What Canada’s new work licence system means for foreign workers  

Canada has announced plans to replace the popular open work permit with a new employer-linked work licence framework from January 2026.

HMSC Times reported that the reform, which will be rolled out in phases through 2028, will redefine how foreign workers, international graduates and temporary residents access jobs, limit job mobility, and tie employment more closely to verified labour shortages as Ottawa seeks tighter oversight and better alignment with national economic priorities.

It noted that under the current system, open work permits allow foreign nationals to work for almost any employer in Canada without the need for job-specific authorisation.

The report said that the flexibility of the permit has made it popular among international students, post-graduation work permit holders, spouses of foreign workers and other temporary residents.

However, Canadian authorities say the model has created gaps in labour market oversight and made it difficult to ensure foreign workers are employed in sectors with genuine shortages.

“From 2026, the federal government plans to introduce a New Work Licence Framework that will link work authorisation to a specific employer, occupation and wage range.

“The new licences will be time-bound and industry-regulated, with approvals tied to verified labour market needs”, the report added.

Officials say the move will allow Canada to better track employment trends, reduce oversupply in saturated sectors and curb cases of worker exploitation.

According to policy briefings, the reforms are driven by the need to align immigration more closely with labour market demand.

Authorities say open work permits have sometimes allowed foreign workers to cluster in low-demand sectors, while critical industries such as healthcare, agriculture, information technology and manufacturing continue to face shortages.

“A licence-based system is expected to improve compliance with wage laws, working hours and safety standards, while giving regulators more reliable data for workforce planning.

“The new framework will also change how applications are reviewed. While open work permits are currently assessed solely by Immigration, Refugees and Citizenship Canada, employer-linked licences will undergo joint review by IRCC and Employment and Social Development Canada.

“The licences will generally last for the duration of a job contract or a Labour Market Impact Assessment and will restrict job mobility, requiring a new application for any change of employer”, HMSC reported.

International graduates are expected to be among the most affected.

At present, graduates of eligible Canadian institutions can obtain a Post-Graduation Work Permit that allows them to work freely after completing their studies.

Under the new system, this pathway will evolve into a Post-Graduation Work Licence, with eligibility dependent on securing a job offer in an approved or high-demand occupation.

Officials say the change will ensure graduates transition into roles that align with Canada’s long-term economic priorities, even though it reduces employment flexibility.

Spouses and common-law partners of international students and foreign workers will also see changes.

Read also: Canada’s new bill to provide discretionary control over visa processing, temporary residence status

Currently entitled to broad employment rights under open permits, they will be required from 2027 to obtain sector- or employer-specific licences unless they qualify for exemptions linked to family reunification or humanitarian considerations.

Temporary residents awaiting permanent residency decisions, including those on Bridging Open Work Permits, will similarly need structured licences during the transition period.

The federal government plans to implement the reforms in phases to minimise disruption.

The first phase in 2026 will focus on post-graduation work permit holders, followed in 2027 by spouses of foreign workers and students. By 2028, the new model is expected to apply to most categories of temporary foreign workers, completing the transition away from open permits.

The report noted that employers will face expanded responsibilities under the new regime as businesses seeking to hire foreign workers will need to register with federal authorities, meet prescribed wage standards and demonstrate ongoing compliance with labour regulations.

“While sectors experiencing acute skill shortages are likely to benefit from priority licence processing, smaller businesses may encounter challenges adapting to the additional administrative requirements”, it noted.

Government officials say the reform forms part of a recalibration of Canada’s immigration policy, shifting emphasis from short-term labour flexibility to sustained, skills-based economic contribution.

By 2026, Canada expects more than 900,000 foreign workers to be active in the labour force, and the new framework is designed to ensure their participation supports areas of long-term national need.

Foreign nationals planning to work in Canada are being advised to prepare early by securing job offers from registered employers, organising employment documentation and monitoring which occupations are prioritised under the National Occupational Classification system.

Immigration advisers also recommend that temporary residents explore permanent residency pathways, such as Express Entry and Provincial Nominee Programs, as part of long-term planning.

Despite the changes, the government has indicated that some categories will continue to qualify for open or flexible permits after 2026.

These include refugee and humanitarian applicants, victims of abuse or exploitation and certain family reunification cases.

Immigration authorities say detailed exemption guidelines will be released ahead of implementation.

While the transition is expected to limit job mobility for many foreign workers, officials maintain that the new work licence system will create a more transparent, fair and economically responsive labour market.

The government insists the reforms are necessary to protect both Canadian workers and foreign nationals, while ensuring immigration continues to support the country’s evolving economic needs.

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