Canada has introduced a change to the Temporary Foreign Worker Program (TFWP)
That could allow certain employers operating multiple small work locations to hire more low-wage temporary foreign workers.
The change was introduced through an Employment and Social Development Canada (ESDC) update published on August 18, 2026. Under the revised calculation, eligible employers with fewer than 10 employees at a particular work location may be able to hire one or two low-wage temporary foreign workers per location, rather than having the workforce cap calculated only on the employer’s total workforce nationwide.
What Has Changed?
The federal government normally limits the proportion of low-wage temporary foreign workers an employer can employ through the TFWP. The standard cap is generally:
- 10% of an employer’s workforce for low-wage positions.
- 20% for certain in-demand sectors, including health care, construction, and food manufacturing.
Under the new calculation, employers with fewer than 10 employees at a particular work location can use the alternative calculation based on the workforce at that individual location.
|
Requirement |
Updated Rule |
|
Standard low-wage cap |
10% of workforce |
|
Certain in-demand sectors |
20% |
|
Small work location |
Fewer than 10 employees |
|
Alternative calculation |
Based on employees at the individual work location |
|
Maximum under alternative calculation |
1 or 2 low-wage workers per qualifying location |
|
In-demand sectors |
Up to 2 workers per qualifying location |
The two-worker limit applies to employers subject to the 20% cap, while the one-worker limit applies to employers subject to the standard 10% cap.
Why the Change Matters for Multi-Site Employers
Before the update, the alternative calculation for employers with fewer than 10 employees was applied based on the employer’s workforce nationwide. The revised approach allows the calculation to be made at the individual work location when the employer has fewer than 10 employees at that location. This can be particularly relevant to businesses that operate multiple smaller locations, such as companies with several branches, facilities, or work sites.
For example, an employer operating several locations could have fewer than 10 employees at each individual site even though its total workforce across Canada is considerably larger.
Under the revised calculation, each qualifying work location may be assessed separately for the low-wage workforce cap.
Who Can Benefit From the Updated Rule?
The change is primarily relevant to employers using the low-wage stream of the Temporary Foreign Worker Program. An employer must still satisfy all applicable TFWP and LMIA requirements. The new workforce calculation does not eliminate the requirement to demonstrate that hiring temporary foreign workers is justified under the program.
Employers must also comply with requirements relating to recruitment, wages, working conditions, transportation, housing, health insurance, and other employment obligations.
How Is the Workforce Calculated?
For the purpose of the low-wage cap, the workforce at a particular location can include:
- Full-time employees.
- Part-time employees.
- Temporary foreign workers with approved LMIAs who have not yet started working.
- Vacant positions for which the employer is requesting workers through LMIA applications.
Part-time employees who work an average of less than 30 hours per week are counted as 0.5 of an employee for the calculation. Employers should therefore carefully calculate their workforce before determining how many low-wage positions they may be able to request.
What Is a Low-Wage Position?
The wage offered to the foreign worker determines whether the position falls under the high-wage or low-wage stream. For the TFWP, the low-wage stream applies when the offered wage is below the applicable provincial or territorial hourly wage threshold.
The thresholds were updated effective July 17, 2026. For example, the current threshold in Ontario is $36.92 per hour. The applicable threshold varies by province or territory and should be checked when preparing an LMIA application.
High-Wage Positions Are Not Subject to This Cap
The workforce cap discussed in the new measure applies to the low-wage stream. Positions that meet the applicable requirements for the high-wage stream are not subject to the same low-wage workforce cap. However, employers must still satisfy the requirements of the high-wage TFWP stream.
Simply increasing the wage offered to a worker does not automatically make a position eligible for the high-wage stream. The offered wage must be assessed against the applicable threshold and prevailing wage requirements.
LMIA Still Required
The new workforce calculation does not remove the Labour Market Impact Assessment requirement. For a foreign worker to be issued or renew a work permit through the TFWP, the employer generally needs a positive or neutral LMIA from ESDC.
The LMIA process assesses whether hiring the temporary foreign worker is expected to have a positive, neutral, or negative effect on Canada’s labour market.
