8 Sep. 2023

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Canada's new Tech Talent Strategy

8 Sep. 2023

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CA Mobility: Immigration alert - June 2023

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What you should know about Canada's Tech Talent Strategy

Improvements to existing programs

To drive increased tech immigration, the federal government has improved existing features and programs. It has introduced measures to improve work permit processing times, longer work permits and quicker permanent residence processing times.

1. Global Skills Strategy processing
Since 2017, employers and foreign workers have enjoyed two-week work permit processing by the migration office in Alberta for initial applications meeting specific requirements. During the COVID-19 pandemic, Immigration, Refugees and Citizenship Canada (IRCC) paused Global Skills Strategy (GSS) processing, so applications were processed in migration offices outside Canada. This resulted in variances from region to region. The migration office in Edmonton resumed processing in 2022, initially taking three to four months to process applications.

With the Tech Talent Strategy, IRCC confirmed they’re again achieving two-week processing for 80% of GSS-eligible work permit applications.

This significantly helps employers plan the onboarding of foreign candidates. Two-week processing is quick enough that employers and foreign workers can choose the certainty of an approval before the worker travels to Canada, as opposed to applying for the work permit at a Canadian port of entry, like an airport or border crossing.
Requirements for Global Skills Strategy processing include:

The work permit application must be under either an employer-specific labour market impact assessment (LMIA)-exempt category for a TEER 0 (managerial) or TEER 1 (university education) occupation, or a Global Talent Stream.

The foreign worker must be outside Canada. Applicants physically in Canada must use other processes, such as applying to CPC-Edmonton or at a port of entry.

The work permit application must be complete. If it’s incomplete, it can be triaged to an overseas migration office, which may result in slower processing. Employers should ensure that applications are not missing anything, including proof of the Offer of Employment and Employer Compliance Fee. An upfront medical examination, police clearance certificates and the biometric fee, where required, must also be included.
2. Canada’s Start-up Visa program
The Tech Talent Strategy announced the reduction of lengthy permanent residence processing times under the Start-up Visa (SUV) Program. It aims to increase annual permanent residence quotas under the program and prioritize applications for entrepreneurs supported by certain designated organizations. It also introduces a new three-year open work permit so entrepreneurs can earn income from a Canadian employer while establishing and scaling up their startups during processing.

Since the COVID-19 pandemic, it has been especially challenging for entrepreneurs who want to establish a startup in Canada. Some have waited up to two years for their SUV work permit approval. Many have waited up to four years for their SUV permanent residence approval.

SUV work permit developments

SUV work permits are issued for a maximum of one year. This short duration means entrepreneurs may need to extend their work permit several times while waiting for their permanent residence application to be approved. That can be very hard to manage, since work permit extension processing times were ~140 days during the pandemic. That means the entrepreneur would need to turn their mind to the extension within only six months of arriving in Canada.

With the Tech Talent Strategy’s goal of increasing SUV work permits from one year to three, entrepreneurs may not have to extend their work permits — and visas, if applicable — while waiting for permanent residence. Or they may only have to extend once.

The program will also allow people to work for another employer so they can earn steadier income. This flexibility will hopefully help entrepreneurs meet the funds requirement should they have to apply to extend their work permit.

Entrepreneurs need to keep in mind that under the immigration law Artificial Transactions, the permanent residence application can be refused if a migration officer decides an entrepreneur is applying primarily to acquire permanent resident status rather than to engage in business activity. Since supporting the startup business will remain important, IRCC could limit the number of hours an entrepreneur can work for the second employer.

SUV permanent residence developments

As of June 2023, the published permanent residence processing times under the SUV category increased from 6 months to 37.

The Tech Talent Strategy announced the tripling of the 2023 permanent residence target to 3,500 people. The hope is that not all entrepreneurs will have to wait 37 months to be approved. We are seeing progression on applications that may suggest an 18-month processing time, which would be a significant improvement.
To qualify for the Start-up Visa Program, entrepreneurs will be required to meet several criteria, including:

Intention to reside in a province or territory other than Québec.

