This article provides general information and is not legal advice. Immigration rules and individual circumstances can change the appropriate strategy.
What changed for employers with fewer than 10 employees?
Employment and Social Development Canada has introduced a specific low-wage cap calculation for employers, including private-household employers, with fewer than 10 employees at a work location.
These employers must complete the cap section of the Labour Market Impact Assessment application, but the formula now uses a deemed workforce of 10 rather than the smaller actual workforce. The practical ceiling is one low-wage temporary foreign worker under the ordinary 10% cap, or two where the position qualifies for the 20% cap variation.
The rule appears in ESDC's low-wage program requirements under a section updated August 18, 2026. Employers should verify the current instructions again before filing because program rules and refusal-to-process measures can change.
The small-employer low-wage cap at a glance
The deemed workforce creates a clear result for a workplace that would otherwise produce a fractional percentage. It does not increase the applicable percentage and it does not automatically authorize new positions.
| Applicable cap | Workforce used in formula | Maximum at the work location |
|---|---|---|
| 10% cap | 10 | 1 low-wage TFW |
| 20% cap variation | 10 | 2 low-wage TFWs |
Who counts in the workforce calculation?
The workforce calculation is broader than the number of people physically working on the date the LMIA is prepared. It must be reconstructed for the specific work location.
- Full-time and part-time employees, including Canadians, permanent residents and work-permit holders
- Temporary foreign workers already employed through the LMIA process
- Employees on leave who are expected to return
- Vacant positions for new temporary foreign workers requested in the current LMIA
- Temporary foreign workers covered by previously approved LMIAs who have not yet started
How are full-time and part-time employees counted?
For the cap calculation, an employee working an average of 30 or more hours per week is full-time and counts as one employee. An employee working an average of less than 30 hours per week is part-time and counts as 0.5.
Service Canada may request supporting records, including payroll information. The employer should retain a location-specific worksheet showing how each person and requested position was classified.
Maximum total versus additional LMIA positions
The one-worker or two-worker result is the maximum low-wage TFW complement at the work location. It should not be read as permission to request one or two additional workers every time an LMIA is filed.
If a workplace subject to the 10% cap already employs one low-wage TFW, the allowance may be fully used. The same may be true where a worker has a previously approved LMIA but has not started. Employers must account for the complete current and approved pipeline before requesting another position.
Four practical calculation examples
Five full-time employees, 10% cap: the formula uses 10 and the maximum is one low-wage TFW. If no existing or approved position consumes the allowance, one requested position may fit within the cap.
Four full-time and four part-time employees: the counted workforce is six because the four part-time employees count as two. The formula still uses 10, producing a maximum of one under the 10% cap or two under an applicable 20% cap.
Approved worker not yet started: that worker must be included. Under a 10% cap, the approved position may already consume the employer's only available low-wage TFW space.
Qualifying 20% sector: a small qualifying workplace uses 10 in the formula and may employ a maximum of two low-wage TFWs at the location, after accounting for existing, requested and approved-but-not-started positions.
Which positions are not subject to the cap?
ESDC identifies categories for which the low-wage cap does not apply. An employer should confirm every condition of an exemption rather than relying on a general description of the work.
- Specified on-farm primary-agriculture positions
- Specified caregiving positions for healthcare institutions
- Positions supporting permanent residence only, with no work-permit application
- Qualifying short-duration positions, generally 120 calendar days or less
- Qualifying low-wage positions in seasonal industries lasting no more than 270 calendar days, subject to the program's conditions and once-per-year rule
Does fitting within the cap mean the LMIA will be processed?
No. The cap is only one part of the low-wage LMIA framework. An application can remain ineligible for processing or receive a negative decision for other reasons.
Employers must separately assess the refusal-to-process rule for certain low-wage positions in census metropolitan areas with unemployment of 6% or higher, as well as business legitimacy, recruitment, prevailing wage, the genuine and full-time nature of the job, correct classification and employer compliance.
What should a small employer do before filing?
A written, location-specific calculation should be completed before the employer commits to an LMIA strategy or assumes that another low-wage position is available.
- Identify the precise work location used for the calculation
- Count each full-time employee as one and each part-time employee as 0.5
- Include employees on leave who are expected to return
- Identify current low-wage TFWs at the location
- Include approved LMIA workers who have not started
- Include every new TFW vacancy requested in the application
- Confirm whether the 10% cap, 20% variation or a no-cap category applies
- Check separate refusal-to-process rules
- Retain payroll and other records supporting every figure
Why this change matters
The new calculation removes the uncertainty created when a percentage was applied to a very small workforce and produced a fractional result. It gives qualifying small workplaces a defined ceiling of one or two low-wage TFWs, depending on the applicable cap.
The operational risk now lies in the inputs. Part-time employees, workers on leave, requested vacancies and approved workers who have not started can all change whether room remains under the cap. The correct question is not merely how many people are on payroll today, but what the complete counted workforce and low-wage TFW complement is at that work location.
Official source
This article was written and reviewed by Pranav Bhushan, RCIC R705848, against ESDC's official low-wage program requirements on August 21, 2026. It provides general information and does not constitute legal advice.