Enterprises with less than 10 employees at a work location may apply a separate cap calculation when recruiting foreign workers under the Temporary Foreign Worker Program (TFWP).
This is a remarkable change for small businesses, especially those with multiple separate workplaces.
However, it should be understood correctly: the new regulation Does n't mean Canada's widely easing its low-wage hiring, which only changes the limit calculation for some small-scale work locations.
1. What is the new change from 18/08/2026?
According to Employment and Social Development Canada (ESDC) regulations, it is common for businesses to recruit foreign workers in positions low-wage must comply with limits on the percentage of foreign workers at a specific work location.
The current conventional cap level is:
- 10% total workforce at work location.
- 20% For a number of branches, their sub - branches and positions shall be separately prescribed.
From 18/08/2026, ESDC adds a calculation for employers with less than 10 employees at a work location.
Instead of calculating a percentage directly on the actual number of employees, the cap formula uses the workforce size is 10 people.
Accordingly:
Applicable cap level | Maximum TFW low-wage labor |
|---|---|
Cap 10% | 1 person |
Cap 20% | 2 people |
This regulation applies to employers with total workforce less than 10 employees at a work location. When calculating workforce, ESDC also considers both new vacancies and LMIA approved employees who have not yet started working.
Notably, part-time employees are also counted according to their own rules: the average person working less than 30 hours a week is counted as 0.5 employees for cap calculation purposes.
2. How important is “Work location”?
This is a point that businesses should pay special attention to.
Regulations are calculated based on each work location... rather than simply adding up the entire staff of the entire business system.
For example:
A business has:
- - Five branches;
- each branch has 4 employees;
- 5 branches are separate work locations;
- the other conditions of TFWP are all meet.
If each location falls into the applicable group cap 10%, the calculation is for employers with less than 10 employees can allow the maximum 1 low-wage TFW at each work location.
Thus, in terms of cap calculation:
5 work locations × 1 TFW = up to 5 low-wage TFW locations
If a work location of the group is applied cap 20%, the formulated maximum for a place with fewer than 10 employees may be 2 TFW at that location.
⚠️ However, this is just Limit calculation wayIt does not mean that the enterprise is automatically recruited.
Enterprises must still meet the full TFWP requirements and be granted positive LMIA.
3. Which industries can apply 20% cap?
Cap level 20% is now applied to a number of sectors, subsector and occupations are specified, including:
- 🏗️ Construction – NAICS 23
- 🍞 Food manufacturing – NAICS 311
- 🏥 Hospitals – NAICS 622
- 👩⚕️ Nursing and residential care facilities – NAICS 623
- Several positions in-home caregiver of the specified NOCs.
So if a work location has less than 10 employees and is in the 20% cap group, the new formula can allow the maximum 2 low-wage TFW Instead of one.
4. How is low-wage defined?
The fact that a position belongs to Low-Wage Stream hay High-Wage Stream is determined based on the salary offered against the hourly wage threshold of the province or territory.
This threshold is calculated based on Median salary by province/territory + 20%.
From 17/07/2026, for example in Ontario:
Hourly wage threshold = CAD 36.92/hour.
- Wage below CAD 36.92 per hour → Low-Wage Stream.
- Wage from CAD 36.92/hour and above → High-Wage Stream.
This threshold varies by province and territory.
5. Not all work locations are handled LMIA
This is the part of the worker that needs special attention.
Canada still applies the policy refusal to process for some low-wage LMIA profiles.
One of the notable cases is the low-wage positions at Census Metropolitan Areas (CMA) have an unemployment rate of 6% or higher, except for the cases/occupations exempted as prescribed.
In addition, LMIA may not be processed if the employer exceeds the cap applied at the work location.
So, whether a business has few employees or has many branches not automatically means that foreign workers can be recruited.
6. Enterprises still have to fully meet LMIA requirements
Even if within cap limits, employers still have to prove many other factors, including:
✔️ Business legitimacy – Business and job offer are legal, practical.
✔️ Recruitment & advertising – must fulfill Canadian and permanent resident recruitment requirements before recruiting TFW.
✔️ Salary and working conditions in accordance with regulations.
✔️ Workplace safety and obligations to protect workers.
✔️ Employment agreement and other requirements of TFWP.
For low-wage positions, employers must also meet the requirements of transportation, housing and health insurance as prescribed.
For example, employers must pay Two-way travel cost for employees from their residence to Canada at the beginning of their working period and returning to the country at the end of their working period; this clause is not revoked from the employee.
Employer must also provide or guarantee there suitable and reasonably priced housing. According to the standards used in TFWP, housing costs are considered affordable when less than 30% of the employee's pre-tax income.
7. Rural areas can be applied cap 15%
Besides the 18th of August, 2026 change, Canada is also having Temporary measures to support employers in rural areas.
From 01/04/2026 to 31/03/2027Eligible employers in rural areas of participating provinces/territories may be eligible for the cap 15% instead of 10% for some low-wage positions.
However, the application depends on participating provinces/territories and specific conditions. This is not a policy that applies across Canada in its entirety.
8. What does this mean for Vietnamese workers?
New changes can create additional ground for some small businesses, especially enterprises with multiple independent work locations.
Previously, when looking at a business with a small personnel size, the 10% rate could produce very low results or be difficult to apply directly.
From 18/08/2026, ESDC has introduced its own formula for work location with less than 10 employees:
Cap 10% → max 1 low-wage TFW
Cap 20%→max 2 low-wage TFW
This can be especially noticeable for businesses with multiple locations that operate independently.
However, This is not a new visa program and it is not open to mass recruitment of foreign workers..
Workers still need:
Eligible Job offer → Eligible Employer → Suitable LMIA → Work Permit meets IRCC requirements.
❌ Do not understand the new rules to:
“The smaller the store, the easier it is to apply for LMIA”
“Enterprises with many branches are sure to recruit many foreign workers"
“Having LMIA is definitely granted Work Permit.”
These interpretations are inaccurate.
🇨🇦 Conclusion
The new regulation takes effect from 18/08/2026 is a notable change in the way ESDC counts cap for low-wage positions at work location with less than 10 employees.
The most important point is:
👉 Cap is calculated by work location.
👉 With work location with less than 10 employees, the new formula using workforce size is 10 people.
👉 Cap 10% → max 1 low-wage TFW.
👉 Cap 20%→max 2 low-wage TFW.
👉 Some eligible rural areas may apply cap 15% under temporary measures until 31/03/2027.
But... cap is only part of the LMIA process. Enterprises must still meet the requirements for recruitment, the legality of enterprises, wages, working conditions, recruitment advertisement, housing, relocation and other provisions of TFWP.
So, for workers who are learning Canada Work Permit/LMIA, it is important not only to find a business “less employees” or “many branches”, but to evaluate whole employer profile, work location, occupation, wage, area and LMIA responsiveness before making a decision.
The new regulation may offer some additional opportunities, but it does n't mean that every small business can hire foreign workers.
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