Possession of a letter of support from the designated organization, and the designated organization has provided IRCC with a commitment certificate.

Hold at least 10% of the voting shares of the Canadian corporation at the time of application. Collectively, all of the entrepreneurs applying (up to five) and the designated organization hold more than 50% of the voting shares of the Canadian corporation at the time of application.

Meet the prescribed amount of settlement funds to support themself and their family members in Canada (e.g., $25,564 for a family of four).

Meet the minimum language requirements of Benchmark Level 5 in all four language skill areas: speaking, listening, reading and writing.

What's new about Canada's Tech Talent Strategy?

The Government of Canada has introduced several new programs and features to attract top tech talent to Canada and facilitate their application for permanent residence.

Although the US H-1B visa holder work permit category reached its quota in one day and the details for the Innovation Stream and digital nomads are still being finalized, the following insights may be helpful to employers.

1. US H-1B visa holders

IRCC introduced a new open work permit for US H-1B visa holders on July 16, 2023, and the 10,000 applicant quota was reached the following day.

Applicants had to provide copies of the current H-1B visa, the application approval (Form I-797/I797B, Notice of Action) and proof of current residence in the United States, such as a Form I-94, Arrival/Departure Record, or a recent utility bill.

Employers may be wondering how easy it is to hire a successful H-1B visa holder. There are two facets that are helpful to understand: the work permit requirements and the work permit process.

Regarding work permit requirements, the work permit will be “open” in the sense that the employer, occupation, and employment location fields on the document will be blank. This allows the individual to work for any employer, subject to normal immigration limitations — for instance, the employer is not an ineligible employer.

Regarding the work permit process, employers should be aware that an applicant is not authorized to work in Canada until they hold a work permit, which is not issued until they enter the country. Applicants will receive the actual work permit from the Canadian Border Services Agency (CBSA) at the Canadian port of entry on entering the country.

The open work permits will be issued to H-1B visa holders for up to three years in duration. Three years is generous, longer than for some other open work permit categories like working holiday work permits and bridging open work permits, and similar in duration to other open work permit categories like post-graduation work permits.

Employers are wondering whether this open work permit for US H-1B visa holders option will be offered again in the future. For instance, if they have a candidate who happens to hold an H-1B visa, will this simplified work permit be an option they can consider. If the pathway is again offered and reaches a quota as quickly as it did on July 17, 2023, the window of opportunity will be short. If the documentary requirements are again published only when the online pathway is released, interested applicants should organize their documents and create an online account in advance of the release date.
2. Innovation Stream work permits

Innovation Stream work permits will be issued to foreign workers for up to five years in duration. It’s the first category to offer work permits for this long. Currently the longest duration under any category is three years. IRCC may have devised this five-year duration with permanent residence in mind. Five years of Canadian work experience is the longest duration awarded points under the Express Entry permanent residence system. For those applicants needing to increase their points to secure an invitation to apply under Express Entry, the five-year work permit will facilitate earning a fifth year of Canadian work experience.

First work permit category

The first Innovation Stream category will consist of employer-specific work permits for employees of high-growth employers. This suggests the federal government will need to recognize an employer as contributing to its industrial innovation goals and priorities and high-tech industries to be eligible.

IRCC has had a process under the Global Skills Strategy since 2017 for qualifying employers for the Dedicated Service Channel. Employers need to be referred to IRCC by a Designated Referral Partner — governmental departments or non-governmental organizations that can assess whether interested employers meet IRCC’s criteria around job-creating investment in Canada. Factors include the capacity for accelerated growth for companies with proven market acceptance, high potential and high growth for startup companies, high-value investments by multinational or foreign companies in Canada, and innovative companies’ willingness and plan to scale up. IRCC may take a similar approach for recognizing employers for the Innovation Stream.

Second work permit category

The second Innovation Stream category, open work permits for highly skilled workers in select in-demand occupations, should be attractive to employers since the work permit will be flexible: it will be open and valid up to five years.

