Canada Work Permit 2024/25 | Key Changes Affecting Employers and Foreign Workers

Canada is considering significant modifications to its Temporary Foreign Worker Program (TFWP), with new laws scheduled to go into effect on October 28, 2024 and November 8, 2024. These reforms are designed to solve labour shortages while emphasizing the hiring of Canadian workers. The Canadian government aims to create a more equitable labour market by tightening wage rules and strengthening corporate compliance checks.

These changes will affect both firms that rely on foreign labour and workers wanting to find work in Canada. Understanding these changes is critical for navigating Canada’s new work permit system successfully.

Key Changes in Canada’s Work Permit System

In 2024, Canada will implement many new laws in its work permit system, mostly through the Temporary Foreign Worker Program. These reforms include stronger business legitimacy criteria for employers, higher wage thresholds for foreign workers, and stricter rules in the low-wage category. Let’s delve deeper into each of these changes and consider the implications.

1. Starting October 28, 2024: New Business Legitimacy Requirements

One of the most notable changes is the increased verification of business legality. Beginning October 28, 2024, employers will no longer be permitted to use attestations from accountants or attorneys to demonstrate the legitimacy of their firm. Instead, the government would use current employer registrations and agreements with provincial and territorial governments to ensure that a business is legitimate.

This amendment intends to combat fraud in the TFWP by requiring that only legal, registered enterprises use foreign workers. Employers must maintain current registrations with appropriate authorities and follow all provincial or territorial rules. Businesses that fail to comply will no longer be eligible to hire foreign workers under the program, potentially causing a substantial setback for industries that rely largely on international expertise.

2. Beginning November 8, 2024: Increased Wage Thresholds for High-Wage Stream Jobs

Another significant alteration will affect foreign workers employed through the high-wage stream. Beginning November 8, 2024, the minimum pay for these workers shall be 20% higher than the median wage in the province or territory where the job is located. Depending on the locality, this might result in an hourly wage increase of $5 to $8.

This reform aims to encourage firms to hire Canadian workers by making overseas labour less cost-competitive. This revision is expected to shift approximately 34,000 jobs from the high-wage stream to the low-wage stream, resulting in an estimated 20,000 fewer overall TFWP approvals.

Employers who rely on foreign labour may need to rethink their wage structures to remain compliant. While this may result in higher costs for enterprises, it is likely to limit the number of foreign workers in non-essential professions and increase reliance on domestic labour.

3. Stricter rules for employers in the low-wage stream.

The low-wage stream of the TFWP will also face harsher constraints under the new legislation. Employers in this stream must offer suitable housing and arrange for return transportation for their employees. Furthermore, organizations must make additional recruitment efforts to hire Canadian employees before turning to international talent.

Employers in non-essential industries will be limited to hiring up to 10% of their workers through the TFWP, with few exceptions for high-demand sectors like healthcare and agriculture. Applications for low-wage jobs in areas with a 6% unemployment rate or above will not be accepted. This law is especially relevant in Census Metropolitan Areas (CMAs) with high unemployment, where the government intends to favour domestic workers.

These new laws are meant to minimize the country’s reliance on low-wage immigrant labour, allowing Canadian workers additional options. Employers in industries like retail and hospitality, which frequently rely on foreign labour, will need to change their hiring methods to match these new standards.

Canadian Labour Market and Unemployment Statistics

The TFWP reforms are part of Canada’s larger endeavour to reduce unemployment and labour market imbalances. To understand the rationale behind these adjustments, we’ll look at Canada’s unemployment statistics:

• Youth Unemployment: As of September 2024, Canada’s youth unemployment rate was 13.5%, more than double the national average of 6.5%. This high rate shows that more needs to be done to create job possibilities for young Canadians.
• Indigenous Workers: In 2023, the unemployment rate among Indigenous people was 7.7%, compared to 4.5% among non-Indigenous Canadians aged 25-54. The government intends to lessen inequality by encouraging firms to hire from underrepresented communities.
• People with Disabilities: In 2022, people with disabilities had an employment rate of 65.1%, compared to 80.1% for those without disabilities. The government hopes that by lowering its reliance on foreign labour, more firms will take advantage of these underutilized labour pools.

These figures emphasize the importance of encouraging domestic hiring, which is a primary purpose of the TFWP changes. By limiting access to foreign workers, the government hopes to generate more possibilities for these groups, resulting in a more inclusive labour market.

Impact on Employers and Employees

The planned TFWP amendments will have a significant impact on both businesses and foreign workers. Here are some of the main implications:

1. Higher costs for employers

The mandate for high-pay firms to raise compensation by 20% above the province median salary will raise labour costs. Businesses that rely significantly on foreign workers may experience diminished profitability, particularly in areas with small margins. Employers must assess the costs of acquiring foreign talent against the possible benefits of using local personnel.

2. Reduced program access for employers in low-wage industries.

The new rules in the low-wage stream will make it more difficult for firms to recruit overseas workers. Employers in industries such as retail, hotel, and food service will confront new obstacles as recruitment efforts become more stringent and the number of foreign workers that they may hire is limited. Those in high-unemployment areas may be unable to use the TFWP since applications for low-wage jobs will be limited.

3. Promoting Domestic Hiring

The major goal of these policies is to encourage firms to hire more Canadian workers. The government expects that by boosting pay requirements and enforcing regulations on foreign labour, firms will turn to underrepresented groups including adolescents, Indigenous people, and workers with impairments. This transition could lead to increased economic involvement among these groups, reducing Canada’s reliance on temporary foreign labour.

Conclusion

The proposed modifications to Canada’s work permit legislation under the Temporary Foreign Worker Program indicate a significant shift in the country’s labour market approach. These measures, which take effect on October 28 and November 8, 2024, aim to lessen reliance on foreign labour while prioritizing the hiring of Canadian workers. Employers will face stronger regulations about business validity, greater pay requirements, and enhanced compliance checks, making it critical for firms to adjust swiftly.

For foreign workers, the changes imply fewer job options under the TFWP, particularly in low-wage sectors. These measures, however, aim to create a more balanced labour market with more possibilities for Canada’s underrepresented groups. As the government continues to evaluate the impact of these changes, businesses and employees alike must remain aware and proactive in adapting to the new work permit restrictions.

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