Vol. 147, No. 16 — July 31, 2013

Registration

SOR/2013-149 July 18, 2013

IMMIGRATION AND REFUGEE PROTECTION ACT

Regulations Amending the Immigration and Refugee Protection Regulations

P.C. 2013-875 July 18, 2013

His Excellency the Governor General in Council, on the recommendation of the Minister of Citizenship and Immigration, pursuant to subsections 5(1) and 89(1) (see footnote a) of the Immigration and Refugee Protection Act (see footnote b), makes the annexed Regulations Amending the Immigration and Refugee Protection Regulations.

REGULATIONS AMENDING THE IMMIGRATION AND REFUGEE PROTECTION REGULATIONS

AMENDMENT

1. The Immigration and Refugee Protection Regulations (see footnote 1) are amended by adding the following after section 315.1:

Services in Relation to an Opinion from the Department of Human Resources and Skills Development

Fee — $275

315.2 (1) A fee of $275 is payable for the provision of services in relation to an opinion from the Department of Human Resources and Skills Development that is requested by an employer or group of employers under subsection 203(2) for each offer of employment in respect of which the request is made.

Exceptions

(2) No fee is payable if the request is made in respect of an offer of employment that relates to

Payment

(3) The fee must be paid at the time the request is made.

Primary agriculture sector

(4) For the purposes of paragraph (2)(b), work in the primary agriculture sector means, subject to subsection (5), work that is performed within the boundaries of a farm, nursery or greenhouse and involves

Exclusions

(5) Work in the primary agriculture sector does not include work involving

COMING INTO FORCE

2. These Regulations come into force on the day on which they are published in the Canada Gazette, Part II.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: The costs of processing labour market opinions (LMOs) to support the hiring of temporary foreign workers (TFWs) are largely being borne by Canadian taxpayers since there is currently no cost to employers to request an LMO from Human Resources and Skills Development Canada (HRSDC). The cost of providing this service should instead be borne by the employers who benefit from the hiring of temporary foreign workers.

Description: The Immigration and Refugee Protection Regulations (IRPR or the “Regulations”) have been amended to establish a user fee of $275 for each position for which an LMO is requested. An exemption to the fee has been established for LMO requests under the Seasonal Agricultural Worker Program and for other primary agricultural occupations.

Cost-benefit statement: The amendments are expected to result in a net present value to Canadians of $108.7 million over 10 years. The present value of total benefits is estimated to be $348.0 million over the same period, while the present value of total costs was calculated to be $239.3 million. Overall, the funds made available to the Government of Canada as a result of the fee will significantly outweigh the costs incurred by employers to pay for the fee, and the costs incurred by HRSDC in administering that fee.

“One-for-One” Rule and small business lens:The “One-for-One” Rule and small business lens do not apply to these amendments as there is no change in administrative or compliance costs to business.

Background

The Temporary Foreign Worker Program (TFWP) helps employers address their immediate skills and labour needs when qualified Canadians and permanent residents are not available.

The TFWP is jointly administered by HRSDC and Citizenship and Immigration Canada (CIC), under the authorities of the Immigration and Refugee Protection Act (IRPA) and the Regulations. Employers who wish to hire a TFW must, unless exempted by the Regulations, request an LMO (multiple TFW positions can be included on a single LMO request). HRSDC assesses requests from employers seeking to hire TFWs and issues an LMO letter stating whether the TFW is likely to have a positive, neutral, or negative impact on the Canadian labour market. CIC is responsible for issuing a work permit to the TFW, which authorizes the worker to work in Canada.

CIC currently charges a fee of $150 to workers when they submit a work permit application. This fee is intended to cover a portion of the costs to all federal institutions involved in the processing of work permits, namely CIC, Canada Border Services Agency, Canadian Security Intelligence Service, the Royal Canadian Mounted Police, as well as HRSDC.

When assessing an employer’s request to hire a TFW, HRSDC generally considers available labour market information for the region and for the occupation to determine whether a labour shortage exists, whether the wage offered to the TFW is consistent with the prevailing wage rate for the occupation, whether the working conditions meet generally acceptable Canadian standards, and whether the employer has made reasonable efforts to hire or train Canadians. HRSDC also assesses the genuineness of the employer and the job offer, as well as the employer’s past compliance with program requirements before an LMO is issued.

It is estimated that it costs HRSDC approximately $275.91 per requested TFW position to administer the LMO process, excluding the primary agriculture sector. This includes costs associated with processing LMOs, providing policy and operational guidance and administering monitoring and compliance verification. However, there is currently no cost charged to employers requesting an LMO from HRSDC.

