Canada LMIA Pause 2026: New Rules for Hiring in High-Unemployment Areas

The Canadian labor market has entered a period of significant recalibration. As of early 2026, the Government of Canada has solidified strict measures under the Temporary Foreign Worker Program (TFWP) to prioritize domestic talent.

Central to these changes is the Labour Market Impact Assessment (LMIA) pause in regions where the local workforce is underutilized.

This policy, which gained momentum in late 2024 and 2025, is now a pillar of the 2026-2028 Immigration Levels Plan.

Employers and prospective foreign workers must navigate a landscape defined by a 6% unemployment threshold, reduced workforce caps, and shortened permit durations.

Understanding the 6% Unemployment Threshold

The cornerstone of the current hiring restrictions is the “Refusal to Process” policy. Under this rule, Employment and Social Development Canada (ESDC) will not process new LMIA applications for the Low-Wage stream in Census Metropolitan Areas (CMAs) where the unemployment rate is 6% or higher.

The government monitors these rates quarterly. The latest update, which remains in effect through January 9, 2026, has expanded the list of ineligible regions to include major urban centers that were previously open to low-wage hiring.

This measure ensures that in areas where a sufficient number of Canadians are looking for work, businesses must look locally before seeking international recruits.

How the Refusal to Process Works

When an employer submits an LMIA for a position that pays below the provincial or territorial median wage, the system automatically checks the latest Labour Force Survey data for that specific CMA. If the region’s unemployment rate hits or exceeds 6%, the application is typically returned without being processed, and the processing fee is not charged.

Affected Cities: LMIA Status for Early 2026

As of the first quarter of 2026, several major Canadian cities remain under the hiring pause for low-wage positions. The list is dynamic and updated every three months by Employment and Social Development Canada.

Regions with Active LMIA Pauses (Ineligible)

Based on the most recent data cycles, the following cities have faced restrictions due to unemployment rates exceeding the 6% mark:

• Ontario: Toronto, Windsor, Oshawa, Hamilton, Kitchener-Cambridge-Waterloo, and Guelph.
• Alberta: Calgary, Edmonton, Lethbridge, and Red Deer.
• British Columbia: Vancouver, Abbotsford-Mission, and Nanaimo.
• Manitoba: Winnipeg.
• Saskatchewan: Regina.
• Quebec: Montréal (subject to specific provincial freezes) and Sherbrooke.

Eligible Regions (Below 6%)

Conversely, some regions have managed to keep unemployment low, allowing for continued low-wage LMIA processing:

• Quebec: Québec City and Saguenay.
• Ontario: Peterborough (recently removed from the pause list).
• British Columbia: Victoria.

Exemptions to the LMIA Pause

While the 6% rule is broad, the Canadian government has identified specific sectors that are critical to the country’s infrastructure and food security. These sectors are currently exempt from the refusal-to-process policy, regardless of the local unemployment rate:

1. Primary Agriculture: Includes seasonal and non-seasonal farm work.
2. Food Processing: Specifically meat and fish processing facilities.
3. Construction: Essential for meeting Canada’s housing supply targets.
4. Healthcare: Including nursing, specialized care, and in-home caregiving for those with high medical needs.

Employers in these sectors can still apply for low-wage LMIAs even in high-unemployment cities like Toronto or Calgary, provided they meet all other program requirements.

Key Rules and Reforms for 2026

The 2026 landscape is shaped not only by regional pauses but also by structural reforms to the TFWP aimed at reducing the total number of temporary residents in Canada to 5% of the population by 2027.

1. The 10% Workforce Cap

Most employers are now restricted to a 10% cap on the proportion of their workforce that can consist of low-wage temporary foreign workers. This is a significant reduction from the 20% or 30% caps seen during the post-pandemic recovery period. For sectors like construction and healthcare, a slightly higher cap of 20% may still apply to address critical shortages.

2. Reduced Employment Duration

For the Low-Wage stream, the maximum duration of a work permit has been reduced from two years to one year. This change is intended to ensure that temporary workers are used only for truly temporary needs and to encourage employers to transition their workforce to permanent residents or Canadian citizens.

3. Increased High-Wage Threshold

To prevent “wage suppression,” the government has adjusted the boundary between the Low-Wage and High-Wage streams. As of late 2024 and continuing through 2026, a position only qualifies for the High-Wage stream if the offered wage is at least 20% above the provincial or territorial median. If an employer wants to bypass the 6% unemployment pause, they must often raise the wage to this new high-wage threshold.

4. Shortened LMIA Validity

A positive LMIA is now valid for only 6 months, down from the previous 12-month or 18-month windows. Employers must ensure that the foreign worker applies for their work permit within this tight timeframe, or the LMIA will expire.

Comparison Table: LMIA Stream Requirements 2026

Feature	Low-Wage Stream	High-Wage Stream
Wage Requirement	Below 20% + Provincial Median	20% above Provincial Median or more
Regional Pause	Active if Unemployment $\ge$ 6%	No regional pause based on unemployment
Workforce Cap	10% (some sectors 20%)	No cap
Permit Duration	Up to 1 Year	Up to 3 Years (standard)
Exemptions	Agriculture, Healthcare, Construction	N/A

Impact on the 2026-2028 Immigration Levels Plan

The 2026-2028 Immigration Levels Plan highlights a shift toward “controlled growth.” In 2026, Canada expects to admit approximately 60,000 new workers under the TFWP, a sharp decline from previous years.

This reduction is coupled with stricter rules for the International Mobility Program (IMP), including limits on open work permits for spouses. The government’s goal is to ensure that the influx of temporary residents does not outpace the country’s capacity for housing and healthcare.

Important Note: Employers are now required to use the “Direct Apply” feature on the National Job Bank for at least four weeks before applying for an LMIA. Failure to review and document local applications can lead to an immediate rejection of the LMIA.

Strategic Advice for Employers and Workers

For Employers

• Review Wage Brackets: Check if increasing the offered wage to the High-Wage threshold is financially viable to avoid the 6% regional pause.
• Diversify Recruitment: Focus on hiring underrepresented groups in Canada, such as youth, newcomers, and persons with disabilities, as these efforts are scrutinized during the LMIA process.
• Plan Ahead: With a 6-month LMIA validity, the window to bring a worker to Canada is narrow. Coordination between HR and immigration consultants is vital.

For Foreign Workers

• Target Exempt Sectors: If you are seeking a low-wage role, focus on healthcare or construction, where the 6% pause does not apply.
• Look for Rural Opportunities: Regions outside of Census Metropolitan Areas (CMAs) often do not fall under the refusal-to-process rule.
• Monitor Expiry Dates: Since low-wage permits are now limited to one year, start your renewal or permanent residency (PR) planning much earlier.

Conclusion

The Canada LMIA Pause of 2026 represents a move toward a more sustainable and domestic-focused labor market. By tying hiring eligibility to regional unemployment rates and tightening the rules for the Low-Wage stream, the federal government aims to balance economic needs with social infrastructure. For stakeholders, staying updated on quarterly unemployment data and sector-specific exemptions is no longer optional—it is a requirement for successful navigation of Canada’s immigration system.

Frequently Asked Questions