To earn an invitation to apply under the Express Entry system, a skilled worker often needs the 50 or 200 points for what IRCC refers to as a “qualifying offer of arranged employment.” Currently to receive such points, the skilled worker must hold a closed work permit that specifies the employer. IRCC will need to consider modifying this requirement if it wishes to treat skilled workers with open Innovation Stream work permits like those with closed work permits. Otherwise, this new group of skilled workers will find it more challenging to qualify for an invitation to apply.
3. Express Entry STEM occupations program
Many skilled workers are interested in attaining permanent resident status, and more employers are supporting their employees in this goal.

IRCC has started conducting Express Entry draws focused on 24 STEM occupations to help address specific labour shortages and strategic growth industries. The occupations range from science managers, architects, data scientists, different types of engineers, land surveyors, mathematicians, software developers and software engineers, to urban and land use planners.

The new category-based draw system is a significant shift from the earlier Express Entry application management system, which was occupation neutral. Many candidates in the Express Entry pool have Global Talent Stream LMIAs, issued for 17 specific STEM occupations, or have provincial nominations, such as a provincial nomination issued under the BC PNP Tech program for 29 occupations. In other words, their work in a tech occupation indirectly helps them receive an invitation to apply for permanent residence. Now these candidates can benefit directly by being invited under a STEM Occupation draw.

LMIAs and provincial nominations are worth 50/200 and 600 points, respectively, under the Express Entry application management system, and so are desired by individuals seeking permanent resident status.

The first STEM occupations round of invitations occurred on July 5, 2023. Many practitioners had anticipated a minimum score lower than for general “no program specified” rounds, but it ended up being very similar, at 486 points. This is due to the volume of the round being quite small, at 500 invitations. If the number of STEM-eligible candidates drawn exceeds the number of new candidates entering the Express Entry pool, hopefully the minimum score will decrease.
Employers can take advantage of this new program by considering the following:

Confirm for their foreign workers what occupation their positions fall under, so they can check whether they will be eligible for the STEM category.

Encourage their foreign workers to assess if they are eligible to create a profile under Express Entry by qualifying under one of the economic categories, specifically Federal Skilled Worker or Canadian Experience Class. EY Law has designed our own assessment tool and conducts assessments for employees and potential candidates who are abroad or already in Canada. If foreign workers are eligible and appear to have a strong Comprehensive Ranking System (CRS) score, they can create a profile. A profile will last up to one year if the individual is not invited earlier.

Work with their foreign workers to increase their score if necessary, such as encouraging them to take a language test again and to take a preparation course or language training in advance and encouraging them to work with their spouse or common law partner to earn points for education, language proficiency or Canadian work experience.

If a foreign worker needs to apply for an initial work permit or an extension, employers can choose an LMIA category that will grant the worker 50 (if TEER 0, 1 or 2) or 200 points (if TEER 00) for a qualifying offer of arranged employment as soon as the closed work permit is received, or an LMIA-exempt closed work permit category that will grant the worker 50 or 200 points for a qualifying offer of arranged employment once they have worked for them full time continuously for one year, or the equivalent in part-time work. Note that this one-year requirement is often overlooked.
4. Digital nomads program

A digital nomad is a foreign national who wishes to reside in Canada while working for a foreign employer. Since the employer is outside of Canada, the foreign national is not considered to be working in Canada as per the definition of “work” in the Immigration and Refugee Protection Regulations and therefore does not require a work permit while in Canada. More specifically, the individual will not be receiving any wages or commissions from a Canadian source such as a Canadian employer or client. Further, the individual’s work will not be “in direct competition with the activities of Canadian citizens or permanent residents in the Canadian labour market.”

Historically, foreign nationals who disclosed their purpose for visiting Canada as working for a foreign employer may have had challenges successfully applying for a visa or being admitted into the country by CBSA at a Canadian port of entry.

