Update – January 11, 2021
Significant Changes to the Owner Operator LMIA Pathway in Canada
By Sean G McKinsley, Managing Partner, Nikola Misina, Partner and Steven J Paolasini, National Vice President, CIVS, Canada Immigration and Visa Services
From Coast to Coast, CIVS is Canada’s national immigration practice assisting entrepreneurial newcomers live the Canadian dream
CIVS, Canada Immigration and Visa Service, is a national immigration and business development practice which specializes in assisting overseas entrepreneurs in becoming Canadian Permanent Residents. One popular pathway is coming to Canada by starting or acquiring a business as an owner operator.
There is a lot of discussion concerning potential changes coming to the program and our clients and prospects have asked: what are these changes and when are they coming? Since we operate on a daily basis in this pathway, we are providing an update to stakeholders about what can be expected moving forward with applications as owner operators. These updates are provided from our experience with Service Canada client interviews on Owner Operator LMIA files over the last 6 months.
Nothing has been publicly announced from Service Canada about changes in policy regarding Owner Operator LMIA applications. However, there are significant internal policy changes that have occurred. These changes have come by way of Guidance Directives of the National Headquarters of Service Canada / ESDC Canada. We can also share from our experience that we have seen an increasing level of scrutiny and due diligence from the officers of Service Canada in three areas in evaluating an Owner Operator LMIA application.
The bottom line, in a nutshell, is that
A) the owner operator pathway is alive and well
B) The size and scope of a business to receive NOC00 200 pointCRS addition for arranged employment has increased
C) Businesses must be fully operational and will be evaluated on what exists today and not the business plan for the future
#1 – Actively Engaged: Business is Operational
This is one of the four factors of Genuineness when evaluating an employment offer supported by an LMIA, even if through the Owner Operator LMIA variation (exemption from recruitment). What does it mean to be actively engaged? In simple terms, it means the business is operational. In the context of evaluating Owner Operator LMIA’s today, we have experienced Service Canada become increasingly rigid in its evaluation. In the past, a visible public information search, employees, a business plan and a website might suffice. What we are seeing is an inflexible approach on a municipal, provincial, or federal license for the business (even if the business does not require the provision of a license such as a software or marketing company which do not require licensing in the city of Toronto for example). For businesses that provide services to other businesses, and if a business license is not applicable, officers usually request to see at least 2-year service contracts, payroll remittances with the CRA (PD7A’s) to show employees are working, and in the case our medical device importer and manufacturing client, they requested an MDL (medical device license).
# 2 – Organizational Structure and NOC Code
In the past, it was understood that a business owner, having more than 50.1% of controlling interest in was automatically a senior manager as the head of an organization. Now, there is a strong emphasis on what makes an NOC 00 (200-point) senior manager and an NOC 0 (50-point) middle manager. Each officer has a different evaluation style, and may consider currently organization structure in terms of how many staff are employed, other officers consider the job roles and duties of the staff employed and sometimes, officers consider the amount of locations, a single shop or business versus multiple locations as a good indicator of seniority in an organization.
One thing is clear. There is a significantly more challenge on the NOC code to obtain the 200 points and it is important to create jobs and positions that reflect that seniority in comparison with previous Owner Operator LMIA applications. There is no absolute number, or way to guarantee a 200 point NOC assignment but the burden of proof rests on the applicant that namely the job duties, represent that of a senior manager.
Please refer to NOC for additional information.
# 3 – Reasonable Employment Need
This is whether or not the position is needed at the company based upon the current organizational structure. Does a small convenience store need a president and general manager? Or does it require a retail store manager? Will the president and general manager once approved immediately move into the role of managing people across various divisions and departments within the organization?
Does Owner Operator LMIA still exist?
Absolutely. We have managed to obtain many approvals as featured on our blog and newsletter communication throughout the course of this year and the pandemic.
In short, what does this mean for the Owner Operator LMIA pathway? It is still accessible but has become more challenging especially for inexperienced immigration representatives. According to an article featured in the Toronto Star on November 14th, it mentions that the business needs to be in operation for at least 1 year. In our experience, this is not the case as after the release of that article, we have obtained 4 approvals for businesses less than 1 year old.
