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Owner/operator Labour Market Impact Assessment and its importance for permanent residence applications in 2017

Labour Market Impact AssessmentAny Canadian employer wishing to employ a temporary foreign worker (“TFW”) in Canada must first obtain authorization from the government, which is typically obtained by proving that the hiring of a TFW will not negatively impact the Canadian labour market. In most cases, the Canadian employer must apply to Employment and Social Development Canada, also known as Service Canada, for approval of the Labour Market Impact Assessment (“LMIA”), previously called a Labour Market Opinion or LMO. A LMIA is a very detailed application process that is subject to a high level of review, and must be completed without error.

Most LMIA applications require the employer to advertise the role to Canadian workers. However, certain LMIA applications are exempt from the advertising requirements. One example is the Owner/Operator LMIA. This category is for foreign nationals who wish to establish or purchase a business in Canada, and want to work in that business in a high-skilled position, often with the aim of immigrating permanently. To qualify as an owner/operator, a foreign national must:

  • demonstrate a level of controlling interest in the business, i.e. a sole or majority shareholder;
  • demonstrate that his or her temporary entry to Canada will result in the creation or retention of employment opportunities for Canadians and permanent residents and/or skills transfer to Canadians and/or permanent residents; and
  • not be in a position to be dismissed, i.e. is not in an employment position where her or she is answerable to someone more senior.

For Owner/Operator LMIAs, no advertising or recruitment is required. The key requirement is that the foreign national owns a business in Canada in which he or she owns a controlling interest of more than 50%. Other requirements include:

  1. a business plan that shows how the owner/operator will fund the business and create or maintain employment, and contains at least a rudimentary financial plan and timeline of events;
  2. active management of the business (i.e. it cannot be a passive investment) in a position that accords with the foreign national’s qualifications and experience with a wage equal to or greater than the median wage requirements for the position; and
  3. and employing at least one Canadian or permanent resident (ideally in the first year as described in the business plan).

This option is available anywhere in Canada.

Once an owner/operator receives a positive LMIA, he or she can obtain a work permit from Immigration, Refugees and Citizenship Canada equal to the validity of the LMIA (usually up to 2 years). Once a work permit is obtained, the owner/operator will, in most cases, be in a position to apply for permanent residence through the Express Entry program.

It is worth noting that the Express Entry Comprehensive Ranking System (“CRS”) has been modified and since November 19, 2016, CRS points awarded for job offers (including those based on Owner/Operator LMIAs) have been reduced from 600 points to either 200 points for senior managerial positions, or to 50 points. This means that an Owner/Operator LMIA-based work permit does not automatically guarantee an Invitation To Apply (ITA) for Permanent Residence, as it inevitably did prior to November, 2016 (although the points will still bolster the applicant’s Express Entry application). It also means that Owner/Operator LMIAs for senior management positions generate a substantially better chance for that person to permanently immigrate to Canada under the Federal Skilled Worker Program.

By Christopher McHardy, Partner

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Employer Advisor, McCarthy Tétrault LLP

Employment and labour lawyers at McCarthy Tétrault LLP
McCarthy Tétrault through their Employer Advisor blogs offers their perspectives on the latest legal developments applicable to the workplace. It provides their insights on legislative and regulatory developments, as well as new case law, while providing practical tips for employers and their human resources professionals when managing the workforce. McCarthy Tétrault is a Canadian law firm that delivers integrated business law, litigation services, tax law, real property law, labour and employment law nationally and globally. Several of their blog posts will be republished with permission on First Reference Talks. Read more
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