The prevailing wage for LMIA applications
The prevailing wage for LMIA applications is a term that you repeatedly see on the IRCC website. However, the phrase appears confusing to many. Therefore, I decided to write this article for clarification.
- There is a genuine need for the job position in Canada;
- The hiring of the foreign national won’t affect the Canadian Labour market negatively; and
- The recruitment of foreign nationals won’t weaken the position of labour unions in Canada.
ESDC or Employment and Social Development Canada is the entity that investigates these issues at the request of an employer. Consequently, they will issue a letter to cast their opinion. They call this letter an LMIA, which stands for Labour Market Impact Assessment. A positive or neutral LMIA letter could allow the foreign national to apply for a work permit. However, an adverse LMIA letter prevents them from pursuing a work permit application. I have a more detailed article on the subject of LMIA. Nonetheless, keep in mind that some foreign workers are exempt from an LMIA or even a work permit.
The government of Canada considers the highest of the following as the prevailing wage:
- The median wage on Job Bank
- The wage that is within the wage range that you are paying your current employees hired for the same job and work location and with the same skills and years of experience (source: IRCC)
I explain the first item in the next section of the article. However, for the second item, let’s consider the following example.
Your accounting department currently hires two bookkeepers. Both of them have about three years of work experience. However, you pay one of them $18 per hour and the other one $20 per hour. You intend to hire another bookkeeper who is a foreign national and has three years of work experience in the field.
If we disregard the median wage on Job Bank, for now, the prevailing wage in this example is between $18 and $20 per hour. Of course, you may play it safe and consider the average salary that is $19 per hour (i.e., ($18+$20)/2). Nonetheless, in real life, you also need to consider the median wage on Job Bank.
Job bank, a government of Canada job board website, posts salary ranges for various jobs in Canada. When you look up a specific job title, they show you a typical lower range, median and higher range salary for the job. For example, the following image shows the results for the role of bookkeepers in the Toronto region.
Of course, these numbers could change over time. In reality, an employer could pay outside this range. However, this table is a good indication of how employers compensate their employees in Canada. Median wage represents the most typical salary somewhere between the low and high values. Therefore, it is not the average. Regardless, in many cases, it means the prevailing wage for the position in that specific region.
When calculating the median wage, you must focus on the region first (e.g. Toronto Region). However, you may consider the provincial median wage if the regional salaries are not available. To be on the safe side, I consider the highest value between the regional and the provincial wages. Of course, in the absence of a median salary for the province, you may consider the national median salary. Regardless, the prevailing wage is the maximum value of the salary range you offer to your existing employees and the Job Bank median wage.
In the previous example, your employees’ salary range is between $18 and $20 per hour. However, this value is less than the $21.98 per hour median wage for Toronto Region. Therefore, if you are hiring your bookkeeper for Toronto, you must pay them at least $21.98 per hour. In other words, the prevailing wage in this example is $21.98 per hour.
If you have a broad question about immigration to Canada, please post it below. Of course, a typical question is like, “What is the prevailing wage for LMIA applications?” However, if your question is specific to your case, book a consultation session with me.
If you wish to visit or move to Canada, please fill out our free assessment form. We will review it for free, but we will contact you only if we find an opportunity for you. Alternatively, you may book a consultation session. Consultation sessions are not free, but you will receive formal advice from a licenced practitioner.
This article provides information of a general nature only. Considering the fluid nature of the immigration world, it may no longer be current. Of course, the item does not give legal advice. Therefore, do not rely on it as legal advice or immigration advice. Consequently, no one could hold us accountable for the content of these articles. Of course, if you have specific legal questions, you must consult a lawyer. Alternatively, if you are looking for immigration advice, book an appointment.
The characters and places in the articles:
All the characters and locations in the articles are fictional, unless otherwise clearly stated. Therefore, any resemblance in names, dates, and places is coincidental.
For our official addresses, trust this website only. We currently do not have offices outside Canada. Therefore, anyone who claims to be our agent is committing fraud. Also, note that we do not issue any work permits or study permits or similar documents. The government of Canada has the sole authority to issue such material.