2 New Canada LMIA Rules And Updates In August 2026

Last Updated On 26 August 2026, 10:12 AM EDT (Toronto Time)

Canada’s LMIA system saw two important rule changes in August 2026, alongside growing practical emphasis on work location and business legitimacy requirements that affect how employers hire temporary foreign workers through the Temporary Foreign Worker Program.

Employment and Social Development Canada (ESDC) changed the low-wage workforce cap calculation for employers with fewer than ten employees at a given work location on August 18, 2026.

Immigration, Refugees and Citizenship Canada extended the concurrent processing grace period from sixty to ninety days for certain in-Canada work permit applicants whose employer’s LMIA is still pending, effective August 21, 2026.

Alongside these two dated rule changes, current LMIA requirements continue to place increasing practical weight on the specific work location, the workforce at that location, and the genuineness of the employer’s business operations.

This article explains each development in detail, compares the old and new rules, walks through practical examples, and answers the most common employer questions about LMIA eligibility in 2026.

1. New Low-Wage LMIA Cap Calculation

ESDC updated the Program Requirements for Low-Wage Positions page on August 18, 2026, introducing a variation that applies the low-wage cap calculation at the work-location level for employers with fewer than ten employees at a given work location.

Under this variation, Service Canada uses a workforce size of ten for the purpose of calculating the cap, even when the actual headcount at that location is smaller.

The result is that eligible employers may hire a maximum of one low-wage temporary foreign worker at a location subject to the standard 10% cap or two low-wage temporary foreign workers at a location subject to the 20% cap that applies to construction, food manufacturing, hospitals, nursing and residential care facilities, and specified in-home caregiver occupations.

Who Counts Toward the Workforce at a Location

ESDC defines the total workforce size at a given work location to include all full-time and part-time employees working at that location, including Canadians, permanent residents, temporary foreign workers employed through the LMIA process, workers holding other types of work permits, and employees who are on leave but expected to return.

A full-time employee is a worker who works an average of 30 or more hours per week.

A part-time employee is a worker who works an average of less than 30 hours per week and counts as 0.5 of an employee for cap calculation purposes.

The workforce count also includes vacant positions for new temporary foreign workers requested on the LMIA application and temporary foreign workers on previously approved LMIAs who have yet to start their employment.

Why This Matters for Multi-Location Businesses

Before this update, the alternative calculation for employers with fewer than ten employees was generally based on the employer’s total workforce nationally.

The shift to a per-location calculation is especially significant for businesses that operate multiple small locations, such as a restaurant chain with several outlets each staffed by seven or eight employees.

Previously, a multi-location employer whose total national workforce exceeded ten would not qualify for the small-employer variation at any individual site.

Under the August 18 update, each location with fewer than ten employees is now independently eligible for the alternative calculation, potentially allowing one or two low-wage TFWs at each qualifying site.

Practical Example: How the New Cap Works

Consider a cleaning company that operates three locations in Ontario with seven full-time employees at each site, for a total national workforce of twenty-one.

Under the previous interpretation, this employer would not have qualified for the small-employer variation because the total workforce exceeded ten.

Under the August 18 update, each location independently qualifies because each has fewer than ten employees.

Assuming the position pays below the provincial wage threshold and falls under the standard 10% cap, the employer could apply for one low-wage TFW at each of those three locations, for a potential total of three low-wage positions across the company.

If the employer operates in a 20% cap sector such as construction, food manufacturing, or nursing and residential care, each location could support up to two low-wage TFWs, for a potential company-wide total of six.

Cap Calculation Comparison Table

Factor	Before August 18, 2026	After August 18, 2026
Unit of measurement	Employer’s total national workforce (for the small-employer variation)	Workforce at each individual work location
Threshold for variation	Fewer than 10 employees overall	Fewer than 10 employees at a given work location
Cap calculation uses	A deemed workforce of 10 (applied once to the employer)	A deemed workforce of 10 (applied independently per location)
Max low-wage TFWs (10% cap)	1 across the employer	1 per qualifying location
Max low-wage TFWs (20% cap)	2 across the employer	2 per qualifying location
Multi-location employer with 7 staff per site (3 sites, 10% cap)	Did not qualify if total exceeded 10	Up to 1 low-wage TFW per site (3 total)
Part-time employee counting	0.5 of an employee	0.5 of an employee (unchanged)

Note: positions that are cap-exempt, such as on-farm primary agriculture, certain caregiving positions, short-duration positions of 120 days or less, and seasonal industry positions of up to 270 days, remain unaffected by this change.

