What is Labour Market Impact Assessment (LMIA): The Ultimate Guide

If you’ve been thinking about hiring a foreigner worker for your businesses in Canada, then you may have already started asking yourself, what is LMIA in Canada? 

You’ll need to know how to go about obtaining the document so your foreign workers have legal entry into the country. Before you can even put your employees on payroll in Canada, you have to make sure they qualify for LMIA.

In most cases, employers will have to apply for LMIA before hiring any foreign workers. The application process can be lengthy. Plus, the Canadian government has a long list of specific requirements that employers must meet before they can hire a foreign worker from somewhere like the United States, the United Kingdom, or India.

In this guide, we’ll break down the basics of the Labour Market Impact Assessment to make hiring foreign workers for your Canadian business as simple an experience as possible. 

What is a Labour Market Impact Assessment (LMIA)? 

A Labour Market Impact Assessment, or LMIA, is a document that most Canadian employers need before hiring a foreign worker for their company.

As an employer, seeking a foreign worker in Canada poses quite a few challenges. In the eyes of the Canadian government, reliance on temporary foreign workers is not seen as optimal, especially if you can hire a Canadian citizen to fill a position. The government wants to bolster the economy and reduce unemployment levels for Canadian citizens.

Before filling a position at your company with a non-Canadian employee, you will need to prove that you couldn’t find anyone in Canada that could properly fill the job and show a positive LMIA. 

Once a business receives a negative LMIA application, it will diminish their chances of success if they decide to re-apply in the future. 

What is a positive LMIA?

A positive LMIA demonstrates that you can’t find someone with Canadian Citizenship to fill the job. You will need to apply for a LMIA on behalf of your temporary foreign worker or employee before they can be approved for a Canadian work visa. LMIA applications are extremely detailed and require a lot of documentation on the part of the employer. 

The employer in Canada must advertise the position for at least four weeks on the National Job Bank (or provincial equivalent), as well as attend a job fair or pursue recruiting opportunities in the area.

If employers are unable to fill the position with a Canadian citizen, or if no Canadian employee has the proper experience, then the employer may begin the LMIA process on behalf of the foreign citizen they want to fill the position. 

What does an LMIA confirm? 

In simple terms, an LMIA confirms that: 

• There is a need for a temporary foreign worker to fill a position 

• No Canadians or permanent residents in the country are available to fill the position 

Before beginning the application process, employers should ask themselves all of these questions to confirm they need a temporary foreign worker in the Canadian labor market: 

1. Is the salary offered to the foreign worker consistent with the median hourly wage for the occupation in the area the position is located?

2. Are the working conditions consistent with labor laws? 

3. Is there a labor shortage for that occupation in the area the position is located?

4. Is there an ongoing labor dispute in the company and/or industry?

5. Has the Canadian employer undertaken recruitment efforts in order to find a Canadian to fill the position before hiring a foreign employee? 

6. Will the foreign worker be able to transfer unique skills or expertise to Canadians?

7. Will hiring the foreign worker(s) help to create jobs for Canadians? 

8. What wage and wage-skill will the worker be paid? 

LMIA requirements 

Health insurance

All international and foreign workers must have health insurance before entering Canada. You can apply for a travel or international plan. 

Health insurance must cover: 

• Medical care 

• Hospital care

• Repatriation 

The Canadian government does not recommend obtaining this insurance until receiving your LMIA confirmation letter or port of entry letter (POE). 

Determine if the worker qualifies for an LMIA exemption

Some temporary foreign workers may be exempt from LMIA, but they are few and far between, with specific qualifying circumstances. 

If you’re deciphering whether or not the temporary foreign worker you’re trying to hire would be exempt from needing LMIA documentation, you can review the LMIA exemption codes or work permit exemptions on the Canadian government website. Choose the work permit code that is relevant to your hiring situation. 

If an exemption applies to your employee, you’ll need to either: 

• Include the exemption code in your offer letter to the employer, so they can prove it in their temporary work permit application

Or

• Contact the International Mobility Workers Unit for workers outside Canada and coming from a country where their visa is exempt 

If the temporary foreigner is not exempt from providing LMIA documentation with their work permit, then the employer will need to apply for an LMIA on their behalf. 