What is Owner Operator LMIA?
An Owner Operator LMIA is simply a variation in the advertising requirements for the LMIA. It is not a different type of LMIA. It pertains to the situation where the business owner is applying for an LMIA for their position and is therefore exempt from the advertising requirements. According to Service Canada, this is the specific wording on the Owner Operator variation:
These positions are for business owners only. They are not intended for individuals receiving shares as part of a compensation package. To qualify as an owner/operator, foreign nationals must demonstrate prior to submitting their application, and for the duration of their employment in Canada:
- they have controlling interest in the business
- by being the sole proprietor
- by being a majority shareholder (hold a minimum of 50.1% of the shares)
- by providing an official document to confirm that one shareholder has controlling interest
- they cannot be dismissed
- Variation: no advertisement or recruitment is required
- Applicability: all provinces and territories
We know from our interactions with Service Canada and our access to information requests that for the Owner Operator variant of LMIA applications, it is far more than simply a variation in the advertising requirement. In their guidance, they do emphasize and more heavily weight labour market factors 1 and 2. The Labour Market factors found in the Immigration Refugee and Protection Regulations (IRPR).
- Job retention and creation
- Skills and knowledge transfer
What is an LMIA?
Obtaining an offer of arranged employment in Canada requires the issuance of an LMIA. An LMIA stands for “Labour Market Impact Assessment.” Service Canada evaluates the effects on the labour market to determine if permitting the foreign national to work in Canada would have a positive or negative effect on the labour market. A positive LMIA will add either 50 points to the CRS score of an applicant if the NOC code for the LMIA position is in skill level 0, A, or B. A positive LMIA in skill level 00 will add 200 points to the CRS score of the applicant.
The Service Canada officer will evaluate the effect on the labour market by doing a global assessment of the 7 labour market factors:
- whether the employment of the foreign national will or is likely to result in direct job creation or job retention for Canadian citizens or permanent residents;
- whether the employment of the foreign national will or is likely to result in the development or transfer of skills and knowledge for the benefit of Canadian citizens or permanent residents;
- whether the employment of the foreign national is likely to fill a labour shortage;
- whether the wages offered to the foreign national are consistent with the prevailing wage rate for the occupation and whether the working conditions meet generally accepted Canadian standards;
- whether the employer will hire or train Canadian citizens or permanent residents or has made, or has agreed to make, reasonable efforts to do so;
- whether the employment of the foreign national is likely to adversely affect the settlement of any labour dispute in progress or the employment of any person involved in the dispute; and
- whether the employer has fulfilled or has made reasonable efforts to fulfill any commitments made, in the context of any assessment that was previously provided under subsection (2), with respect to the matters referred to in paragraphs (a), (b) and (e).
An LMIA will be approved and receive a positive confirmation if the reviewing Service Canada officer is convinced it will have a positive impact on the labour market and meets the following 4 tests of “Genuineness”
- The business is actively engaged and providing a good or service
- The business has a reasonable employment need for the LMIA being requested
- The business can fulfill the terms of the job offer
- The business has no past compliance issues
The employer requesting the LMIA must provide proof of sufficient advertising (30 days) and attempts made to hire Canadians or Permanent Residents first, before the LMIA will be issued to a foreign national.
Once the LMIA is approved, the foreign national now officially has secured “arranged employment.” This results in a CRS score increase in Express Entry of either 50 or 200 points depending on the skill level of the LMIA approved. The skill level is determined by the NOC (National Occupation Classification) code, essentially a code assigned to the occupation of the position.
50 points are assigned for NOC 0 (management), A, and B skill levels.
200 points are assigned for NOC 00 (senior management positions).
For an Owner Operator LMIA since the applicant is also concurrently the employer, the required proof of sufficient advertising does not apply.
For more information on being a Canadian investor immigrant and obtaining permanent residency, please contact us.
Sean G McKinsley, Managing Partner & Founder
RCIC & ICCRC Member R529731
Nikola Misina, Partner
RCIC & ICCRC Member R524218
Steve Paolasini, Senior National Vice-President, B. Eng