On November 17, 2021, Employment and Social Development Canada (ESDC) updated their annual wage data relied on by the Temporary Foreign Worker Program (TFWP) to assess the merits of Labour Market Impact Assessment (LMIA) applications filed by employers that require foreign workers to meet their human resource needs.
In order to make an application, employers are first required to recruit domestically in Canada at the median wage rate (also known as the prevailing wage rate) for the occupation as determined by ESDC using their wage methodology for the position that they intend to fill with a foreign worker. ESDC data serves to set the wage benchmark at which the Government of Canada will entertain an application by an employer to fill a position with an international hire. The wages that shall first be advertised by a Canadian employer must be at the median or prevailing average wage in the city or region of employment. If ESDC does not publish wage data for the specific city or region provincially, then the employer is expected to advertise and offer employment at the average wage rate for the nearest large centre in their province or at the provincial average for the occupation. Employers determine if they access the high wage or low wage LMIA application streams by consulting the provincial median wage table.
Since the government sets the wages that must be extended to foreign workers, Canadian employers are expected to advertise vacancies at the wage rate that meets or exceeds the average or median wages paid to Canadians and permanent residents in Canada for the occupation, irrespective of any other factor. Additionally, employment agreements extended to the foreign workers, which must be included with LMIA applications, must stipulate the fixed wages that are at the median wage and/or the advertised wage rate referenced in postings placed by the employer.
Given the importance of ensuring the wages meet the requirements of the TFWP, legal counsel must first verify the prevailing wage for the position and ensure that the employer is comfortable extending the wages necessary to move ahead with preparing for and filing an LMIA application.
It is surprising how many employers are amazed by the government’s labour market data vis-à-vis the prevailing wage. Employers often remark how the wage information cited by ESDC is not aligned with their experience recruiting for the position. Nonetheless, employers must follow the wage rates imposed by the government and the mandatory wage requirements are often enough for employers to discontinue efforts to hire workers abroad. When ESDC modifies the median wages and employers are in the midst of their pre-application recruitment campaign or where their LMIA application is in process, employers are expected to adjust the wages in their advertisements where possible and offer the foreign worker wages in accordance with the newly adjusted wage rate. This will involve confirming in writing to the Program Officer that the wages will be changed per the new wage guideline and a newly signed employment agreement at the new wage must be co-signed for the LMIA to be approved.
Last month, ESDC updated the wages, and this means that all employers with LMIA applications in the works must review the adjusted wage rates and plan accordingly. As LMIA processing times have increased substantially as of late, employers have time to review wages and move quickly to sign the requisite updated employment agreements.
Below are some observations resulting from this recent November 2021 wage update.
NOC 3227 (B) Other technical occupations in therapy and assessment
In October 2021, no wage was specified for City of Ottawa and was recorded as N/A. Hence, an employer was expected to pay the provincial average wage of $18.00 per hour.
The November 2021 wage update now provides a specific wage for Ottawa at $17.00 per hour. Hence, an employer is only required to pay $17.00 to meet the median wage following wage update.
NOC 2174 (A) Computer Programmers and interactive media developers.
The October 2021 median wage for all of Canada changed from $37.95 to $38.46 per hour. For the City of Winnipeg, the median wage rate was $33.65 per hour in October 2021.
As of November 2021, the hourly wage was raised to $38.46 per hour. This has resulted in employers in Winnipeg having to immediately raise wages by almost $10,500 to secure the LMIA for a position where a foreign worker will work 40 hours per week.
NOC 2171 (A) Information Systems Analysts and Consultants
Another example where the median wage has been substantially increased is for NOC 2171 in Edmonton, Alberta. Until November 16, 2021, the median wage for this occupation provincially was $39.42 per hour and jumped more than $8.00 per hour from $39.42/hr to $47.62/hr (the provincial prevailing wage) – that’s an annual salary increase of $17,000 dollars.
Such a rise in the prevailing wage can certainly catch employers off guard and result in them abandoning the LMIA process entirely. It also begs the question as to whether ESDC’s labour market data is both current and reliable?
The median wage for Gas Fitters in the City of Toronto remained the same after the wage adjustment in November 2021. Hence, employers recruiting foreign workers in this occupation are not required to amend their advertisements nor change the terms of the offer to foreign workers in response to changes in the median wage.
Concluding Remarks
Preparing and filing LMIA applications is time consuming and requires ongoing monitoring of Service Canada’s instructions, median wages and LMIA application processing times. Counsel is best advised to inform their clients at the outset that wage expectations can change while the preparation of the LMIA application is in progress. Moreover, employers should be counselled that they are also expected to adjust their wages annually after the LMIA has been approved and while the foreign worker’s LMIA-backed work permit is valid. This is to ensure employers continue to remunerate at the median wage in accordance with IRPR 203(3)(d)
The issue of prevailing wages also impacts intra-company transfers (ICTs) for specialized knowledge workers under the general provision category (C12). Multinational employers are expected to remunerate transferees at the prevailing wage rate for the occupation in Canada. For those with pending ICT applications, employers are well advised to update the application so that wages are consistent with the new wage rates.
LMIA applications can sometimes be tricky. The key is doing extensive labour market research including research about wages offered by similar employers in the same region. There is often a minefield of data on wages available on industry websites, job boards and even on the National Job Bank. Use these tools to bolster your LMIA applications.