Determine wage

Before hiring a temporary foreign worker, you’ll need to determine if the worker is high-wage or low-wage. 

These wages are set by the ESDC (Employment and Social Development). Any position where the prevailing wage rate is below the provincial/territorial minimum wage is considered a low-wage job. Positions where the prevailing wage is at or above the territorial median wage is considered high-wage. 

To determine which wage stream to follow:

1. Identify the job’s skill level using the NOC Matrix

2. Decide whether the job is considered high or low skilled

3. Go to jobbank.gc.ca and click “By wages” 

4. Locate the area of the job 

5. Identify the “Median Wage” for the specific location. This will give you the “prevailing wage rate” for the specific job in that occupation 

6. Determine the median wage rate in that provincial/territorial location 

7. If the prevailing wage rate is below the territorial median wage, then it would be low-wage. If the prevailing wage rate is at or above the territorial median wage rate, then it is considered high-wage 

High-wage vs low-wage workers

High-wage workers

If you hire a high-wage foreign worker, you’ll need to provide a transition plan in the LMIA documentation and pay them at a wage that is equal to or above the given median wage in the area they’ll be employed in. 

Territorial median hourly wages will exist in Canada, so make sure you’re researching the specific region you need to hire within. 

The transition plan for high-wage workers falls into Schedule C of the LMIA application form. 

This shows the specific commitments the employer has agreed upon to host the temporary foreign worker in that location, including their salary requirements.

Low-wage workers

For low-wage workers, a transition plan is not needed on the employer's part. 

Unlike high-wage workers, low-wage workers are subject to a cap on the number that a business can employ.

If a Canadian employer has more than 10 employees, a maximum of 10% of their workforce can be low-wage temporary foreign workers. 

LMIA processing time

The LMIA processing time may take a couple of weeks, or a couple of months. 

Canada receives a large number of LMIA applications each year. Applying early for a position will help increase your chances of a successful application. (Note: Failure to comply with the formal requirements or not knowing the requirements can result in application denial.)

However, general application processing time is: 

• For high-demand occupations (skilled workers), the highest paid top 10% occupations, or short duration work periods (120 days or less) expect to wait 10 business days for LMIA application approval. The 10-day service standard is limited to the skilled trades where the prevailing wage rate is at or above the provincial/territorial median wage

• For low-wage workers, the processing time is around one month depending on the number of applications the Canadian government receives. 

To know exactly how long to expect for processing time, you should research exactly where your wage or occupation falls for demand and importance. 

• For example, in-home caregivers are in the middle of both wage streams and occupational significance, so the processing time is between 10 days and one month, or an average of 17 days. 

• For engineering or tech, the average processing time is around 14 days, as it’s considered a high-skilled position. 

How does the government make a decision for LMIA? 

After you fill out all of the necessary paperwork and determine that you have a need for a temporary foreign worker, you must prove your case to an LMIA officer.

This includes: 

1. The means you’ve already taken to recruit or train a Canadian for the position

2. What challenges you had recruiting a Canadian or permanent Canadian citizen 

3. Your plan to train a Canadian so the business can replace the temporary foreign worker with a permanent Canadian citizen after they’ve helped build the position (you don’t want to become reliant on a temporary foreign worker, as their stay is limited)

4. The way the Canadian Labor Market would benefit from hiring a temporary foreign worker

5. The employer’s intention to abide by all Canadian labor laws that relate to hiring a foreign worker

If you follow all of the guidelines and prove a plausible case to a LMIA officer, then you should be able to hire a temporary foreign worker for the position. 

LMIA processing and application fee

For every job position being requested, the employer will have to pay a $1,000 CAD application fee. This is not per application, but per position. Workers are not responsible for paying this fee. 

For example, if you’re seeking to hire 10 temporary foreign workers, you will need to pay $10,000 CAD. 

LMIA-exempt vs. LMIA-approved workers 

The application process for LMIA-exempt and LMIA-approved workers will be similar once the foreign worker has been approved for LMIA. 

You’ll need to send the employee an offer letter, complete the employer attestations and certifications, pay the compliance fee, and give the worker their rights to work in Canada. 

