LMIA applications

Question:

My question is about an LMIA application for low-wage positions. The case scenario is:

1. The employer will start a new restaurant within the year; the employer registered the master business license of the restaurant under his current active business; the application was made by this current active business.

2. The employer intends to hire a head chef, a cook, and a baker.

3. The wages offered to these three positions are higher than the median but lower than the Ontario median level, therefore the applications were prepared as the ones for low-wage positions.

4. The minimum experience required in the advertisement was 5 years.

However, Service Canada officer refused to process the application, citing the following reasons:

1. The restaurant is not yet in operation, “the LMIA is not a start-up program for business that hasn’t started yet; only after the restaurant begins to operate and has had chef, cook and baker, can the employer use the program to hire temporary foreign workers.”

2. The officer noted that the employer “should meet the job occupation standard at job bank re years of experience” – the requirement of 5 years of experience is too high.

We find the officer’s conclusion is confusing for the following reasons:

1. It is our understanding that if an LMIA is to support an individual’s application for permanent residence; the employer must prove that the business has been in operation for at least one year; but not the case for hiring a temporary foreign worker only. The employer indicated that without these foreign workers for these key positions, he is unable to have the restaurant in operation. Isn’t this a matter of hen and egg, which one should come first?

2. It is the employer’s position to hire experienced workers for a new restaurant for the purpose of making high quality authentic food; he does not intend to hire a green hand; why does the officer believe that the requirement of a minimum of 5 years of experience is too high? Doesn’t the employer have the right to make decisions on requirements relating to experience?

Answer:

 

I will deal with both of the issues that were raised in turn.

Is it possible for a non-existent business to obtain an LMIA for a temporary foreign worker?

 

It is extremely difficult for a non-existent business to obtain an LMIA for a temporary foreign worker.

As you correctly noted, the requirement to submit proof that the business has been in operation for a minimum of one year only applies to applications in which the employer is hiring a skilled foreign worker to support his or her application for permanent residence in Canada. However, all employers applying to the Temporary Foreign Worker Program (TFWP) must supply documents along with their Labour Market Impact Assessment application to demonstrate that their business and job offer are legitimate.

R200(5) of the Immigration and Refugee Protection Regulations states:

Genuineness of job offer

 

200(5) A determination of whether an offer of employment is genuine shall be based on the following factors:

 

(a) whether the offer is made by an employer that is actively engaged in the business in respect of which the offer is made, unless the offer is made for employment as a live-in caregiver;

 

(b) whether the offer is consistent with the reasonable employment needs of the employer;

 

(c) whether the terms of the offer are terms that the employer is reasonably able to fulfil; and

 

(d) the past compliance of the employer, or any person who recruited the foreign national for the employer, with the federal or provincial laws that regulate employment, or the recruiting of employees, in the province in which it is intended that the foreign national work.

 

In order to demonstrate the employer’s ability to fulfill the job offer, Employment and Social Development Canada requests one of the following documents (unless the employer has obtained an LMIA before):

• T2 Schedule 100 Balance sheet information and T2 Schedule 125 Income statement information
• T2042 Statement of farming activities (redact social insurance number)
• T2125 Statement of business or professional activities (redact social insurance number)
• T3010 Registered charity information return
• T4 or payroll records for a minimum of 6 weeks immediately prior to the submission of this LMIA application, pay periods if the temporary foreign worker already works for you (redact social insurance number)
• your most recent Canada Revenue Agency notice of assessment (NOA) and documentation showing your income exceeds the low income cut-offif you are a family or private household hiring a worker to perform caregiver duties. (Submit previous year NOA if LMIA application is submitted after July 1st. Submit a rationale for consideration if, due to an extraordinary circumstance, the most recent year NOA is not available)
• an attestationconfirming that your business is in good financial standing and will be able to meet all financial obligations to any temporary foreign worker you hire for the entire duration of their employment
• if you are a foreign employer without a Canada Revenue Agency number whose business address and operation is outside of Canada, you may submit your contract or invoice for the goods or services that you are providing in Canada

In order to demonstrate that the employer is providing a good or service, Employment and Social Development Canada requests one of the following documents (unless the employer has obtained an LMIA before):

• municipal/provincial/territorial business license(valid, i.e. not expired)
• T4 Summary of remuneration paid
• PD7A Statement of account for current source deductions
• an attestationconfirming that you are engaged in a legal business that provides a good or a service in Canada where an employee could work and a description of the main business activity. Permanent residency stream only, confirmation that the business has been operating for at least one year must also be included in the attestation.
• if you are a foreign employer without a Canada Revenue Agency number whose business address and operation is outside of Canada, you may submit your contract or invoice for the goods or services that you are providing in Canada
• a copy of the Coasting Trade letter of authority issued by the Canada Border Services Agency for positions onboard a foreign vessels undertaking coastal trade in Canadian waters

It is hard to imagine how a non-existent business would be able to provide the documents requested above, many of which require the business to have submitted tax filings. While I would need more information about the relationship between the client’s active business and the proposed business to make any definitive conclusions, it seems as though the businesses are separate, even if they are owned by the same individual. Therefore, the employer is not really demonstrating the viability and activity of the proposed business by submitting the tax documents of the active business.

While we realize that this may hamper the client’s ability to be entrepreneurial, it is understandable that EDSC is skeptical of non-existent businesses. Start-ups often fail. This is especially true for restaurants. If the business fails, then the temporary foreign workers are put in a difficult situation. It would also be easy for individuals to abuse the program by creating bogus business plans.

Perhaps the client can reframe the opening of the proposed business as an expansion of the current business. It may also be worth exploring with the client the possibility of only applying for an LMIA for a Head Chef experienced in the relevant cuisine type, who would then be able to train Canadian citizens or permanent residents in the positions of cook and baker. This would likely make for a stronger application.

Does the employer have the right to set the requirements relating to qualifications?

Yes, but that does not mean that the employer can set any requirements that they want. Requirements must be reasonable and justifiable for the position. The employer cannot arbitrarily set a high bar in the hopes of weeding out candidates who would otherwise be suitable to the position. If suitable Canadian candidates are weeded out because of requirements that are too onerous, then Service Canada will not be able to come to the conclusion that “the employment of the foreign national is likely to have a neutral or positive effect on the labour market in Canada”.

We always try to cater and compare the requirements to the employment requirement of the NOC. These are the requirements for Chefs:

 

Employment requirements

 

• Completion of secondary school is usually required.
• Cook’s trade certification, which is available in all provinces and territories, or equivalent credentials, training and experience, are required.
• Executive chefs usually require management training and several years of experience in commercial food preparation, including two years in a supervisory capacity and experience as a sous-chef, specialist chef or chef.
• Sous-chefs, specialist chefs and chefs usually require several years of experience in commercial food preparation.
• Red Seal endorsement for cooks is also available to qualified chefs upon successful completion of the interprovincial Red Seal examination.
• Chef de cuisine certification, administered by the Canadian Culinary Institute of the Canadian Federation of Chefs and Cooks (CFCC), is available to qualified chefs.

It comes down to the meaning of “several”. For chefs, we generally advise clients to set the requirement at 3 years of experience.

That being said, the employer can always try to justify why more years of experience are required. The justification needs to be rational and cogent. As was the case here, there is the risk that Service Canada will scrutinize and reject the justification for the higher experience threshold.