Issue

The use of TFWs as a source of labour has been growing in Canada. From 2006 to 2012, the number of requested TFW positions on LMO applications, excluding primary agriculture, has more than doubled.

The increased use of TFWs has put significant pressure on existing HRSDC resources to process LMOs since there are currently no fees charged to employers to request an LMO. In the absence of a fee for LMO processing, HRSDC’s costs are largely being subsidized by Canadian taxpayers and in small part by the work permit fee that is charged to workers by CIC.

The costs for administering HRSDC’s portion of the TFWP, including the processing of LMOs and employer monitoring and compliance verification, should be borne by the employers who seek to hire TFWs since they directly benefit from the service provided by HRSDC.

Objectives

The objectives of the regulatory proposal are to ensure that employers bear the cost of processing LMOs to support the hiring of TFWs since they directly benefit from the service, and to enable the Government of Canada to more accurately recover the cost of administering the LMO portion of the TFWP by establishing a fee for the processing of LMO requests. The amount of the fee has been determined so as to maximize cost recovery for the Government of Canada while ensuring that the fee does not exceed the cost of providing the service. In addition, consideration has been given to the needs of various business sizes so that the fee is applied in an equitable manner.

An additional objective is to maintain the existing system that is in place to facilitate the use of TFWs by the primary agriculture sector as there are proven acute labour shortages in the sector and many of the unfilled jobs are truly temporary.

Description

Fee

The amendments establish a fee of $275 per requested position to be paid by employers at the time they request an LMO from HRSDC to support the hiring of TFWs. The fee revenues will be deposited into the Consolidated Revenue Fund and will not be available for re-spending by the Department.

Application

The fee will apply to each TFW position for which an LMO is requested, including to requests under the Live-in Caregiver Program.

The fee will not apply to employers requesting LMOs under the Seasonal Agricultural Worker Program or for occupations in the primary agricultural sector.

For the purposes of this regulatory proposal, work in the primary agriculture sector is defined as work that is performed within the boundaries of a farm, nursery or greenhouse, involving

Work in the primary agriculture sector employment does not include work involving

Coming into force

The amendments come into force on the day on which they are published in the Canada Gazette, Part II. All LMO requests received as of that date will be subject to the fee.

Regulatory and non-regulatory options considered

The following options were considered:

Status quo

HRSDC considered not pursuing regulatory amendments and continuing to process LMO requests free of charge. However, this option would not meet the objectives of ensuring that employers bear the cost of LMO processing and allowing the Government of Canada to recover the cost of administering the LMO portion of the TFWP. Taxpayers and work permit holders would continue to subsidize the provision of this service to employers.

Establish a fee per LMO request

Consideration was given to charging a fee per LMO request, rather than per position. With this option, employers would be charged a set fee for the LMO, regardless of the number of TFW positions requested on the application. It is estimated that it costs HRSDC approximately $350 per LMO request to administer the process, due to multiple positions being included on many LMO applications. However, this option would not meet the objective of ensuring that employers equitably bear the costs because employers who request large numbers of TFWs would be subsidized by employers who request fewer TFWs per application. This option would likely disproportionately affect small businesses, as they are more likely to request fewer TFWs on an LMO.

Establish a fee at various levels

When calculating the fee amount, HRSDC considered different fee levels. The fee could not be set too low since it would not meet the objective of maximizing the recovery of the Government of Canada’s costs. However, the fee could also not be too high since there would be a risk that the fees collected could be greater than HRSDC’s cost of providing the services related to LMOs. It was decided to charge a fee of $275 per position, which represents approximately 100% of HRSDC’s costs based on projected volumes of requested positions on LMO applications.

Establish a fee with no exemptions

Consideration was given to establishing a fee for LMO processing with no exemptions. The set fee would be charged to all employers requesting an LMO, regardless of the program stream or occupation. However, charging a fee to employers in the primary agricultural sector could have an unintended consequence of limiting their ability to meet their labour needs as these employers are required to hire a large number of TFWs annually to fill predominantly seasonal positions. There are proven acute labour shortages in this sector and the jobs are truly temporary.

Establish a fee with an exemption for the Seasonal Agricultural Worker Program and primary agriculture

Under this option, HRSDC would establish a fee of $275 per TFW position, and jobs in the Seasonal Agricultural Worker Program and primary agriculture sector would be exempt from the fee. This would meet the objectives of ensuring that employers bear the cost of the service from which they benefit, maximize cost recovery at 100%, while addressing the unique characteristics of the primary agriculture sector. This is the option that has been retained.

