As of January 1, 2024 employers are required to annually review the wages of their temporary foreign workers to ensure that they remain within the required prevailing wage for the associated NOC code and location under which their employment is classified.  Prevailing wages are generally updated in November of each year, and the expectation is that, if required, salaries will be adjusted to the updated prevailing wage by the following January 1^st (ie. within one to two months).

Although this requirement will go into affect on a go-forward basis, starting with applications submitted to Employment and Social Development Canada (ESDC) as of January 1, 2024, this undertaking is not necessarily a new one.  For several years, when signing a Labour Market Impact Assessment (LMIA) form, an employer committed to reviewing the conditions of the employee’s work on at least an annual basis.  This new requirement is essentially the same, however the requirement is more structured, specifically focused on wage requirements, timing of updates and can now be enforced by a compliance review.

This change in policy affects the review process for ESDC and does not necessarily apply under the International Mobility Program (IMP) but reviewing salaries for all foreign workers within your organization as per their NOC requirements is a good practice in general.  Salary thresholds for work permit categories such as the C63 Intra-company Transferee category for Specialized Knowledge Workers must be maintained for the purposes of work permit renewal applications.  In addition, all work permits have certain conditions that must be met to maintain the validity of the work permit and it is critical to review this information on at least annual basis as well.

Our recommendation is that reviews be completed both during the annual performance review process and that the review be documented by use of a checklist.  Salaries should then be checked at the end of November or beginning of December each year when prevailing wages are updated to ensure no further changes are updated. 

Our offices have developed such a checklist and would be happy to provide a copy to you upon request here.

Employers can be selected for random audits by both the Temporary Foreign Worker Program (TFWP) at ESDC or the IMP at IRCC to ensure that the company is maintaining compliance with the applicable program.  Approximately 1 in 4 companies will be audited each year, which means that every company can expect to be audited at least once in a four-year period.

In addition to the above, the following are some things that you should keep in mind about immigration compliance programs:

1. There are three separate documents against which a company can be compared for the purposes of an audit: a) the work permit, b) the Offer of Employment form which each employer must submit electronically when hiring a foreign worker under an LMIA-exempt category, and c) the LMIA.
2. In addition to the above documentation, in September 2022 additional sets of compliance requirements were set by both ESDC and IRCC a list of which are set out in the Immigration and Refugee Protection Regulations (IRPR) at Section 209.2 (for IMP based work permits)., 209.3 (for LMIA based work permits) and 209.4 (for all work permits). Additional information on the 2022 Compliance changes can be found here.
3. Once the electronic Offer of Employment is submitted it is a good idea to print a copy of the submitted information for your employee files for easy reference.
4. There are generally 6 conditions listed on a work permit, which include the occupation, location, and employer. In general, if your employee is being moved to a new office, assigned to a new project in a new position or with a related entity, or is being promoted, you must apply for a work permit amendment to change the conditions.  The new work permit must be issued prior to the changes taking effect.
5. Significant changes in salary or benefits to an employee must also be reported to ESDC or IRCC prior to the change taking effect. There is no specific threshold amount that needs to be reported, however if it is an amount outside of the regular course of business, you may want to consult your immigration professional for review and guidance.
6. When signing an LMIA form, a company commits to reviewing the conditions of the employees work on an annual basis, and as of January 1, 2024, this has become a point of review for program compliance with ESDC (as per the above).
7. Salary increases in line with prevailing wage increases are not required to be reported to ESDC prior to executing the increase (in contrast to point 5 above).
8. There are three key ways an immigration audit can be triggered, a) a random selection, b) there is reason to suspect noncompliance, or c) there is a previous history of non-compliance. When you receive written notification of the review it should indicate the reason for triggering the review.
9. Penalties for non-compliance (including not meeting the prevailing wage) can include bans from the program lasting from a two-year period up to a permanent basis, financial penalties (annual maximum of $1 million), web publication of non-compliant companies, and the revocation of previously issued documents. Penalties are cumulative for each infraction and each affected individual.
10. Self reporting of infractions can reduce a company’s liability, but often not significantly so.

One of the ways a company can reduce its liability under the compliance programs is to support their employees in applying for permanent residence.  Once an employee possesses Permanent Residence (PR) status in Canada, they are no longer beholden to the terms and conditions of their work permit or LMIA.  Once PR status is issued, employees can be relocated within Canada, promoted and their salary modified without issue.

In all cases, if your business is subject to a compliance investigation, we recommend that you consult with your legal advisors as soon as possible so that they can guide you through the process. Our MT❯iplus team will be happy to support you in this process and/or answer any questions you may have related to the hiring of temporary foreign workers.