Updated August 18, 2026, Employment and Social Development Canada (ESDC) introduced an important change to how the low-wage Temporary Foreign Worker Program (TFWP) cap is calculated for employers operating at small work locations.
The change is particularly relevant to businesses that operate multiple locations, each with fewer than 10 employees.
Under the new approach, eligible employers can potentially hire up to one low-wage temporary foreign worker per small work location under the standard 10% cap, or up to two per location where the 20% cap applies.
This does not eliminate the TFWP cap or other LMIA requirements. Instead, it changes how the cap is applied to certain small work locations.
What Changed on August 18, 2026?
Previously, the calculation of the low-wage TFWP cap could create difficulties for employers operating multiple small locations.
ESDC’s updated rules introduce a specific variation for employers with fewer than 10 employees at a given work location.
Under the updated calculation:
- A work location with fewer than 10 employees is treated using a workforce size of 10 employees for the cap calculation.
- Where the 10% cap applies, the employer may have up to 1 low-wage temporary foreign worker at that location.
- Where the 20% cap applies, the employer may have up to 2 low-wage temporary foreign workers at that location.
The change was updated on the official ESDC program requirements page on August 18, 2026.
What Is the Low-Wage TFWP Cap?
The Temporary Foreign Worker Program generally limits the proportion of workers employed in low-wage positions.
The standard cap is currently 10% of the employer’s workforce at a specific work location.
However, a 20% cap applies to certain sectors, subsectors and occupations, including:
- Construction
- Food manufacturing
- Hospitals
- Nursing and residential care facilities
- Certain in-home caregiver positions
The purpose of the cap is to limit employers’ reliance on low-wage temporary foreign workers and ensure that Canadian citizens and permanent residents are considered for available positions.
How Does the New Small-Workforce Rule Work?
Consider an employer with a small location employing 5 people.
Under the updated variation, the cap calculation uses a workforce size of 10 employees.
If the employer is subject to the standard 10% cap:
10 × 10% = 1 worker
Therefore, the employer may employ up to 1 low-wage temporary foreign worker at that location, subject to all other TFWP requirements.
If the employer is in a sector covered by the 20% cap:
10 × 20% = 2 workers
The employer could therefore employ up to 2 low-wage temporary foreign workers at that location.
The important point is that this is calculated at the specific work location, rather than simply treating the employer’s entire multi-location operation as one workforce for this particular variation.
Why Is This Important for Multi-Site Employers?
The change could be particularly significant for businesses that operate several relatively small locations.
For example, imagine a company operating:
- 5 restaurants
- 4 hotels
- 6 retail locations
- Multiple care facilities
- Several construction-related work locations
If each location has fewer than 10 employees, the updated calculation may allow the employer to access the applicable low-wage TFWP capacity at each qualifying location, rather than having the small workforce at each location create an immediate mathematical limitation below one worker.
This could make the TFWP more practical for certain multi-site businesses.
However, the change should not be interpreted as giving an employer an automatic entitlement to one or two foreign workers at every location.
Every LMIA application must still satisfy the applicable requirements.
Who Counts Toward the Workforce?
ESDC has clarified that the workforce calculation at a given work location can include:
- Full-time employees
- Part-time employees
- Canadian citizens
- Permanent residents
- Temporary foreign workers hired through the LMIA process
- Workers holding other types of work permits
- Employees on leave who are expected to return
- Vacant positions for new temporary foreign workers requested in the LMIA application
- Temporary foreign workers with approved LMIAs who have not yet started working
There is also a specific rule for part-time employees.
A full-time employee works an average of 30 or more hours per week.
A part-time employee works an average of less than 30 hours per week and is counted as 0.5 of an employee for the cap calculation.
What Does “Work Location” Mean?
The distinction between the employer and the work location is particularly important.
A company may have one legal employer but operate multiple physical locations.
The updated rule specifically addresses employers with fewer than 10 employees at a given work location.
Therefore, employers should carefully identify the actual work locations associated with their LMIA applications and ensure that the workforce information provided for each location is accurate.
ESDC may request supporting documents, such as payroll records, to verify the information used in the cap calculation.
The 20% Cap Still Matters
Not every employer is limited to 10%.
A 20% cap applies to certain sectors and occupations.
The current list includes:
Construction
NAICS 23
Food Manufacturing
NAICS 311
Hospitals
NAICS 622
Nursing and Residential Care Facilities
NAICS 623
Certain in-home caregiver positions are also subject to the 20% cap under specified NOC codes.
For a qualifying employer with fewer than 10 employees at a location, the updated rule means the maximum under this variation can be 2 low-wage temporary foreign workers.
Other TFWP Restrictions Still Apply
The August 18 change does not remove the other requirements of the low-wage TFWP.
