Economic Class

Generally, a positive result is sought by Canadian employers when applying for a Labour Market Impact Assessment (LMIA).

Here’s a case where a positive LMIA was challenged. Why? What’s to learn from it? Read on.

LMIA explained

Labour Market Impact Assessment (LMIA) is a mechanism to ensure Canadian jobs are extended to Canadians and permanent residents first. In other words, LMIA is to examine if a vacant position in Canada has to be offered to a foreign national because no Canadians nor permanent residents are available for the position. An LMIA is a prerequisite for applying for a work permit by foreign workers whose work permits are issued under the Temporary Foreign Worker Program (TFWP). When employers in Canada intend to hire a foreign national through the TFWP, which means that the intended foreign worker is not eligible for work permits prescribed in sections 204 to 208 of the Immigration and Refugee Protection Regulations, SOR/2002-227 (IRPR), namely, International Mobility Program (IMP), the employers need to obtain a positive LMIA. Employers applying for an LMIA must pay a $1,000 processing fee for each foreign worker according to subsection 315. 2(1) of IRPR. Therefore, generally speaking, a positive LMIA is the outcome employers would expect when applying for an LMIA.

Employment and Social Development Canada (ESDC) is the federal department responsible for LMIA processing. ESDC officers assess LMIA following the six factors prescribed in subsection 203(1) of IRPR, including the hiring and retention of Canadian and permanent resident workers, the labour shortage, etc. Subsection 203(2.1) of IRPR requires ESDC officers to assess LMIAs based on information provided by the employer applicant and other relevant information. After a positive LMIA is issued by ESDC, the employer will provide it with the intended foreign worker for the worker to apply for a work permit, which will authorize its holder to work in Canada for the employer specified on it.

The background of the Recursive Craft case

Employers who fail to obtain a positive LMIA, at times, take ESDC to the Federal Court when they believe the refusal of the issuance of a positive LMIA to them by ESDC is incorrect or unreasonable. Recursive Craft Inc. v. Canada (Employment and Social Development), 2022 FC 1206 (Recursive Craft) is a case where the employer seeks judicial review against the positive LMIA issued by ESDC.

The Applicant of the case, Recursive Craft Inc., a federally incorporated company that came into business on December 11, 2019, specializes in web performance testing software. It generated gross sales of over $100,000 CAD in 2020. The foreign national to be hired as its president and chief technology officer in its LMIA application on January 26, 2021, is its sole owner. In its LMIA application, the identified National Occupational Classification (NOC) was NOC 0013 senior managers – financial, communications and other business services. The application was approved but for a different NOC, NOC 0213 computer and information systems managers. Keep in mind, this was an application before NOC 2021 replaced NOC 2016 on November 16, 2023. Therefore, the NOC codes were based on NOC 2016.

The rationale behind the officer’s decision was the Applicant only has one employee. It made sense that the majority of the intended worker’s time would be spent managing the day-to-day operations of the company instead of running the business. Therefore, NOC 0213 was the best fit.

Though there was no issue for this intended foreign worker to apply for a work permit based on the LMIA, he could only get 50 points from this arranged employment for his Express Entry profile instead of 200 points if the identified NOC 0013 was unchanged in the approval.

The Applicant argued that the officer’s decision was unreasonable and filed a reconsideration request, which was turned down by ESDC even though ESDC reviewed the submissions and the file. The Applicant held the same position, so it applied to the Federal Court for judicial review to challenge the change of NOC.

The Court’s analysis and decision

The Applicant’s main argument was that the officer erred by taking the size of the company into consideration, which was neither prescribed in NOC codes nor in ESDC’s applicable guidelines. It also emphasized the intended foreign worker held the title listed in NOC 0013 example titles.

The Court agreed with the position held by ESDC. NOC 0013 is a position of senior managers who manage through middle managers as their subordinates. Therefore, it does require a corporation with several levels of hierarchy. NOC 0213 fits managers who, while controlling the company, also work with their team directly, not through middle managers. Based on the size and structure of the Applicant, the Court concluded that the officer’s decision was a reasonable decision as defined in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 (Vavilov) by the Supreme Court of Canada. Vavilov para 85 reads, “[A] reasonable decision is one that is based on an internally coherent and rational chain of analysis and that is justified in relation to the facts and law that constrain the decision maker.”

Based on the analysis, the Court dismissed the application and upheld the decision made by ESDC.

Lessons drawn from the case

Identifying a NOC correctly is crucial in permanent residency applications where work experience is one of the mandatory requirements because getting it wrong risks the applications to be refused on the ground that applicants don’t have the work experiences they claimed. It may seem minor to LMIA applications compared to the severe consequences of errors made in permanent residency applications.

This case serves as a reminder that shows the importance of identifying the NOC correctly in terms of LMIA applications. The case also reiterates the jurisprudence about identifying a NOC. The assessment of a NOC cannot be based solely on the job title. On this point, the parameters set out for identifying work experience prescribed in the applicable sections of IRPR for the three classes in Express Entry are good references. In short, a NOC is to be identified by performing the actions and a substantial number of the main duties, including all essential duties, described in the lead statement and main duties of the NOC respectively.

In general, this case showcases that LMIA applications belong to immigration practice, a legal practice. A full grasp of applicable laws and jurisprudence is necessary for the practice, either DIY or done by a representative.