The Owner Operator LMIA Pathway
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).
What is an 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 Owner Operator variant of LMIA applications, they do emphasize and more heavily weight labour market factors 1 and 2.
- Job retention and creation
- Skills and knowledge transfer
Types of LMIA
There are several different types of LMIA’s (agricultural worker, low wage, high wage, seasonal agricultural, PR) that require slightly different forms and have nuances in their application and advertising requirements. The two that are most pertinent to our economic class business and investor clients are:
- High Wage LMIA
- Permanent Residency – PR LMIA (Also referred to as dual-intent LMIA)
Both LMIA’s will offer additional CRS points of either 50 points or 200 points depending on the NOC code of the position.
The Pathway to Canada
An LMIA permits the applicant to apply for a work permit to Canada, allowing the applicant to enter Canada as a worker. In most cases, the LMIA will allow a work permit to be issued for 2 years. The applicant must work only for the employer that is listed on the LMIA and subsequent work permit, which in many cases of investor immigration, is the business they have controlling interest in as the Owner Operator, such as the business they have 1) started 2) acquired.
An accompanying spouse is eligible to accompany the applicant to Canada and receive an open work permit, allowing them to work for any employer in Canada. The dependent children of the applicant under the age of 22 are eligible for visitor records and study permits.
The Points Pathway to Permanent Residence
Based on recent draws, generally a CRS point score above 470 will receive an invitation to apply in a matter of weeks. For applicants seeking a draw for permanent residency, an applicant with 420 CRS points or higher and receiving a 50-point LMIA will be drawn imminently for permanent residency. For candidates in the 270-419 range, a 200-point LMIA is needed for an imminent invitation to apply for Permanent Residence.
It may seem obvious by now that a 200-point LMIA is almost always more favourable than a 50 point.
50 vs 200-point LMIA
We always aim for the 200-point LMIA however depending on the Service Canada officer, a small portion will challenge the seniority of the position required and can sometimes demote to a 50 point LMIA. Their rationale depends on a few things, some officers require that the position involve “Senior Managerial Duties” that is, to manage teams of people, and coordinate the work of departments. For small business owners, they may not fit this description. For applicants that are in the range of 270-419 who receive a 50-point LMIA, it is unlikely that they will be drawn in Express Entry as they will not be above the 470 mark.
So how does the pathway to permanent residency work from there?
An LMIA, whether a 50-point or 200-point LMIA enables the applicant to apply for a work permit, an open work permit for an accompanying spouse, and visitor records for children. This will permit entry to Canada, the right to work in Canada, healthcare, and other benefits of being a worker in Canada.
Things to note:
1) Service Canada is responsible for issuing the LMIA
2) IRCC evaluates Work Permits and Permanent Residency
Often times the LMIA (arranged employment) is needed to apply for a Work Permit or is needed for additional points to be drawn in Express Entry. So both departments must be respected.
Service Canada is focused on the company. IRCC is focused on the individual.
Service Canada focuses on genuineness of the job offer based on the 4 factors
- Reasonable Employment Need (does the employer need the position being requested)
- Ability to Fulfill (can the employer pay the worker the wages stated)
- Actively Engaged (is the employer operational in providing a good or service in Canada)
- Past Compliance (history of company with LMIA issuances and compliance)
Service Canada does not evaluate your ability to perform the job duties required by the NOC. Service Canada is focused on the employer itself. It is important that the LMIA issued to your company for you to be the owner operator as, you must be able to perform those duties based on your work experience for a smooth transition to Permanent Residency or for entry to Canada as a worker by application of a work permit.
ESDC (Service Canada) does not assess the applicant’s qualifications for the job (including skills and education); this is the role of Citizenship and Immigration Canada (CIC). ESDC communicates exclusively with the employer and third party representative.
Obtaining points through work experience
To further improve your score in Express Entry it is possible to obtain Canadian Work Experience while working on an LMIA and a work permit for an employee, or an employment LMIA. However, for Owner Operator LMIA candidates, who have achieved the LMIA based on their ownership in the company, may be considered self-employed by IRCC (Immigration Refugees and Citizenship Canada).
Most Recent Ministerial Instructions Respecting the Express Entry System
The most recent ministerial instructions (still regarded as current) respecting the Express Entry system for all 3 categories: FSW, CEC, and FST. The important part of the instructions regarding work experience are outlined in:
Section 15 – Canadian Work Experience
- Sub-Section 7 – Work Experience -requirements
- Sub-Subsection (b), 15(7)(b) which states:
(b) a period of self-employment or unauthorized work is not to be included in calculating a period of work experience;
This means, if the immigration officer reviewing the file considers your period of employment in Canada operating your own business as, self-employment, you cannot gain additional points for Canadian Work Experience.
Pathways to PR for a 50-point LMIA holder
If the applicant does not have sufficient Express Entry CRS point score, and has no certain pathway of obtaining additional points through Canadian Work Experience, how can they achieve permanent residence?
Upgrade to a 200-point LMIA
If the company on the application was too small and the applicant now has a work permit in Canada, they can seek to work and grow the company to the point the LMIA suitable would be a 200 pt job description.
Receive a Provincial Nomination
If an applicant’s profile in Express Entry is active and they have an LMIA, it is possible that they receive a provincial nomination/expression of interest.
Spouse with Open Work Permit as Primary Applicant
If the applicants spouse accompanies the primary applicant to Canada it is possible to achieve additional Canadian work experience points.
In many cases, there are several different pathways afterwards depending on the circumstances of the applicant.
Recent Updates to Owner Operator LMIA evaluation
Our recent blog, outlines some changes to the Owner Operator LMIA Pathway, including more stringent NOC evaluation, substantial proof of operations in addition to active engagement. For more Owner Operator LMIA updates, see our blog section below.