Benefits and costs

The following analysis provides an overview of the costs and benefits to stakeholders of the regulatory amendments to implement a fee of $275 for the processing of each position on an LMO request to support the hiring of TFWs. It is estimated that the amendments will result in a net present value to Canadians of $108.7 million from 2013–14 to 2022–23.

The table below highlights the benefits and costs, factoring in a discount rate of 7% per year as recommended by the Treasury Board of Canada Secretariat. Prices were held constant using a rate of inflation of 1.9% (estimated from Statistics Canada’s Consumer Price Index), using fiscal year 2013–14 as the base period.

Cost-benefit Statement

Cost-benefit statement

Base Year (see reference *) 2013–2014 (non-discounted)

Final Year 2022–2023 (non-discounted)

Total (PV) (discounted)

Annual Equivalent (discounted)

A. Quantified impacts in $ (price year: 2013–14)

Benefits

Stakeholder

$ millions

$ millions

$ millions

$ millions

Benefits to Canadians

More funds available to the Government of Canada: Revenue from the fee

Canadian taxpayers

$23.1

$34.4

$231.3

$32.9

More funds available to the Government of Canada: Reduced costs to process TFW requests

Canadian taxpayers

$10.8

$19.0

$116.7

$16.6

Total benefits

$33.9

$53.4

$348.0

$49.6

Costs

Stakeholder

$ millions

$ millions

$ millions

$ millions

Costs to industry

Costs of applying for TFWs

Employers of TFWs

$23.1

$34.4

$231.3

$32.9

Costs to Human Resources and Skills Development Canada

Initial cost of setting up a user fee payment system

HRSDC

$0.89

$0.00

$0.87

$0.12

Ongoing costs of accepting user fee payments

HRSDC

$0.70

$1.05

$7.10

$1.01

Total costs

$24.7

$35.4

$239.3

$34.1

Total net benefits

$9.2

$17.9

$108.7

$15.5

B. Quantified impacts in non-$

There are no quantified impacts in non-dollars terms.

C. Qualitative impacts

Positive impacts

1. Canadians and permanent residents may experience a slight increase in employment if employers react to the fee by exerting greater efforts to recruit and train Canadians in lieu of applying for TFWs. The impact would be the greatest in regions/industries with high unemployment, where TFWs may be employed in positions that could have been filled by Canadians or permanent residents.

Negative impacts

1. Consumers may have to pay slightly more for goods and services if businesses pass the costs associated with applying for TFW positions onto consumers by raising their prices.

2. Immigration consultants may experience reduced business if LMO request volumes decrease as a result of instituting a fee. These consultants often charge employers a fee for requesting LMOs to ensure that the employer meets program requirements.

3. Many employers feel that the option to recruit TFWs has allowed them to expand their businesses and broaden their hours of operation that would not have been possible without TFWs. If the fee dissuades some of these employers from recruiting TFWs where workers are not available domestically, they may choose not to expand their business.

Reference *
Because the fee will be implemented in summer 2013, the base year of 2013–14 only counts as a partial year (67% of the 12-month period).
Explanation of the baseline scenario
Explanation of the regulated scenario
Determination of the amount of the fee

The following information provides a detailed explanation of the assumptions and framework that determined each stakeholder impact.

Funding made available for other public services

Currently, there is no cost to employers to request an LMO. The introduction of a fee requires employers to pay for approximately 100% of program costs, which include costs associated with processing LMOs (Service Canada), providing policy and operational guidance, and administering monitoring and compliance verification.

The amount made available for other public services for Canadians is equivalent to the revenue collected from the fee, plus the reduction in processing costs resulting from the reduction in the number of TFW requests resulting from the introduction of a fee. The revenue from the fee was determined by multiplying the number of expected positions for which a TFW would be requested by the amount of the fee for each position. The reduced processing costs were determined by calculating the difference between expected volume in TFW requests in the baseline scenario (182 714 in 2013–14) and the regulated scenario (127 900 in the same year) and multiplying that difference (54 814) by the fee per requested TFW position ($275).

As a result, the total funding made available to Canadians in the first year was estimated to be $23.1 million and about $32.9 million on average over the next 10 years (discounted at 7%).

The present value of the total additional funding for other public services over the 10-year period was estimated to be $348.0 million. It should be noted that throughout this analysis, the 2013–14 impact was reduced by 33% to account for the fact that the fee will not be implemented until summer 2013, only impacting 67% of the 2013–14 fiscal year.

