Employment and Social Development Canada (ESDC) has overhauled its Labour Market Impact Assessment (LMIA) guidance, making it considerably harder for staffing and employment agencies to hire temporary foreign workers on behalf of third parties. The new rules, effective September 18, redefine a “genuine employer” as the entity that directly hires, supervises and pays the worker. Agencies that simply place workers with client firms no longer qualify. Service Canada officers are now instructed to probe who truly controls the worker’s schedule, compensation and dismissal rights. Misclassification could trigger application refusals, compliance inspections or—as a worst-case scenario—fines of up to CAD 1 million and multi-year bans from the Temporary Foreign Worker Program (TFWP). The guidance also bars businesses from treating TFWP employees as independent contractors, a practice long criticized for depressing wages and undermining worker protections. Related companies that shuffle workers among subsidiaries must demonstrate clear lines of supervision and payroll responsibility. While ESDC says the update is aimed at protecting vulnerable workers, the immediate burden falls on employers, especially in construction, IT consulting and agriculture, where third-party labour supply is common. Companies that rely on staffing solutions should audit their contracts and payroll systems quickly; failing to do so could stall projects that depend on foreign talent. The policy dovetails with Ottawa’s broader effort to curb temporary immigration growth and ensure that the remaining inflows address demonstrable labour shortages rather than exploitable cost gaps. Employers with urgent hiring needs may increasingly turn to LMIA-exempt pathways—such as the Global Skills Strategy or Intra-Company Transfer—but those avenues, too, are under policy review.
Source: Immigration.ca
