Canada has introduced new restrictions under the Temporary Foreign Worker Programme that directly affect how foreign employees can be hired. The government has clarified that only the entity controlling and managing the employment relationship can apply for a Labour Market Impact Assessment (LMIA).
This means staffing agencies and Employers of Record (EORs) can no longer sponsor workers through LMIA applications if those employees will ultimately work for another business. The change effectively ends the use of the EOR model for LMIA based work permits, though EORs may continue in other employment arrangements under provincial laws.
The government has also ruled out classifying temporary foreign workers as independent contractors to bypass payroll, tax, or compliance obligations.
Employers must now carefully assess which entity directs and supervises a worker’s day to day activities. If a foreign sending entity continues to control the worker while they are in Canada, the Canadian business may not qualify as the employer for LMIA purposes.
For employees, this shift reduces the pathways available to enter Canada’s labour market through third party arrangements. Workers previously recruited via agencies or EORs will now need direct employer sponsorship, which may limit opportunities but also ensures clearer accountability in the employment relationship.
For HR leaders and businesses, the change requires immediate review of existing LMIA based work permits and renewal plans. Companies must ensure compliance before seeking extensions or new permits. The move underscores Canada’s push for transparency and stronger oversight in foreign worker hiring, placing responsibility squarely on the actual employer managing the workforce.