’s journey through LMIA is highly dependent on the wage category of the position offered.

Before diving into the unique attributes of each category, it’s crucial to underline the general premise of LMIA. LMIA is essentially a process where ESDC assesses an offer of employment to ensure that the employment of a foreign worker will not negatively impact the Canadian labour market. Employers must prove that they have attempted to hire Canadians and permanent residents before turning to foreign workers.

Given this context, the LMIA process becomes an exercise in balancing the needs of Canadian employers with the protection of the Canadian labour market.

Definition of High-Wage and Low-Wage Positions

In greater detail, the definition of high-wage and low-wage positions is dependent on the median wage level in specific regions in Canada. These median wages vary across provinces and territories and among different occupations within those regions.

For example, a high-wage position in Alberta may be classified as a low-wage position in Prince Edward Island due to regional wage differences. Therefore, understanding the median wage for your specific occupation in your particular region is crucial for correctly categorizing the offered job position.

Moreover, the wage level you offer must comply with the prevailing wage rate for the occupation, which means it must be equivalent to or more than the wage level paid to workers in the same occupation in the region. The prevailing wage rate can be found using Job Bank.

Please note this table is a general comparison and may not cover all specific details or differences between the two streams. Employers should always reference the most current guidelines from Employment and Social Development Canada.

Median hourly wages by province or territory

Province/territoryMedian hourly wages as of May 31, 2023
Alberta$28.85
British Columbia$27.50
Manitoba$23.94
New Brunswick$23.00
Newfoundland and Labrador$25.00
Northwest Territories$38.00
Nova Scotia$22.97
Nunavut$35.90
Ontario$27.00
Prince Edward Island$22.50
Quebec$26.00
Saskatchewan$26.22
Yukon$35.00
See the latest median hourly wages at: https://www.canada.ca/en/employment-social-development/services/foreign-workers/service-tables.html

Key Takeaway: Wage categories are region and occupation-specific. Understanding regional wage variations and the concept of the prevailing wage rate can help you accurately define the offered position and comply with wage requirements.

Key Differences Between High-Wage and Low-Wage Positions

CriterionHigh-Wage PositionLow-Wage Position
Wage OfferedAt or above the provincial/territorial median hourly wageBelow the provincial/territorial median hourly wage
LMIA StreamHigh-wage streamLow-wage stream
Median Hourly Wage Example (British Columbia)$27.50 (or above) as of May 31, 2023Below $27.50 as of May 31, 2023
Application Requirements– May be more stringent in terms of recruitment efforts.
– May have different or additional requirements for transportation, housing, and healthcare of workers.
– Generally aimed at skilled positions.
– Typically less stringent recruitment requirements.
– May involve caps on the number of TFWs or restrictions based on the sector or region.
– Generally aimed at lower-skilled, lower-paid positions.
Intended UseFor filling short-term skills and labor shortages when no Canadians or permanent residents are available for skilled positions.For jobs that do not require high levels of skills and training and where there is a shortage of available Canadian workers.
Program RequirementsMust comply with high-wage position requirements from Employment and Social Development Canada, which may involve minimum recruitment efforts, providing certain benefits, etc.Must comply with low-wage position requirements from Employment and Social Development Canada, which may include different standards for recruitment, housing, and other factors.
Duration of Employment AllowedUp to 3 years as of April 4, 2022, and potentially longer in exceptional circumstances with adequate rationale.Typically shorter durations, aligning with the lower skill level and pay rate of the position.
Impact on Canadian Labour MarketAn LMIA will determine if hiring a TFW will have a positive or negative impact on the Canadian labour market.An LMIA will determine if hiring a TFW will have a positive or negative impact on the Canadian labour market.
Transition PeriodEmployers may experience a change in classification due to updated median wages and need to adjust their applications accordingly.Employers may experience a change in classification due to updated median wages and need to adjust their applications accordingly.

While high-wage and low-wage positions are primarily differentiated by their wage levels, these categories diverge in several other aspects related to the LMIA process. Let’s unpack these differences to facilitate your understanding and preparation for the LMIA application.

Transition Plans

For high-wage positions, employers are required to submit a transition plan along with the LMIA application. This plan should demonstrate the employer’s commitment to reducing their reliance on temporary foreign workers over time. For instance, the transition plan may include measures for hiring and training Canadian citizens or permanent residents for the role.

On the other hand, low-wage employers are not required to submit a transition plan. However, they need to adhere to a different set of regulations, which brings us to our next point.

Cap on Low-Wage Positions

A key regulatory measure for low-wage positions is the cap imposed on the proportion of low-wage temporary foreign workers a business can employ. As of the last available data, as of April 30, 2022, and until further notice, you’re subject to a 20% cap limit on the proportion of TFWs that you can hire in low-wage positions at a specific work location. This cap does not apply to high-wage positions.

For applications received between April 30, 2022, and October 30, 2023, you’re eligible for a cap limit of 30% from employers hiring workers in low-wage positions in the following defined sectors and sub-sectors:

  • Construction
  • Food manufacturing
  • Wood product manufacturing
  • Furniture and related product manufacturing
  • Hospitals 
  • Nursing and residential care facilities 
  • Accommodation and food services

Housing and Transportation

For low-wage positions, employers must also provide evidence that affordable housing is available for their foreign workers. Depending on the work location, employers may be required to provide or arrange transportation for these workers. Such conditions do not generally apply to high-wage positions.

Key Takeaway: Recognizing the unique requirements associated with high-wage and low-wage positions, such as transition plans, caps, and housing provisions, can help employers prepare for a successful LMIA application.

The LMIA Process

The LMIA process, despite its reputation for being complex, can be broken down into manageable steps. Here, we outline the basic procedure, though it’s important to remember that there may be additional steps or requirements for your specific situation.