Employers must still satisfy applicable rules relating to:
- LMIA eligibility
- Recruitment
- Job Bank advertising
- Recruitment of Canadians and permanent residents
- Youth recruitment requirements
- Wages
- Working conditions
- Transportation
- Housing
- Health insurance
- Workplace safety
- Business legitimacy
- Employer compliance
For example, employers must generally advertise the position on Job Bank and demonstrate reasonable efforts to recruit Canadians and permanent residents before hiring through the TFWP.
The Low-Wage TFWP Has Other Restrictions
The updated cap should also be considered alongside Canada’s broader restrictions on low-wage LMIA applications.
For example, certain low-wage LMIA applications submitted for positions located in a census metropolitan area with an unemployment rate of 6% or higher may not be processed when the applicable conditions are met.
There are exemptions and specific rules, so employers need to assess the work location and occupation carefully before relying on the TFWP.
Rural Employers Have a Separate Temporary Measure
The August 18 change should also be distinguished from another temporary measure affecting rural employers.
Eligible rural employers may be able to use a temporary 15% low-wage TFWP cap, rather than the standard 10%, under measures running from April 1, 2026, to March 31, 2027, where the applicable province or territory participates.
The rural measure and the small-work-location rule are separate mechanisms and should not be confused.
Low-Wage Does Not Mean No LMIA Requirements
An employer cannot simply identify a position as low-wage and hire a foreign worker.
The TFWP is designed to address temporary labour shortages where qualified Canadians or permanent residents are not available.
Employers must demonstrate that they have complied with the applicable recruitment and program requirements.
The LMIA process also requires a $1,000 processing fee per position requested, subject to applicable exemptions. The fee cannot be recovered from the temporary foreign worker.
What About Wages?
The employer must offer a wage that meets the applicable prevailing wage requirements.
ESDC states that the prevailing wage is generally the higher of:
- The median wage on Job Bank; or
- The wage the employer pays current employees in the same occupation and work location with similar skills and experience.
The fact that a position falls within the low-wage stream does not mean the employer can simply choose an artificially low wage.
What Does This Mean for Foreign Workers?
The August 18 change is primarily an employer-side TFWP change.
It does not create a new work-permit category for foreign workers.
A foreign worker still generally needs:
- A genuine job offer
- An LMIA where required
- A positive LMIA where applicable
- A work permit application
- To satisfy IRCC’s requirements for the work permit
The change may nevertheless create additional employment opportunities because some qualifying multi-site employers may now have greater capacity to request low-wage TFWP positions.
Could This Create More LMIA Opportunities?
Potentially, yes—but the effect will vary substantially by employer and sector.
The biggest potential beneficiaries are businesses that:
- Operate multiple locations
- Have fewer than 10 employees at individual locations
- Need workers in low-wage positions
- Can satisfy the applicable LMIA recruitment requirements
- Are located where low-wage LMIA applications can still be processed
- Have sufficient operational need for the positions
However, employers should not interpret the change as an expansion of the TFWP without limits.
Canada continues to impose significant restrictions on low-wage temporary foreign worker hiring.
Why This Change Matters in 2026
The policy change is notable because Canada has simultaneously been tightening controls on the Temporary Foreign Worker Program.
The government has been attempting to reduce reliance on temporary foreign workers while maintaining access to foreign workers where genuine labour shortages exist.
The new small-location calculation represents a more targeted approach:
restrict excessive use of low-wage TFWs while avoiding a situation where legitimate small worksites are effectively unable to use the program because of the mathematics of a percentage-based cap.
That distinction is important.
What Employers Should Do Now
Employers considering a low-wage LMIA should review:
1. Each work location
Determine exactly where the foreign worker will perform the job.
2. Workforce size
Calculate the workforce at that specific location using ESDC’s rules.
3. Applicable cap
Determine whether the employer is subject to:
10%, 20%, a temporary rural measure, or an applicable exemption.
4. Recruitment
Make sure the required recruitment activities have been completed and documented.
5. Wage
Confirm that the offered wage meets the applicable prevailing-wage requirements.
6. Location restrictions
Check whether the work location is affected by the unemployment-rate restrictions on low-wage LMIA applications.
7. Other TFWP requirements
Review transportation, housing, health insurance, workplace safety and employer-compliance obligations.
Final Thoughts
ESDC’s August 18, 2026 update gives certain employers operating small worksites more flexibility when calculating the low-wage TFWP cap.
For a qualifying work location with fewer than 10 employees:
10% cap → up to 1 low-wage TFW
20% cap → up to 2 low-wage TFWs
The change could be particularly important for multi-site employers, because the calculation is tied to the workforce at a given work location.
However, this is not a relaxation of all TFWP rules.
Employers must still meet the applicable LMIA requirements, recruitment obligations, wage rules, location restrictions and worker-protection requirements.
For businesses considering an LMIA in 2026, the key question is no longer simply “How many employees does the company have?”
It is also:
“How many employees are at the specific work location, which cap applies, and does the position satisfy every other TFWP requirement?”
That distinction could materially affect whether a low-wage LMIA application can proceed.