Costs to employers

The framework and assumptions surrounding the costs to employers is identical to that of the revenue collected from the user fee. Employer costs were determined by multiplying the number of forecasted requested TFW positions by the fee of $275. Employers will not incur a significant administrative burden to pay the fee.

Based on these assumptions, the present value of the total costs borne by employers was estimated to be $231.3 million. Again, the 2013–14 impact was reduced by a factor of 33% to account for the fact that the fee will not be implemented until summer 2013, only impacting 67% of the fiscal year.

Cost to set up the fee

HRSDC estimated that there will be a one-time cost of $0.89 million to build a system to accept payment for a fee. This includes start-up costs related to equipment and training. This cost will only be incurred in the base year (2013–14).

The total present value of costs associated with this activity over the 10-year period is $0.87 million.

Ongoing costs of accepting payments

HRSDC estimated that the annual ongoing costs to accept payment for a fee will be $1.05 million, in constant 2013 dollars. However, it will be $0.70 million in the first year to account for partial year implementation. This cost was assumed to remain fixed for each year of the 10-year reference period. It includes the salaries of Service Canada staff to process payments. The total present value of costs associated with this activity over the 10-year period is $7.10 million.

Additional information and points of clarification

In 2011–12, it was estimated that the cost to process a single LMO was roughly $350. This was determined by dividing total program costs by the number of LMO requests in 2011–12, including primary agriculture. This estimate is not to be confused with the estimated cost per requested TFW position of $275.91. Multiple TFW positions can be requested on a single LMO application, meaning it costs more, on average, to process an LMO application than it costs to process each requested TFW position. The determination of a fee of $275 was based on a cost recovery model of approximately 100%, and primary agriculture was not included as part of the analysis.

“One-for-One” Rule

The “One-for-One” Rule does not apply to these amendments, as they will not change the administrative costs to business.

In order to minimize the administrative burden on businesses, HRSDC is taking steps to ensure that only a minimal amount of additional documentation will be required from employers for the processing of the fee payment (i.e. credit card information).

Small business lens

The small business lens does not apply to this proposal. As per the Treasury Board of Canada Secretariat’s Canadian Cost-Benefit Analysis Guide, fees are not considered to be compliance or administrative costs.

Although the small business lens does not apply, HRSDC has been mindful of the needs of small business in designing the fee. By charging a fee per TFW position, the impact on small business is lower than if a fee was charged per application, as small businesses typically hire low numbers of TFWs.

Consultation

HRSDC and CIC have been collaborating on an ongoing review of the TFWP to ensure that Canadians and permanent residents are considered for available jobs before employers turn to TFWs.

As part of the review, HRSDC and CIC have engaged a wide range of stakeholders in consultations about the TFWP and a user fee for LMO processing, including employers, unions and labour groups, and migrant worker groups.

On February 27, 2013, the Minister of HRSDC and the Minister of CIC held consultations with TFWP stakeholders in Ottawa to discuss employer needs, worker protection, and job opportunities for Canadians. Additional consultations across the country were led by HRSDC and CIC officials with employers and labour representatives in March 2013.

HRSDC organized additional roundtables with stakeholders in May and June 2013, hosted by the Parliamentary Secretary to the Minister of HRSDC, on recently announced changes to the TFWP, including the introduction of a fee for LMO processing.

During consultations, many employers and employer associations indicated that they would not oppose paying a fee when they request an LMO. However, they were interested in seeing faster LMO processing. Some employer associations expressed concern that some small and medium-sized enterprises may not be able to afford a fee if it was too high.

Unions, labour groups, and migrant worker groups had limited reactions to the introduction of a fee for LMO processing. The main concern of labour and migrant worker groups was ensuring that employers do not pass the cost of the fee on to workers.

HRSDC is committed to continually making improvements to the TFWP, and intends to develop and publish national service standards for the processing of LMOs, as well as explore ways to prohibit employers from passing on the cost to TFWs.

Under the Stream for Lower-skilled Occupations and the Live-in Caregiver Program, HRSDC currently requires employers to sign a contract indicating that they will not charge or recoup recruitment costs from TFWs, which is interpreted as including the fee for LMO processing. In addition, a number of provinces have legislation that strictly prohibits all employers and third parties from charging fees to workers as part of a recruitment process.

Rationale

The amendments introduce a fee of $275 per TFW position for which an LMO is requested. The fee is reflective of approximately 100% of HRSDC’s costs to administer the TFWP (including monitoring and compliance verification). The introduction of a fee will ensure that the cost of processing LMO requests is being borne by employers who seek to hire TFWs, rather than by Canadian taxpayers and work permit holders.

