Canada Updates LMIA Rules for Employers and Foreign Workers

Canada Announces Key LMIA Changes in August 2026

Canada introduced two important LMIA-related changes in August 2026. These updates affect employers hiring temporary foreign workers and workers in Canada applying for a new work permit while their employer’s LMIA is still being processed.

1. Low-Wage LMIA Cap Rules Have Changed

First, Employment and Social Development Canada (ESDC) updated how employers with fewer than 10 employees calculate the low-wage LMIA cap.

The change took effect on August 18, 2026.

Previously, the small-employer calculation generally looked at the employer’s workforce across Canada. Now, ESDC looks at the number of employees at each individual work location.

As a result, businesses with multiple small locations may have more flexibility when hiring low-wage temporary foreign workers.

2. How the New Calculation Works

Under the updated rule, ESDC uses a workforce size of 10 when calculating the cap if a particular location has fewer than 10 employees.

Therefore:

• Under the standard 10% cap, an eligible location may hire up to 1 low-wage temporary foreign worker.
• In sectors with a 20% cap, such as construction, food manufacturing, hospitals, nursing and residential care, and certain caregiver occupations, an eligible location may hire up to 2 workers.

However, the exact eligibility still depends on the applicable LMIA rules and the type of position.

3. Why This Matters for Businesses With Multiple Locations

This change is especially important for businesses that operate several smaller locations.

For example, imagine a company has three locations, with seven employees working at each location.

Previously, the employer’s total workforce could affect whether it qualified for the small-employer calculation.

Now, ESDC can assess each location separately.

Therefore, if each location qualifies, the employer could potentially hire low-wage temporary foreign workers at each eligible location, subject to the applicable cap.

4. Who Counts as an Employee?

ESDC considers several types of workers when calculating the workforce at a location.

This can include:

• Full-time employees;
• Part-time employees;
• Canadian citizens and permanent residents;
• Temporary foreign workers;
• Workers with other types of work permits;
• Employees who are temporarily on leave but expected to return;
• Certain vacant positions requested through the LMIA application; and
• Workers with previously approved LMIAs who have not yet started working.

Moreover, a part-time employee generally counts as 0.5 of an employee for the calculation.

5. Some Positions Are Not Affected

It is also important to note that certain positions remain exempt from the low-wage cap.

These include some positions in areas such as:

• Primary agriculture;
• Certain caregiving occupations;
• Short-duration positions of 120 days or less; and
• Certain seasonal industry positions of up to 270 days.

Therefore, employers should check whether their position falls under an exemption before applying.

6. IRCC Extends the Work Permit Grace Period

The second major change came from Immigration, Refugees and Citizenship Canada (IRCC).

Effective August 21, 2026, IRCC extended the concurrent processing period for certain in-Canada TFWP work permit applications.

The period has increased from 60 days to 90 days.

In simple terms, eligible workers now have an additional 30 days to provide proof of their employer’s positive or neutral LMIA.

7. What Is Concurrent Processing?

Normally, an employer needs a positive or neutral LMIA before a worker can receive a work permit through the Temporary Foreign Worker Program.

However, concurrent processing allows certain workers already in Canada to submit their work permit application while their employer’s LMIA is still pending.

IRCC then holds the work permit application while the LMIA application is being processed.

Previously, the applicant had 60 days to provide the required LMIA documentation. Now, they have up to 90 days.

8. Who Can Use the 90-Day Period?

The 90-day extension does not apply to every work permit applicant.

A worker must meet specific conditions.

For example:

• Their current work permit must expire in two weeks or less.
• Their employer must have already submitted a complete LMIA application.
• The LMIA application must have been submitted with enough time for a decision to reasonably have been made.
• No decision must have been made on the LMIA when the work permit application is submitted.

Therefore, workers should not assume that simply having a pending LMIA automatically makes them eligible.

9. Last-Minute LMIA Applications May Not Qualify

There is also an important point for employers.

The LMIA should not be submitted at the last minute and then immediately used to request concurrent processing.

IRCC states that applications involving LMIA submissions made without sufficient lead time will generally only receive consideration in exceptional circumstances.

Therefore, employers should plan the LMIA process well before the worker’s current work permit expires.

10. How the 90-Day Process Works

Once an eligible worker submits their in-Canada work permit application, an IRCC officer can place the application on hold.

The worker then has up to 90 days to provide proof of the positive or neutral LMIA.

If the employer receives the LMIA during this period, the worker can update their application with the required document.

After the 90-day period ends, IRCC can return to the application and make a decision.

Consequently, the new rule gives eligible workers more time while they wait for the LMIA process to finish.

11. Maintained Status Can Help Eligible Workers

Another important point is maintained status.

If a foreign worker applies for a work permit extension from inside Canada before their current permit expires, they may be able to continue working under the conditions of their existing permit while IRCC processes the application.

However, the worker must meet the requirements for maintained status and remain in Canada.

Therefore, submitting an application on time is extremely important.

12. Work Location Is Becoming More Important

Alongside these changes, employers should pay close attention to the actual work location mentioned in an LMIA application.

This is because the work location can affect several parts of the process, including the low-wage cap and workforce calculation.

For example, employers may need to clearly show:

• Where the worker will actually work;
• How many employees work at that location;
• Why the position is needed;
• What duties the worker will perform; and
• Whether the business is genuinely operating.

As a result, employers should make sure that the information in their LMIA application accurately reflects their real business operations.

13. Employers May Need Business Documents

Employers who have not received a positive LMIA within the previous two years may need to provide documents proving that their business is legitimate.

For instance, ESDC may request a valid municipal business licence or another appropriate document showing that the business operates and provides goods or services in Canada.

Depending on the situation, documents such as tax or payroll records may also help demonstrate business operations.

However, ESDC can request additional documents when necessary.

14. What These Changes Mean

Overall, the August 2026 updates bring more flexibility in some situations, while also highlighting the importance of proper planning and accurate documentation.

For employers with multiple small work locations, the new low-wage cap calculation could provide additional hiring flexibility.

At the same time, eligible foreign workers applying from inside Canada now have 90 days instead of 60 days to provide their employer’s LMIA through concurrent processing.

However, these changes do not remove the existing LMIA requirements.

Therefore, employers and foreign workers should carefully review the latest ESDC and IRCC rules before submitting an LMIA or work permit application.

Get in touch with SPS Global

Receive advice on any of your questions regarding immigration. Get in touch with us, experienced immigration consultants from SPS Global. For additional information, contact support@spscanada.com (Canada) or support.amd@spscanada.com (Ahmedabad), or by phone at (1) 905-362-9393 (Canada) or +919586226232 (Ahmedabad).