After all of the above steps have been completed, temporary foreign workers can apply for a work permit. 

There are a few basic steps to hiring a Canadian temporary foreign worker:

• Get a labor market impact assessment and submit an offer of employment 

• Have the worker apply for a work permit 

• Explain the application process to the worker

Employer responsibilities 

Employers hiring expats will need to create an account to access the Employer Portal on the official Canadian government website; and so will their foreign workers. Once you’re both signed up, you will send an invitation to apply to the worker. 

You will have to do this for both LMIA-approved applicants and foreign workers exempt from LMIA. Once your LMIA is approved, you will need to provide your foreign worker with a copy of their LMIA documentation with a confirmation letter. 

In Canada, you aren’t allowed to charge foreign workers with any type of recruitment fee, whether directly or by anyone working on behalf of your business. 

Employment letters should always be: 

• Written in the foreign national’s native language

• Signed by both the employer in Canada and foreign worker

• Include information on the occupation, wage, and all other working conditions 

• Give new employee information on their rights as a worker in Canada 

Hire a foreigner worker without LMIA 

As stated above, if an employee is exempt from LMIA (in rare cases), they will go about applying for a work permit after the employer has sent them an offer letter. Hiring a foreign worker without LMIA does give a bit of express entry to Canada, especially compared to going through the entire LMIA process. 

Make sure that you’re always checking the work code exemptions to prove  that the foreign worker is exempt from providing LMIA documentation. 

If work code exemptions exist, then the employer will need to: 

• Send an offer letter through the Canadian portal 

• Complete the employer attestations and certifications 

• Pay the employer compliance fee in their Employer Portal 

Temporary Foreign Worker Program (TFWP) through LMIA 

Another option to hire foreign workers in Canada is through the Temporary Foreign Workers Program that the country has set up; you will need to show a positive LMIA. The Temporary foreign worker processing time is the same as the LMIA. 

The TFWP allows workers to stay in the country for 6 months, with the option of extension. 

During their stay, the foreign worker is only allowed to work for one employer. Once the work permit has expired, the worker can apply for an extension. Otherwise, they leave Canada. 

Federal Skilled Trades Program 

The Federal Skilled Trades Program is another express entry way for skilled workers to become permanent residents.

To be eligible, workers must:

• Meet the required language levels

• Have at least two years of full-time work experience in the skilled trade in the five years previous to applying 

• Meet the job qualifications for that skilled trade, as set forth by the National Occupational Classification 

• Have a valid job offer for full-time employment for a total period for at least 1 year, or have a certificate of qualification in that skilled trade issued by a Canadian provincial, territorial, or federal authority  

Provincial Nominee Program

The Provincial Nominee Program is another way that temporary foreign workers are able to gain access to a temporary work visa without LMIA confirmation and documentation. This is also a way for skilled refugees to gain entry or express entry legally into Canada. 

In 2022, Canada accepted a record number of refugees into the country. Through the Provincial Nominee Program, refugees from Mexico, Colombia, Iran, and Haiti were able to find permanent stay visas or reasons to seek asylum. 

The program is for foreign workers who: 

• Have the skills, education, and work experience to contribute to a specific province or territory

• Want to live in that province

• Want to become a permanent resident of Canada

Each province and territory has its own “streams” or target groups they focus on, including:

• Students

• Business people or startups

• Skilled workers

• Semi-skilled workers 

Work permits and visas in Canada

Once foreign workers have been approved for LMIA (or have proved that they qualify for a work code outside of LMIA), then they can apply for a work permit in Canada. 

Applicants will need to provide their LMIA number and their job offer in their work permit application. The employment offer from the employer needs to include: 

• Name of employer

• Address of employer

• Occupation title

• Salary

• Duration of work

• Hours of work

The application fee is $125 CAD. 

During the LMIA application, employers have to specify the length of employment for the temporary foreign worker. Officers issuing a work permit for a temporary worker that has LMIA documentation will not issue the work permit for longer than what was specified in the LMIA application. 

Temporary foreign worker permits are normally only good for 1-2 years in Canada, as the government is hoping that the employer will find a way to fill the position with a Canadian employee. 