2. IRCC Extends Processing Grace Period to 90 Days

IRCC updated its officer instructions on the Labour Market Impact Assessment Review page on August 21, 2026, extending the concurrent processing window from sixty days to ninety days.

Concurrent processing allows certain foreign nationals who are inside Canada to submit a Temporary Foreign Worker Program work permit application before their employer’s LMIA has been decided, provided specific eligibility conditions are met.

Under the updated instructions, IRCC will hold the work permit application for ninety days from the date of submission, giving the applicant that window to provide proof of a positive or neutral LMIA.

Eligibility Conditions: This Is Not a Blanket Rule

This extended grace period applies only when all of the following conditions are met simultaneously:

The foreign national’s current work permit is set to expire in two weeks or less at the time they submit their new work permit application.

The employer has already submitted a complete LMIA application to ESDC.

The application was submitted with sufficient lead time, meaning the employer filed it far enough in advance of published LMIA processing times that a decision could reasonably have been made.

No decision on the LMIA application has been made yet at the time the work permit application is submitted.

Critical warning from IRCC: Employers should not submit the application immediately prior to the work permit application and expect that IRCC will allow concurrent processing.

IRCC’s officer instructions explicitly state that requests where the LMIA was filed at the last minute will be assessed on an exceptional basis only.

How Concurrent Processing Works in Practice

When a qualifying in-Canada work permit application is submitted under concurrent processing, the IRCC officer reviewing the file puts the decision on hold for the ninety-day period.

During that window, the applicant can update their application with proof of the employer’s positive or neutral LMIA.

After the ninety days elapse, the officer returns to the application and renders a final determination on the work permit.

If the applicant has not provided a positive LMIA by the end of the ninety-day window, the application will be assessed based on whatever documentation is on file, which will typically result in a refusal because the LMIA is a mandatory document under paragraph R10(1)(c) of the Immigration and Refugee Protection Regulations.

IRCC also notes that applicants who need concurrent processing should enter CPTS2026 in the Job Title field of IMM 5710 when completing their application, though the code is for tracking purposes only and does not affect the officer’s decision.

Concurrent Processing Comparison Table

Detail	Before August 21, 2026	After August 21, 2026
Grace period length	60 days from submission	90 days from submission
Applies to	In-Canada work permit applications under R199	In-Canada work permit applications under R199 (unchanged)
Work permit expiry requirement	2 weeks or less remaining	2 weeks or less remaining (unchanged)
Application filing requirement	The employer must have submitted a complete LMIA with sufficient lead time	The employer must have submitted a complete LMIA with sufficient lead time (unchanged)
Last-minute LMIA filing	Assessed on an exceptional basis	Assessed on an exceptional basis (unchanged)
LMIA decision status	No decision yet made	No decision yet made (unchanged)
Quebec applicants	Must also provide CAQ if required	Must also provide CAQ if required (unchanged)

Practical Example: When Concurrent Processing Helps

An employer in British Columbia files a complete application in early May 2026 for a low-wage food-service position.

The employee’s current work permit expires on September 5, 2026, and ESDC has not yet issued a decision.

On August 25, the employee submits an in-Canada work permit renewal application, providing proof that their permit expires within two weeks, that the employer filed the LMIA well in advance of published processing times, and that no decision has been made.

IRCC holds the application for up to ninety days, giving the applicant until late November to provide the positive LMIA.

If ESDC issues a positive LMIA in October, the applicant submits the proof, and the officer can proceed to finalize the work permit.

Under the previous sixty-day window, this same applicant would have had until late October, thirty days less breathing room in a period when LMIA processing times have been trending upward.

Employers Face Greater Scrutiny Over Work Locations

The concepts of business legitimacy and genuine work location have historically been part of the LMIA assessment process.

ESDC’s business legitimacy assessment has long required all employers to demonstrate four factors: that the business is providing a good or service in Canada; that the job offer is consistent with reasonable employment needs; that the employer can fulfill the terms of the job offer, including wages; and that the employer has no unresolved compliance issues.

What has changed in recent enforcement cycles is the practical emphasis that Service Canada places on the specific work location, the workforce attached to that location, and the supporting documentation employers must provide.

Why the Work Location Now Carries More Weight

Several interconnected rules have made the work location central to multiple parts of the LMIA assessment.

Low-wage caps are calculated based on the workforce at a specific work location, as confirmed by the August 18 update discussed above.

Prevailing wage varies by occupation and local Job Bank region, while whether an LMIA falls under the high-wage or low-wage stream is determined by comparing the offered wage with the applicable provincial or territorial wage threshold.

