Canada is reforming its Temporary Foreign Worker Program (TFWP) with significant changes set to take effect on September 18, 2026. The new rules specifically target staffing and employment agencies, barring them from applying for Labour Market Impact Assessments (LMIAs) when the temporary foreign workers they recruit will ultimately be employed by another business.
Defining the True Employer
The core of the revised regulations is to ensure that the company which actually employs and controls a foreign worker bears the responsibility for meeting the TFWP's requirements. Under these updated guidelines, an employer is explicitly defined as the entity that:
- Directly hires the temporary foreign worker.
- Determines their working conditions.
- Pays the worker's wages directly.
Employment and Social Development Canada (ESDC) will scrutinize various factors to determine the true employer, including who dictates the employee's work location, schedule, and methods, assigns job duties, supervises performance, and holds the authority to dismiss the worker. Consequently, staffing or employment agencies recruiting workers for a third-party business will no longer be recognized as employers under the TFWP, preventing them from securing approval to hire temporary foreign workers on behalf of other companies where a direct employer-employee relationship does not exist with the agency itself.
Impact on Foreign Workers and Businesses
These changes hold particular relevance for foreign nationals whose Canadian job arrangements involve staffing companies or Employers of Record (EORs). Instead of an intermediary obtaining an LMIA, the business that directly employs and controls the worker will now be required to meet all program stipulations. The government also explicitly prohibits employers from classifying temporary foreign workers as independent contractors when an employer-employee relationship clearly exists. Misclassification can lead to administrative monetary penalties and potential bans from the TFW Program.
Recruitment Fees and Compliance
Canadian regulations continue to place the onus on employers to ensure that recruitment fees are not charged to or recovered from temporary foreign workers, either directly or indirectly. These prohibited costs encompass fees paid for assistance in finding or securing employment, as well as certain third-party recruitment expenses. Non-compliance can result in a negative LMIA decision.
Broader Compliance Requirements for Businesses
Businesses applying for an LMIA must demonstrate the legitimacy of both the job offer and their operations. They are also obligated to comply with a range of requirements covering wages, working conditions, employment agreements, and, where applicable, limits on the number of low-wage foreign workers. For employers using LMIA Online, applications can be submitted up to six months before the anticipated job start date.