How innovation-based work permits could help Canadian businesses stay globally competitive


To be competitive in our global economy, Canadian businesses need the right people and access to critical skills to deliver results quickly. Unfortunately, the battle for such talent is fierce and many employers in the Canadian startup and innovation space struggle to attract and retain key workers. In fact, the Information and Communications Technology Council (ICTC) predicts that, by 2019, Canada will need an additional 182,000 skilled information and communications technology workers alone to meet the domestic needs of employers.

With the pervasive skills shortages in key sectors, employers often need to turn to foreign workers. However, it has become increasingly evident that Canada’s economic immigration policy does not adequately support the specific talent needs of startup and innovative companies, thereby hindering their growth and plans.

The current challenges startups are facing

The current immigration programs present challenges, both in employing temporary foreign workers and transitioning their status to become permanent residents of Canada.

Typically, to employ a foreign national in Canada, an employer must first obtain government approval by demonstrating that there are no willing and qualified Canadians to assume the proposed role. This process, known as the Labour Market Impact Assessment (“LMIA”), requires the employer to undertake extensive public recruitment, which can be costly and time-consuming. Moreover, the process may be unnecessarily redundant for employers in the area of innovation – the skills shortage in Canada is indisputable.

Canadian companies within the innovation ecosystem often have to resort to limited immigration strategies, resulting in prolonged processing times.

In addition, employment terms offered by innovation and startup companies are usually in conflict with the LMIA review criteria. For example, many new (and often cash-strapped) companies offer compensation packages that are largely based on variable incentives, whereas an LMIA approval requires a guaranteed salary. Furthermore, innovation and startup companies often have unconventional roles and fluid job duties, which do not fit neatly into the National Occupational Classification system as required by the LMIA.

Secondly, the Express Entry system, through which permanent residency applications are processed, is largely ineffective for innovation companies to secure or retain foreign talent. Under Express Entry, candidates are awarded points based on various factors and ranked against each other based on their total points. Candidates with a ‘Qualifying Offer of Arranged Employment’ are awarded 600 out of the total 1,200 points, significantly improving their chance of receiving an ‘Invitation to Apply’ for permanent residence. A job offer of “indefinite” duration and which is supported by an LMIA is one of the only ways to qualify for the “arranged employment” points. Given the challenges faced by innovation and startup companies with obtaining LMIAs, this is a significant impediment for these foreign worker candidates.

As a result, Canadian companies within the innovation ecosystem often have to resort to limited immigration strategies, which usually means prolonged processing times. All too often, from the time a foreign worker is identified to the completion of the temporary or permanent immigration process, significant business opportunities have been missed. Indeed, innovators and opportunities are frequently lost to global competitors.

Canada’s immigration policies must support innovation and growth

Immigration Refugees and Citizenship Canada (IRCC) has publicly stated that immigration policies are not against hiring temporary foreign workers, but employers are encouraged to consider a permanent residence solution first. Canadian innovation requires the opposite approach; there must be an expedited temporary solution to first meet immediate business needs and compete globally, and the permanent residence solution should follow as an incentive.

An immigration solution must be developed based on a policy rationale that supports Canadian innovation and economic growth. Under Section 205 of the Immigration and Refugee Protection Regulations, a work permit can be issued without an LMIA to a foreign national to perform work that would create or maintain significant social, cultural or economic benefits for Canadians. If necessary, IRCC has the authority to create new work permit categories that achieve the legislative intent of Section 205. This is not unusual or unprecedented; in February 2016, IRCC created a new LMIA-exempt work permit category for television and film production workers on the basis of the anticipated significant economic benefits for Canadians.

An ‘innovation-based’ work permit

A feasible solution would be for IRCC to create an ‘innovation-based’ work permit category, exempt from an LMIA pursuant to Section 205, for workers in the innovation space based on the anticipated benefits to the Canadian Innovation Ecosystem. Policy considerations for innovation based work permits may include: developing Canada’s innovation ecosystem; supporting significant innovation projects and ideas; growing Canada’s innovation footprint internationally; attracting foreign investment and talents; enabling skills transfer, training and new job creation for Canadians; and stimulating business growth. In developing the criteria for the exemption, IRCC policymakers should consult with innovation experts, academics, businesses and industry advisors. While a broad LMIA-exempt work permit category currently exists for workers that provide “significant” social, cultural and economic benefit to Canada, there is a need for a specific exemption that addresses the uniqueness and value of Canadian innovation.

A temporary immigration solution by way of an innovation-based work permit should, in turn, correspond with amendments to Canada’s permanent residence system in order to facilitate long-term talent retention in Canada. In particular, foreign workers holding such work permits could be awarded additional points under Express Entry, thereby increasing their likelihood of receiving an invitation to apply for permanent residence. It would also be a creative incentive to ensure Canada is able to retain key skilled workers to address long-term labour market shortages.

If the government is truly committed to making innovation an intrinsic Canadian value, it must carve out a bolder, more aggressive immigration policy to support our innovation and startup culture. The timing seems right, with a Minister of Immigration who has a strong economic background and a government that has prioritized innovation to be a national priority. In fact, the policy rationale supporting innovation-based work permits is entirely consistent with the Federal Government’s Innovation Agenda which seeks to establish Canada as an innovation leader and improve the ease of doing business in Canada.

Additionally, Canada could benefit significantly in attracting new startup ideas, entrepreneurs, and investors, by promoting an efficient and focused immigration strategy designed to support the growth of new businesses in the innovation space.


Naumaan Hameed

Naumaan Hameed is a Partner at KPMG Law with over fifteen years of experience in corporate immigration law. He has been recognized as a Certified Specialist in Immigration Law by the Law Society of Upper Canada.

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