Many other countries require employers to pay fees to hire a TFW. The fee for LMO processing in Canada is lower than the fees for hiring a TFW in the United States, United Kingdom and Australia, as compared in the table below. Canada’s fee may be lower for a number of reasons, including different processing practices, program costs, policy objectives and/or legislation governing the charging of fees.

International Comparison of Temporary Foreign Worker User Fees

Country

Fees Charged to Employers

Total in Canadian Dollars (see reference **)

Comments

Canada

Fee per position on the LMO: $275

$275

The fee is paid per position.

Australia

Fees for temporary business entry — Standard Business Sponsorship

Sponsorship fee: $420 (AUD)

Nomination fee: $85

$508

The sponsorship fee is paid per application. The nomination fee is paid per position.

United Kingdom

Sponsorship licence fee: £515

Certificate of sponsorship fee: £14

$836

The sponsorship licence fee is paid per application.

The certificate of sponsorship fee is paid per position.

Additional fees may apply depending on the stream and size of the firm.

United States

Base filing fee: $325 (USD)

Fraud prevention and detection fee:

  • H1-B (specialty occupations): $500
  • H2-B (non-agricultural workers): $150

H1-B: $853

H2-B: $491

The filing fee is paid per application. The fraud prevention and detection fee is paid per position.

Additional fees may apply depending on the stream and size of the firm.

Reference **
Bank of Canada’s currency converter (June 3, 2013).

In addition, the fee will be charged per position, rather than per request, to ensure that businesses requesting large numbers of TFWs will have to pay more than businesses that request a single TFW. This is an equitable way to reflect HRSDC’s additional costs of administering the program when there are multiple TFWs on a single LMO application (including monitoring and compliance verification costs).

The amendments establish an exemption to the fee for LMO requests under the Seasonal Agricultural Worker Program and for other primary agriculture occupations since there are proven acute labour shortages in this sector and the jobs are truly temporary. It is in Canada’s strategic interest to protect Canadians’ access to healthy and affordable foods by ensuring that the primary agriculture sector has access to a stable and predictable pool of labour.

Implementation, enforcement and service standards

Implementation

These amendments come into force on the date on which they are published in the Canada Gazette,Part II, and the fee applies to each position for which an LMO request is received to support the hiring of TFWs as of that date. HRSDC and Service Canada are responsible for the implementation of the fee, including the training of current staff. An operational working group has been established to develop interim and end-state implementation plans for the fee. A policy directive and operational guidelines have been developed to provide guidance to Program officials on how to process payments once the fee is implemented.

Employers will be required to submit payment information for the fee along with their LMO application and the payment will be processed before the LMO application is assessed by Program staff. In the interim, employers will provide their payment information as part of the paper application. However, the eventual intention is to enable employers to submit their payment information electronically.

Refunds will only be available if a fee was collected in error (i.e. an incorrect fee amount was processed). There will not be refunds in the event of a negative LMO since the fee covers the process to assess an application and not the outcome.

Service standards

HRSDC intends to develop and publish national service standards for the processing of LMOs.

Privacy Impact Assessment

A Privacy Impact Assessment for the TFWP, including the introduction of a fee for LMO processing, will be completed following the coming into force of this regulatory package. A summary of the assessment will be made available on the HRSDC Web site.

Communication activities

To support the implementation of the fee, information will be published on the HRSDC Web site and on the TFWP Web Service to notify employers of the coming-into-force date and the process for payment of the fee.

Performance measurement and evaluation

In accordance with Treasury Board of Canada Secretariat guidelines, HRSDC and CIC are required to jointly evaluate the TFWP every five years to assess issues related to the relevance and performance of the Program, as well as its design and implementation. As part of the next TFWP evaluation, administrative data along with other lines of evidence will be used to measure the impact of the fee for LMO processing, including reassessing the fee amount to ensure that it continues to maximize cost recovery while not exceeding the cost for providing the service.

An evaluation of TFWP will commence in 2016–17 with a completion date of 2017–18.

Contact

Colin Spencer James
Director
Policy and Program Design Division
Temporary Foreign Worker Directorate
Skills and Employment Branch
Human Resources and Skills Development Canada
140 Promenade du Portage, Phase IV, 4th Floor
Gatineau, Quebec
K1A 0J9
Fax: 819-994-9544
Email: colin.s.james@hrsdc-rhdcc.gc.ca