Service Canada updated its Temporary Foreign Worker Program (TFWP) employer guidance on September 18, 2026, to clarify how officers determine who is the actual employer in a Labour Market Impact Assessment (LMIA) application.
The update is important for employers using staffing arrangements, labour brokers, related companies or other multi-party structures. It also makes clear that temporary foreign workers under the TFWP cannot simply be treated as independent contractors.
This is best understood as a significant clarification of Service Canada/ESDC program guidance, rather than a new law passed by Parliament or a new regulation.
Who does Service Canada consider the employer?
Under the updated guidance, the employer is the entity that hires the temporary foreign worker, sets the working conditions and directly pays the worker.
When assessing an LMIA application, Service Canada may consider factors such as:
- Who directly benefits from the worker’s services
- Who decides where, when and how the work is performed
- Who pays wages and other compensation
- Who determines the worker’s duties and job expectations
- Who supervises and monitors performance
- Who has authority to terminate the worker
- Who signs the employment agreement as the employer
- Who the worker recognizes as the employer in practice
- Who administers payroll deductions and statutory benefits
The practical issue is therefore not simply which company name appears on an LMIA application. Service Canada will look at the real working relationship.
Staffing and employment agencies: an important clarification
The September 18 guidance expressly states that staffing or employment agencies that recruit workers for other businesses are not considered employers under the TFWP where the employer-employee relationship does not exist between the agency and the worker.
In practical terms, an agency should not expect to obtain an LMIA simply to place a temporary foreign worker with a separate client business that actually controls the worker’s schedule, duties, supervision and working conditions.
This does not mean staffing agencies are prohibited from operating in Canada. The issue is whether the entity applying for the LMIA genuinely functions as the employer for TFWP purposes.
Temporary foreign workers cannot be classified as independent contractors
Service Canada also now states explicitly that employers cannot classify temporary foreign workers as independent contractors under the TFWP.
The worker’s status must reflect the employer-employee relationship described in the approved LMIA and employment agreement. Employers also cannot obtain an LMIA and later reclassify the worker as an independent contractor or restructure the arrangement to avoid payroll, compensation or program requirements.
Misclassification may lead to consequences under the existing employer-compliance framework, including administrative monetary penalties and bans from the TFWP.
Which LMIA streams are affected?
The updated employer guidance appears across several major TFWP streams, including:
- High-wage positions
- Low-wage positions
- Global Talent Stream
- Agricultural Stream
- Seasonal Agricultural Worker Program
- In-home caregiver positions
- LMIAs supporting permanent residence
- Recognized Employer Pilot requirements
The Recognized Employer Pilot is closed to new participants, but recognized employers can still access its simplified LMIA process.
Does the change cancel existing LMIAs or work permits?
The September 18 guidance does not announce the automatic cancellation of existing positive LMIAs or employer-specific work permits.
However, employers remain subject to the TFWP’s existing compliance requirements. Service Canada requires employers to keep relevant records for six years and can inspect compliance with LMIA conditions and the treatment of temporary foreign workers during that period.
Employers with pending or future LMIA applications involving subcontracting, labour supply, client placement or unusual payroll structures should review the arrangement carefully against the updated employer test.
What employers should review before filing an LMIA
Before submitting an LMIA, employers should confirm that the entity named as the applicant will genuinely:
- Hire the temporary foreign worker
- Directly pay the worker’s wages
- Control the work location, schedule and duties
- Supervise and evaluate performance
- Sign the employment agreement
- Administer required payroll deductions
- Have authority to terminate the employment relationship
If those responsibilities actually belong to another corporation or client business, the proposed LMIA structure may require further review before filing.
CanLink’s practical takeaway
For employers, the key question is now very clear: Who actually controls, supervises, pays and can terminate the worker?
If the answer points to a different entity than the company applying for the LMIA, there may be a significant compliance or eligibility issue.
CanLink Consulting assists Canadian employers with LMIA strategy, recruitment review, employer documentation, transition plans and related work permit applications. Review our 2026 LMIA Employer Guide, visit our Work Permits & LMIA service page, or request a consultation.
Official government sources
- Service Canada: High-wage program requirements
- Service Canada: Low-wage program requirements
- Service Canada: LMIA requirements supporting permanent residence
- Service Canada: Employer compliance
Program requirements can change and individual LMIA files may involve additional stream-specific rules. Employers should confirm the current requirements before recruitment or filing.