  1. Job Advertisement: Before applying for an LMIA, employers must advertise the job position across Canada for at least four weeks. The job ad must include details such as job duties, skills required, wage offered, and work location.
  2. Application Preparation: Employers then prepare their application, demonstrating efforts to recruit Canadian citizens or permanent residents and the necessity of hiring a foreign worker. This may include the aforementioned transition plan for high-wage positions.
  3. Submission and Assessment: The completed application is submitted to ESDC/Service Canada. The department then assesses the potential impact of hiring a foreign worker on the Canadian labour market.
  4. Result: If positive, the employer can extend a job offer to the foreign worker, who then applies for a work permit. A negative LMIA means the employer must revisit their application or consider other options.

Key Takeaway: Though the LMIA process can be complex, understanding the basic steps can provide a solid foundation. Always seek advice relevant to your specific circumstances to ensure a smooth application process.

Requirements for High-Wage Positions

While the LMIA process outlined above provides a basic blueprint, the requirements for high-wage positions add an extra layer of complexity. As mentioned earlier, employers offering a high-wage position must submit a transition plan. This plan outlines steps to reduce reliance on foreign workers over time.

Steps could include initiatives to hire or train more Canadians, such as:

  1. Recruiting activities to hire Canadians/permanent residents, including future plans to do so.
  2. Training provided to Canadians/permanent residents or plans to provide training in the future.
  3. Assisting a high-skilled temporary foreign worker to become a permanent resident of Canada.

Moreover, high-wage employers are also subject to stricter advertisement requirements. In addition to advertising the job across Canada, the job must be advertised on the Job Bank and at least two other methods consistent with the advertising practices for the occupation.

Employers must also provide the prevailing wage for the occupation in the region where the job is located. The wage cannot be below this prevailing wage, ensuring foreign workers receive wages equivalent to Canadian employees in the same occupation and region.

Key Takeaway: High-wage position employers face unique requirements, including a transition plan and stricter advertisement norms. Familiarizing yourself with these requirements can better prepare you for the LMIA application.

Requirements for Low-Wage Positions

For low-wage positions, the requirements differ. Employers must ensure they meet the cap for the number of low-wage foreign workers they can hire, which is 10% or 20% of their workforce depending on when they first accessed the TFWP.

Moreover, employers must provide evidence of affordable housing for their foreign workers, which may involve a review of average rental rates in the area and accommodations provided by the employer. Depending on the work location, they may also need to provide or arrange transportation for their workers.

Like high-wage employers, low-wage employers must advertise the job across Canada and on the Job Bank. However, they are also required to conduct additional advertising targeting underrepresented groups in the Canadian workforce, such as indigenous people, persons with disabilities, and youth.

Finally, low-wage employers must offer the prevailing wage, just like high-wage employers, to ensure fair wages for foreign workers.

Key Takeaway: The requirements for low-wage positions, such as workforce caps, affordable housing, and additional advertisement efforts, cater to the unique circumstances of these positions. Understanding these requirements is essential for a successful LMIA application.

Impact on Canadian Businesses

The LMIA process and its high-wage and low-wage categories have a significant impact on Canadian businesses. Let’s explore these effects to help employers make informed decisions.

High-Wage Positions

Employing foreign workers for high-wage positions can bring much-needed skills and talent to Canadian businesses, particularly in industries experiencing labour shortages. However, the requirement for a transition plan could potentially place additional responsibilities on employers, such as investing in training and development programs for Canadians.

Moreover, while the absence of a cap on high-wage foreign workers offers more flexibility for businesses, the stringent advertising and prevailing wage requirements could offset this. Thus, companies must carefully consider these implications before offering high-wage positions to foreign workers.

Low-Wage Positions

Low-wage foreign workers can also be beneficial, especially for industries such as hospitality, agriculture, and home health care, where there is a high demand for such workers. However, the cap on low-wage foreign workers limits businesses’ ability to rely on this labour pool.

The requirement to provide affordable housing and potentially transportation could also impose additional costs on businesses. However, these measures and the specific advertising requirements align with Canada’s social objectives, including fair treatment of foreign workers and job opportunities for underrepresented groups.

Key Takeaway: The impact of high-wage and low-wage foreign workers on Canadian businesses can be significant, affecting various aspects such as workforce planning, cost structures, and social responsibility. Businesses should weigh these impacts against their operational needs and long-term objectives.

Conclusion: Navigating the LMIA Maze

The LMIA process may seem daunting with its high-wage and low-wage distinctions. But with a clear understanding of definitions, differences, requirements, and impacts, Canadian businesses can confidently navigate this process. Embrace the LMIA journey, knowing it can open doors to a global talent pool that can enrich your business while contributing to Canada’s social and economic goals.

Pax Law team

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Frequently Asked Questions

What is the LMIA application fee?

The LMIA application fee is currently set at $1,000 for each temporary foreign worker position applied for.

Are there any exceptions to the requirement for an LMIA?

Yes, there are certain situations where a foreign worker may be hired without an LMIA. These include specific International Mobility Programs, such as the NAFTA agreement and intra-company transferees.

Can I hire a foreign worker for a part-time position?

Employers must offer full-time positions (minimum of 30 hours per week) when hiring foreign workers under the TFWP, which is the program governed by the LMIA process.

Can I apply for an LMIA if my business is new?

Yes, new businesses can apply for an LMIA. However, they must be able to demonstrate their viability and ability to fulfill the conditions of the LMIA, such as providing the agreed wages and working conditions to the foreign worker.

Can a rejected LMIA application be appealed?

While there is no formal appeal process for a rejected LMIA, employers can submit a request for reconsideration if they believe a mistake was made during the assessment process.


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