Employers can be asked to submit payroll records to verify the workforce count claimed at a particular location.

The employer compliance inspection regime, which saw penalties more than double in the most recent fiscal year, can include on-site verification of the workplace.

What Employers Should Be Prepared to Substantiate

Merely providing an address on the LMIA application does not establish that the proposed workplace and employment are genuine.

Employers should be prepared to substantiate where the employee will actually perform the work, the workforce associated with that work location, why the position is required, and that the employer is genuinely operating and providing goods or services in Canada.

Business Legitimacy Documentation

Employers who have not had a positive LMIA issued within the past two years must submit supporting documents to demonstrate business legitimacy.

The primary document ESDC requests is a valid municipal business licence, or any applicable permit or licence required to operate the business.

If a municipal business licence is not required in the employer’s area, alternatives include a T4 Summary of remuneration paid, T2 Schedule 100 and Schedule 125 for corporations, a PD7A statement of account for current source deductions, or other appropriate documents that clearly demonstrate the business is in operation and provides a good or service in Canada.

Service Canada will consider alternative documents on a case-by-case basis.

Employers who have received a positive LMIA within the past two years are not required to re-submit these documents, though Service Canada retains the right to request additional documentation at any time.

The key principle is genuineness: the employer must accurately identify where the worker will perform the job, demonstrate that the position represents a genuine labour need, and show that the business is legitimately operating and providing goods or services in Canada.

Canada’s August 2026 LMIA changes give some employers more flexibility, but they also reinforce the importance of accurate work-location information and proper planning before filing an application.

Employers and foreign workers should review the latest ESDC and IRCC requirements carefully, particularly when dealing with low-wage positions, pending assessments, or multiple work locations.

With LMIA rules and processing policies continuing to evolve, applicants should verify the most current federal requirements before submitting an assessment or related work permit application.

Frequently Asked Questions (FAQs)

Can I Apply for a Work Permit Before My LMIA Is Approved?

Yes, but only under the specific conditions of IRCC’s concurrent processing measure, and only if you are applying from inside Canada. The LMIA is normally a mandatory document required for a complete work permit application under the Temporary Foreign Worker Program. Concurrent processing creates a narrow exception: if your current work permit expires in two weeks or less, your employer has already submitted a complete application with sufficient lead time, and no LMIA decision has been made, IRCC will accept your application and hold it for up to 90 days while you wait for the LMIA result. If you are applying from outside Canada, concurrent processing does not apply, and you must have a positive LMIA before submitting your work permit application.

How Long Can IRCC Wait for a Positive LMIA?

Under the updated officer instructions effective August 21, 2026, IRCC will hold a qualifying in-Canada work permit application for ninety days from the date of submission. This is the maximum window, not a guarantee of approval.
If the positive LMIA is not provided within those ninety days, the officer will render a decision based on the documents on file, which will typically lead to a refusal because the requirement has not been met.
The grace period does not extend the validity of a positive LMIA itself, which is generally valid for up to six months from the date ESDC issues the approval letter.

Can a Company With Fewer Than 10 Employees Get an LMIA?

Yes, employers with fewer than ten employees at a given work location can apply for and receive an LMIA under either the low-wage or high-wage stream of the Temporary Foreign Worker Program. The small-employer variation described above applies specifically to the low-wage stream cap calculation.
Under the high-wage stream, there is no cap on the proportion of temporary foreign workers, and the employer must instead submit a transition plan outlining steps to reduce reliance on the program over time.
An employer with only two or three employees can still apply for an LMIA, provided they meet all program requirements, including recruitment, business legitimacy, wages, and the ability to fulfill the terms of the job offer.

How Many Low-Wage Foreign Workers Can a Small Employer Hire?

An employer with fewer than ten employees at a given work location can hire a maximum of one low-wage TFW under the standard 10% cap, or two low-wage TFWs if the position falls in a sector subject to the 20% cap, such as construction, food manufacturing, hospitals, nursing and residential care facilities, or specified in-home caregiver occupations. These limits apply per location.
An employer operating multiple locations, each with fewer than ten employees, could potentially qualify for one or two low-wage TFWs at each qualifying site, as described in the August 18 update.
Positions that are exempt from the cap, such as on-farm primary agriculture or certain seasonal positions, do not count against these limits.

Does an LMIA Employer Need a Physical Office in Canada?

