How the 10% LMIA Cap Is Forcing Employers to Make Difficult Staffing Decisions

In an effort to balance labour market needs with the protection of Canadian jobs, the federal government has imposed a 10% cap on the proportion of low-wage foreign workers that most employers can hire under the Labour Market Impact Assessment (LMIA) stream. While this policy aims to ensure employers prioritize hiring Canadians, it is creating unintended—and often harsh—consequences for both employers and temporary foreign workers.

What Is the 10% LMIA Cap?

Under the Temporary Foreign Worker Program (TFWP), employers hiring low-wage foreign workers are generally restricted to a maximum of 10% of their workforce in such positions. This means that if a company has 100 full-time staff, only 10 may be low-wage LMIA-approved foreign workers—regardless of the demand for labour or inability to fill roles locally.

A Policy with Harsh Trade-Offs

What may seem like a straightforward compliance metric is actually forcing some employers into difficult positions. As businesses grow or experience turnover among Canadian staff, their total headcount may increase. Ironically, this can push them over the 10% threshold—even without hiring any additional foreign workers. The only way to reduce the percentage? Terminate the employment of one or more foreign workers.

This puts employers in a lose-lose scenario:

If they retain foreign workers beyond the cap, they risk LMIA refusal for future applications or even compliance penalties.

If they let workers go, they lose experienced staff who are often vital to daily operations.

Real-World Examples

We are seeing reports of employers in sectors such as manufacturing, hospitality, and retail reluctantly terminating the contracts of well-performing foreign workers simply to meet the cap. These are workers who have followed the rules, integrated into the workplace, and in many cases, were hoping to build long-term futures in Canada. Yet due to a rigid policy, their employment becomes collateral damage in a regulatory numbers game.

No Consideration for Turnover or Seasonality

The policy does not account for industries with seasonal demand. Employers often struggle to recruit Canadians for physically demanding or lower-paid roles—especially in rural or remote regions. In these cases, the cap becomes not just a hiring constraint, but a barrier to business continuity.

While the original intent of the policy is valid—to protect Canadian jobs—its current structure is creating instability and unnecessary hardship for both employers and foreign workers.

Conclusion:

Canada’s economic and labour needs are evolving. Policies like the 10% low-wage LMIA cap need to be flexible enough to reflect those realities. When compliance requires employers to terminate loyal workers, it’s time to re-examine the system. A more balanced approach would protect Canadian interests without undermining the valuable contributions of foreign workers who help keep critical industries running.