Canada's Employment and Social Development Canada (ESDC) announced updated Temporary Foreign Worker Program (TFWP) rules on August 18, 2026, shifting the workforce cap calculation from an employer's total headcount to the number of staff at each individual work location. This change gives businesses with multiple small work locations greater flexibility under the program.
How the New Cap Works
Under the standard TFWP rules, low-wage temporary foreign workers cannot make up more than 10% of an employer's workforce. That limit rises to 20% for employers in selected in-demand sectors, including health care, construction, and food production. With the new approach, an employer with fewer than 10 employees at a specific work location can bring in one low-wage temporary foreign worker at that site. Employers operating in the three priority sectors can hire up to two per location.
Previously, this alternative calculation only applied when an employer had fewer than 10 staff across its entire operation. ESDC has now extended it to individual locations where applying the standard percentage would result in less than one eligible worker under the 10% cap, or fewer than two under the 20% cap.
Counting Staff and Worker Classification
When counting staff at a location, employers must include full-time and part-time workers, temporary foreign workers with approved Labour Market Impact Assessments (LMIAs) who have not yet started, and vacant positions covered by an active LMIA application. Part-time employees averaging fewer than 30 hours per week count as half an employee.
A job is classified as low-wage when it pays below 120% of the regional median wage published on the federal government's Job Bank. In Ontario, that threshold currently stands at $36.92 per hour. Positions at or above the applicable rate may qualify under the TFWP's high-wage stream, which carries no workforce cap.
Employer Obligations and Broader Context
Employers hiring through the low-wage stream must also meet a range of additional obligations. These include covering the worker's return travel to and from Canada, arranging accommodation that costs less than 30% of the worker's pre-tax income, and providing private health insurance where provincial or territorial coverage does not apply.
Since March 13, 2026, provinces have been permitted to raise the low-wage cap to 15% for employers in rural areas. However, a moratorium on processing low-wage LMIA applications in urban areas with unemployment rates above 6% has remained in place since September 2024.
The TFWP operates separately from Canada's International Mobility Program (IMP), which covers most work permits issued nationally and does not require an LMIA. Under Canada's 2026 immigration levels plan, the federal government aims to admit 60,000 foreign workers through the TFWP and a further 170,000 through the IMP.