The program does not contain a blanket rule requiring every employer to maintain a commercial physical office. What ESDC does require is that the employer demonstrate the business is providing a good or service in Canada, the job offer is consistent with reasonable employment needs, and the employer can fulfill all terms of the offer. The positive LMIA letter includes a Location of Employment field that specifies the physical address where the work will be performed.
Service Canada can request documentation to verify that real business activity occurs at the stated address, and employer compliance inspections may include an on-site component.
The practical takeaway is that the employer needs to provide a genuine and accurate location of employment and be able to substantiate where the worker will actually perform their duties.

Can a Home-Based Business Get an LMIA?

ESDC’s program framework does not automatically disqualify home-based businesses from the process.
Private household employers are explicitly recognized in the low-wage program requirements, and caregiver positions in a private household are specifically listed among the sectors subject to the 20% cap variation.
For non-caregiver positions, a home-based employer would need to clearly demonstrate that the business genuinely operates from that address, that the role represents a real employment need, and that the employer can meet all wage, housing, transportation, and insurance obligations.
A home-based bakery producing goods for commercial sale, for example, is a different proposition from a residential address with no visible business activity, and each application is assessed on its own facts.

Can an Employer Use a Virtual Office Address for an LMIA?

The LMIA application requires a work location where the temporary foreign worker will actually perform their duties, and the positive LMIA letter specifies this address in the Location of Employment field.
A virtual mailing address alone does not prove a genuine work location.
Employers must accurately identify where the foreign worker will perform the employment and be able to substantiate the business and job offer.
A virtual-office arrangement is not expressly prohibited and must be assessed on the facts of the application.
An employer whose workers perform duties at client sites or in the field rather than at a central office has a different situation entirely, and the work location on the assessment application should reflect where the work is actually performed.

Does Service Canada Verify an Employer’s Work Location?

Yes, Service Canada has the authority to verify the information provided on an LMIA application, including the work location.
This verification can occur during the assessment process, when officers may request additional documents such as a lease, utility bills, or photos of the workplace.
It can also occur after a positive LMIA is issued, through the employer compliance inspection regime.
ESDC can inspect any employer who has hired a temporary foreign worker for up to six years after the worker’s first day of employment.
In the fiscal year ending March 31, 2026, ESDC finalized 1,488 compliance inspections, found 12% of employers non-compliant, issued over $10.2 million in penalties, and banned 30 employers from the program.

Can One Company Apply for LMIAs at Multiple Locations?

Yes, a single employer can apply for LMIAs at different work locations across Canada. Each application is assessed based on the specific work location, the prevailing wage for that location and occupation, the workforce count at that location, and the local labour market conditions.
The low-wage cap is calculated independently for each work location, which is the core change introduced by the August 18, 2026 update for employers with fewer than ten employees per site.
Employers should note that the refusal-to-process policy for census metropolitan areas with an unemployment rate of 6% or higher applies based on the location of the job, so a company could have one location eligible for a low-wage LMIA and another location in a high-unemployment CMA where the application would not be processed.

What Documents Prove That an LMIA Business Is Legitimate?

The specific documents depend on the employer’s history with the Temporary Foreign Worker Program. Employers whose most recent positive LMIA was issued within the past two years are generally not required to re-submit business legitimacy documents.
All other employers must provide a valid municipal business licence, or if one is not required in their area, at least one alternative document such as a T4 Summary, T2 Schedule 100 and Schedule 125, a PD7A statement, or other documentation that clearly demonstrates the business is operational and provides a good or service in Canada.
To demonstrate the ability to fulfill terms of the job offer, employers must provide the most recently assessed CRA document applicable to their business structure, such as T2 schedules for corporations, T2042 for farming operations, T2125 for sole proprietorships, T3010 for registered charities, or T5013 Schedule 1 for partnerships.
When these CRA documents are unavailable, an attestation from a financial institution is an acceptable alternative, though Service Canada may contact the institution to verify it.
Trucking employers must always submit a current carrier profile, National Safety Code certificate, and fleet insurance, regardless of their program history.

Fact-Checked Against: ESDC Program Requirements for Low-Wage Positions (updated August 18, 2026); IRCC Officer Instructions for LMIA Review (updated August 21, 2026); ESDC Business Legitimacy Assessment (updated February 19, 2026).

Disclaimer: This article is published by Immigration News Canada for informational purposes only and does not constitute legal or immigration advice. Consult a licensed immigration professional for advice on your specific situation.

Kamal Deep Singh, RCIC

Kamal Deep Singh, RCIC (Regulated Canadian Immigration Consultant) licensed by CICC (formerly known as ICCRC) with member number R708618. He brings extensive knowledge of immigration law and new changes to rapidly evolving IRCC.