If a foreign national who wishes to work for a foreign employer did manage to enter Canada, they would have normally been granted visitor status for only six months. They would then have to leave Canada by the end of their visitor status or apply to extend it. Similar to the initial visa application or application at a Canadian port of entry, foreign nationals who disclosed their purpose for extending their stay as working for a foreign employer may have also had challenges successfully applying for an extension. Also, generally the longer a visitor remained in Canada, the more reluctant IRCC would be to grant an extension.

These challenges are why formal recognition of digital nomads is important for these foreign nationals. IRCC’s announcement recognizes that a digital nomad can enter Canada as a visitor and work remotely for up to six months. IRCC will likely develop guidelines concerning digital nomads who wish to work remotely beyond the six months, for instance for up to a year. A year would align better with practical considerations such as apartment leases, which are often for a minimum of one year.

How are digital nomads relevant to Canadian employers?

IRCC’s announcement refers to digital nomads deciding to seek jobs with Canadian employers. This shouldn’t be a surprise since many foreign nationals quickly enjoy residing in Canada and wish to settle further.

Working for a Canadian employer will increase the chance of many digital nomads applying for permanent residence. Once they secure a Canadian work permit, they will be eligible for public health care coverage. Once they become a permanent resident, they will be exempt from provincial taxes on real estate, such as the 20% additional property transfer tax in British Columbia.

From the employer’s perspective, digital nomads will already be settled in Canada. They will not have to relocate from abroad like many foreign workers. For these reasons, IRCC’s promotion of digital nomads will hopefully benefit Canadian employers in due course.

How can companies capitalize on Canada's Tech Talent Strategy to manage US immigration delays and changing US immigration policies?

US employers seeking to retain tech talent in the long term may benefit from Canada’s increased focus on attracting and retaining this talent, though the new initiatives may require a longer planning perspective.

The most widely publicized addition of a work permit tailor made to attract H-1B specialty occupation professionals from the US set the quota at 10,000 and was over-subscribed within 48 hours of being introduced. However, for employers already operating in Canada with aggressive growth strategies, the development of the Innovation Stream for designated employers and commitment to a two-week processing time for high-skill level occupations under GSS should open up the number and types of positions foreign workers may occupy and reduce the time to hire.

Some specific ways US employers might capitalize on the Canadian Tech Talent Strategy include:
Obtain a referral for the Innovation Stream for a related Canadian entity, which may require a strong growth plan. Recognition as a high-growth employer may permit an employer operating in Canada to extend a job offer to a foreign worker in a broad occupational category, with greater flexibility around education, experience level or salary. This could be particularly helpful for retaining new graduates from US programs in non-STEM fields who can only secure up to 12 months of Optional Practical Training work authorization before having to leave the US unless they are selected in the H-1B lottery, which is becoming statistically less likely every year.

Capitalize on the fact all high-skill employer-specific LMIA-exempt work permit applications are again enjoying GSS two-week processing. New hires of Canadian employers can now comfortably go through the online work permit process and obtain approval before making plans for relocation. This should be remembered for graduates in Master’s STEM degree programs in the US who are not qualified for the O-1 Extraordinary Ability visa and who are unlucky in the H-1B lottery.

Consider the digital nomad permission, which allows someone to enter Canada under visitor status to work for a US employer for up to six months, without need of either a US or Canadian work permit. US employers will need to vet this strategy with their tax professionals, but from an immigration perspective, they can retain a foreign worker on US payroll who has lost their US work authorization, so long as the foreign worker is not physically on US soil. This six-month exemption in Canada may be long enough, for example, for H-1B workers approaching their six-year maximum and waiting on the I-140 Immigrant Petition to be approved to fill that gap and recapture some extra time abroad. This is one of the few immigration options that would not require a US employer to have operations in Canada, since the digital nomad would be expected to be paid by a foreign employer outside of Canada.

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Download our Tech Talent Strategy Immigration Alert

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Summary

As the competition for top tech talent increases, employers need tools to promote recruitment and retention. In June 2023, the Government of Canada announced its new Tech Talent Strategy, introducing new measures and improvements to existing programs to help Canadian employers attract and retain tech talent.