Work visa

The terms “work visas” and “work permit” are interchangeable in Canada. The only way for foreign workers to obtain a work permit or visa is to go through the LMIA process or be LMIA exempt, have a skilled trade that makes you exempt, or go through the Provincial Nominee Process. 

Visa sponsorship

In Canada, employers don’t necessarily “sponsor” candidates; they can only bring a foreign worker into the country through LMIA approval or through a job offer if the worker is LMIA-exempt.  

Permanent residency

To be eligible for permanent residency in Canada, you need to: 

• Be a permanent resident 

• Live in Canada for 3-5 years

• File your taxes in Canada

• Pass a citizenship tests 

• Prove language skills

All of these steps usually are completed after you’ve been living in Canada as a temporary foreign worker. 

Other LMIA exemptions

Atlantic Immigration Program 

Another way to gain permanent residency in Canada as a foreigner is through the Atlantic Immigration Program.

This program is designed for skilled workers and international graduates who want to live in 1 of Canada’s 4 Atlantic provinces: New Brunswick, Nova Scotia, Prince Edward Islands, or Newfoundland and Labrador. 

The program helps employers find qualified candidates to fill positions in these provinces that they weren’t able to fill locally. 

Francophone Mobility Program 

The Francophone Mobility Program issues work permits for French-speaking foreigners who want to live and work in a Francophone community outside of Quebec. You must have a job offer with a National Occupation Code Skill of 0, A, or B. The program is open to any nationality. 

For this mobility program, an LMIA application is not required.

Hiring in Quebec

LMIA operates a bit differently in the territorial region of Quebec.

To hire in the province of Quebec for employment periods over 30 day consecutive days: 

• You will need to submit a LMIA documentation to the ESDC with Quebec’s ministère de l’Immigration, de la Francisation et de l’Intégration (MIFI) (in French only). Your application will be denied if you fail to submit both documents correctly and together will lead 

• All LMIA applications in Quebec must be submitted in French, with the exception of in-home caregivers

• All applications must be submitted in paper

Quebec Experience Program

This is another program that provides a fast-track or express entry way for foreign graduates and those with work experience in Canada to obtain a Quebec selection certificate. The certificate is a mandatory part of being granted permanent residency in the area by the government. 

Business immigration and social development in Canada

The Canadian labor market is home to a global talent stream. The country is also home to an exciting startup ecosystem and other business ventures. For these reasons, more businesses will need to find solutions for hiring within the country. 

The boom in international hiring is impacting existing tech hubs in Ontario and British Columbia, as well as emerging ones in provinces like Quebec, Nova Scotia, New Brunswick, British Columbia, and Newfoundland and Labrador. 

How Justworks Provides International EOR Services for Small Business

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Our team of local labor lawyers and experts ensure that your small business always remains compliant while expanding internationally. We handle the responsibility side of things so you can focus on what matters: managing your team. 

Learn more about how you can expand your international business through Justworks, and get started today. 

FAQs

How do I get a LMIA for Canada? 

Obtaining a LMIA in Canada can be a tricky process. The employer you’re wanting to work for will need to prove that they can’t fill the position with a Canadian citizen and have actively tried to fill the position with Canadian workers. Once the employer has proven they can’t, they will need to submit a long application, be approved, and then give you a LMIA identification number for your work permit application. 

How much does LMIA cost in Canada? 

In Canada, it is up to the employer to pay the LMIA cost. LMIA in Canada costs $1,000 CAD per requested position. So, for 10 LMIA applications, the cost would be $10,000 CAD. 

Do I qualify for LMIA? 

Qualifying for LMIA can be a lengthy process. You will need to know exactly what wage the job you’re wanting to apply for costs and prove that a non-Canadian resident can’t fill the position. LMIA applications are all dependent upon the employer. 

What is LMIA in Canada? 

LMIA in Canada stands for Labour Market Impact Assessment. It is a document that employers are required to obtain if they want to hire a temporary foreign worker to fill a position without hiring a native or permanent Canadian worker. 

What is the National Occupation Classification (NOC)?

The National Occupation Classification in Canada (NOC) is the system in Canada that gives a taxonomy for all jobs with codes and descriptions of where the job falls for skill and wage.