What Changes Does ESDC Approve To The Owner-Operator LMIA Effective April 1, 2021?
Effective April 1, 2021, an “owner/operator” (foreign entrepreneur having a controlling interest in the Canadian business, at least 50.1% of the shares) willing to come and manage the business in Canada will be required to offer this job to qualified Canadians or permanent residents first.
Thus, Service Canada/ESDC [the Department of Employment and Social Development of Canada] removed the exemption (i.e., “variation: no advertisement or recruitment is required”). ESDC made it mandatory for all Owner/Operator LMIA applications to conduct reasonable efforts to hire Canadians and permanent residents before offering a job to a foreign worker.
What Do Changes To The Owner-Operator LMIA Mean For Entrepreneurs?
For example, a foreign entrepreneur buys Canadian business and would like to apply for a work permit and PR to run and manage this company. Before doing so, the Canadian employer will need to advertise this position, i.e., in many cases, CEO, President, General Manager, etc., in the Canadian labor market. They will need to conduct recruitment efforts. This means that a job posting content, the number of job ads, and how long they run must meet Service Canada/ESDC’s minimum advertising requirements. Qualified Canadians and PRs must be identified through the recruitment process and interviewed. If qualified Canadians or PRs are not available, only then an owner/operator can apply for an LMIA. Still, they will be required to report how many applications were received from Canadians and PRs, and why those applicants were not qualified or offered a job.
Assuming that in most instances, an advertisement will be for senior executive/managerial (“owner/operator”) positions (NOCs 0013 - 0016), it is very likely that there will be plenty of Canadians qualified and willing to apply for these jobs. The comparatively high median wage for these kinds of jobs will be another stimulus for Canadians/PRs to apply. For example, in the Toronto region, the median wage for NOCs 0013 – 0016 jobs is around 60 $/hr (see table below: Job Bank, Wages in the Toronto Region, March 2021). In other words, these positions can be filled with Canadians/PRS pretty fast.
An agency or an HR professional should assist with recruiting. Given that direct conflict of interests exists between the “owner/operator” and prospective applicants to occupy this job, neither the foreign entrepreneur nor the business immigration lawyers representing them in the LMIA process can be involved in the recruitment process. If the owner or lawyer is involved in the recruitment process, Service Canada/ESDC may assess this labor factor negatively (i.e., the employer has not made reasonable efforts to hire or train Canadians, as set in R203(3)(e)), which may result in a negative assessment overall, i.e., LMIA refusal.
Owner/Operator LMIA program may still be a viable option for business people with a unique skill-set not readily available in the Canadian labor market. For example, a unique combination of executive/managerial experience and expertise in an innovative sector, etc., which are directly related to and required to manage Canadian operations successfully. The ability and preparedness to invest money in the business can be one of the job requirements in some cases. We highly recommend you get legal advice/assessment before proceeding with any of these unique situations.
What Are The Alternatives To The Owner-Operator Program For Foreign Entrepreneurs?
The Owner-Operator program involves two steps, application for an LMIA-based work permit and application for permanent residence through Express Entry under the Federal Skilled Worker program.
The most significant benefit was that a valid job offer gave 50 or 200 points, which expedited immigration for “owner/operators” without the necessity to wait a year, as long as they had a valid work permit and a permanent job offer.
Overall, the immigration process for “owners/operators” who can get a positive LMIA after conducting reasonable efforts to hire Canadians/PRs and a work permit will remain the same. Due to the new policy, the number of these cases will be much lesser.
There are alternatives for foreign entrepreneurs and business people.
Top 3 Work Permit to PR Alternatives for Entrepreneurs
- Intra-company Transfer Work Permit (LMIA-exempt). This option will work for business people running a business overseas. They can apply for a transferee work permit to establish an affiliated company in Canada. After one year, there is a possibility to apply for PR in Canada.
- C11 Entrepreneur/Self-Employed Work Permit (LMIA-exempt). This option will work for foreign entrepreneurs who are able to operate a business in Canada that would generate significant economic, social, or cultural benefits or opportunities for Canadians or PRs. Startup Visa Program entrepreneurs and nominees under business/investor PNP streams may also apply for early entry to start establishing business under C11 work permit. After one year, there is a possibility to apply for PR in Canada.
- Global Talent Stream Category A (LMIA-based, no recruitment/advertisement required). This option is for business people with a unique skill-set to help an innovative business grow and scale in Canada. Canadian designated organization must validate an innovative company first through a referral to ESDC. There is a possibility to apply for PR in Canada.
Other Work Permit Options for Business People (Only Under Canada FTAs)
Direct PR Routs for Qualified Businesses