Employers must therefore continue to meet the applicable recruitment and advertising requirements and demonstrate that they have made appropriate efforts to recruit Canadians and permanent residents where required.
Additional Requirements for Low-Wage Workers
Employers hiring workers through the low-wage stream must meet additional obligations. Depending on the circumstances, these can include:
- Paying for the worker’s transportation to and from Canada.
- Providing access to suitable housing.
- Ensuring housing costs are less than 30% of the worker’s pre-tax income.
- Purchasing private health insurance when the worker is not covered by the applicable provincial or territorial health insurance plan.
- Meeting applicable workplace safety and employment standards.
These requirements remain applicable despite the updated workforce calculation.
Rural Employers Have Separate Temporary Measures
The federal government has also introduced temporary measures for eligible employers in rural areas. From April 1, 2026, to March 31, 2027, eligible rural employers in participating provinces and territories may benefit from measures including a 15% low-wage cap instead of the usual 10% cap, subject to the applicable conditions. Some employers may also be able to retain their existing proportion of low-wage temporary foreign workers.
These rural measures are separate from the August 18 change affecting employers with fewer than 10 employees at a given work location. Participation also varies by province or territory, so employers should verify whether the temporary rural measures apply to their location.
Restrictions in High-Unemployment Urban Areas Remain
The new workforce calculation does not eliminate other restrictions affecting the low-wage TFWP. Since September 2024, the federal government has maintained a policy restricting the processing of LMIA applications for low-wage positions in census metropolitan areas where the unemployment rate is 6% or higher, subject to specified exceptions.
Employers should therefore check the applicable unemployment rate and exemptions before submitting an LMIA application.
TFWP and International Mobility Program Are Different
The TFWP is not the only way employers can hire foreign workers in Canada. Many Canadian work permits are issued through the International Mobility Program (IMP), which generally does not require an LMIA.
What This Means for Employers
The updated rule may provide greater flexibility for businesses that operate multiple small work locations. An employer that previously had to calculate its low-wage workforce cap across its entire Canadian workforce may now be able to use the number of employees at an individual qualifying work location when applying the alternative calculation.
However, the change does not guarantee LMIA approval or automatically authorize an employer to hire foreign workers. Each position must still satisfy the applicable TFWP requirements, and ESDC will assess the LMIA application under the rules in effect at the time of application.
What This Means for Foreign Workers
The change may create additional opportunities for foreign workers where an employer is eligible to use the revised calculation and successfully obtains the required LMIA. However, foreign workers cannot independently apply for a low-wage TFWP position without an eligible employer.
The employer must first satisfy the applicable requirements and obtain the necessary authorization through the LMIA process before the worker can proceed with the corresponding work permit application.
Key Takeaways
Canada’s latest TFWP update introduces several important changes:
- ESDC updated the low-wage TFWP requirements on August 18, 2026.
- Certain employers with fewer than 10 employees at a given work location can now use an alternative workforce-cap calculation based on that individual location.
- Eligible employers may be able to hire one low-wage temporary foreign worker per qualifying location under the 10% cap.
- Employers in applicable 20% sectors may be able to hire up to two workers per qualifying location.
- The change can be particularly relevant to multi-site employers with several small work locations.
- The workforce calculation can include full-time employees, part-time employees, certain approved temporary foreign workers, and requested vacant positions.
- The LMIA requirement remains for TFWP positions.
- Low-wage employers must continue to meet recruitment, wage, housing, transportation, insurance, and other program requirements.
- Separate temporary measures may provide additional flexibility for eligible rural employers.
- Restrictions on low-wage LMIA applications in certain high-unemployment urban areas continue to apply.
- The International Mobility Program is separate from the TFWP and is not subject to this low-wage workforce cap.
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This article is provided for informational purposes only and does not constitute legal or immigration advice. Express Entry draw sizes, CRS cut-off scores, provincial nomination requirements, immigration programs and federal policies may change over time. Candidates should verify the latest information with Immigration, Refugees and Citizenship Canada (IRCC) and the relevant provincial or territorial government before making immigration decisions or submitting an application.
