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The Owner-Operator’s Last Stand?

In order to employ a foreign national, a Canadian employer must generally prove that there is no negative impact on the Canadian labour market. In most cases, the employer must apply for a Labour Market Impact Assessment (LMIA) and advertise the available position to Canadian citizens and permanent residents.

The Owner-Operator LMIA is exempt from advertising requirements. Instead, a foreign national effectively employs him or herself through a company that he or she controls. The Owner-Operator LMIA is for foreign nationals who will purchase an established business or launch a new one in Canada and work actively in that business. An Owner-Operator must:

  • Demonstrate a level of controlling interest in the business;

  • Occupy a senior position in the company without the possibility of being dismissed and be actively involved in the management of the business;

  • Provide a detailed business plan showing the business financing, the creation or maintenance of employment and associated timelines;

  • Create or retain employment opportunities for Canadians/ permanents residents and/or transfer skills to Canadians/permanent resident); and

  • Employ at least one Canadian or permanent resident within the first year of company activities.

After obtaining an LMIA, the Owner-Operator can be positioned advantageously to apply for permanent residence through the federal Express Entry program. He or she can receive an additional 50 or 200 Comprehensive Ranking Score “CRS” points depending on the seniority of position they have been hired by their company to perform.

In my experience, foreign nationals pursue this more complicated option because, although they have impressive business backgrounds, they are ‘too old’ for Express Entry. While a lack of a formal education or language proficiency could also be factors, the usual downfall is age - they are over 40 and their CRS is not competitive. In short, my clients enter the Owner/Operator arena to leverage their business success in a last resort effort to immigrate to Canada with their families.

Employment Services Development Canada “ESDC” has recently proposed several changes to the Owner-Operator LMIA. These changes would include:

  1. Recruitment: Requiring the business to make a reasonable effort to hire a Canadian or permanent resident for the position that the owneroperator intends to fill;

  2. Wages & Working Conditions: Requiring the business to pay the operator a salary at the prevailing wage in its industry for the position; and

  3. Genuineness: Requiring that the business be active and operating at the time of the LMIA request and that the owner be involved for one year prior to applying.

At the risk of stating the obvious, these proposed changes are impractical. For a program designed for an owner who will operate a business, it is illogical to require the owner to recruit someone else for operator position. Similarly, requiring a business to pay the operator a full salary in its formative years is inconsistent with business reality. Finally, requiring an owner -operator to be involved in the business as a pre-requisite to an LMIA (which is a prerequisite for a work permit), could result in a work permit being required to obtain a work permit!

I was recently asked to provide feedback on ESDC’s proposed changes as part of a working group of the Canadian Bar Association. In our ad hoc submissions, the CBA Immigration section detailed the very substantial problems with the ESDC proposals.

Is it possible that ESDC does not recognize how impractical its proposals are? Or, does ESDC recognizes this impracticality but want to rid itself of the OwnerOperator portfolio?

As Express Entry and provincial nominee programs have become prominent and options for investors have dwindled, there are also fewer options for entrepreneurs to immigrate to Canada. The Owner-Operator LMIA is one such option on this short list. Rather than reducing it, the Owner -Operator LMIA should be revamped or replaced with transparent program that attracts and fairly assesses the successful businessmen and women who become OwnerOperators. For these people are well suited to contribute to Canada’s post COVID-19 economic recovery.

This update has been compiled with the latest available information for the general information of Border Law clients and other interested parties. This Update is not comprehensive and should not be relied upon without appropriate legal advice.


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