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Minister of Employment and Social Development Jason Kenney speaks in Ottawa on Feb. 28, 2014.Sean Kilpatrick/The Canadian Press

The federal government is set to introduce steep new fines for employers caught abusing the Temporary Foreign Worker program – the latest crackdown on a program critics have warned can undercut wages or cost Canadians their jobs.

The authority to fine employers is expected to be included in a budget implementation act set to be tabled in Ottawa Friday, according to a source familiar with the change. The act is the legislation that implements the budget, which was made public Feb. 11. The act will include, for the first time, a range of cash penalties for companies found to have misused the TFW program.

The program allows employers to bring in foreign workers who aren't yet permanent residents, and is meant for cases where Canadians can't fill the jobs. It has proven vulnerable, however, to high-profile cases of abuse where Canadians have been skipped over or forced to train their foreign replacements. Those cases sparked outcry and led to federal changes announced last year, and Employment Minister Jason Kenney has since signalled further changes are coming.

Under the bill, employers will face administrative penalties in various cases, including if they brought in a worker under a false pretense, hired a foreign worker when they should have hired Canadians or fired Canadians from jobs that subsequently went to a foreign worker, the source said. The broad strokes of the change are expected to be announced Friday. Specific fines will be finalized in the coming months, with the changes expected to formally take effect in early 2015, the source said.

The potential fines were described as "very heavy" and "severe" by the source, described as the strongest action the government has taken to rein in the TFW program thus far. Companies who refuse to pay up could face a court order or have their case referred to the Canada Revenue Agency.

The new rules on foreign workers come as the Conservative government is under fire over its claims of rising skills shortages, which have been used to justify a dramatic increase in the number of foreign workers entering Canada.

A Finance Canada Jobs Report released with the Feb. 11 budget claimed that the job vacancy rate was rising, a statement that was at odds with Statistics Canada surveys of employers which said the vacancy rate is on the decline.

This week the Parliamentary Budget Officer made public the fact Finance Canada's numbers are off because they rely in part on wonky data from the classified site Kijiji. Mr. Kenney was criticized Thursday in the House of Commons by the NDP for defending the government's use of Kijiji and for saying in an interview this week that "none of us know exactly what is going on in the labour market of today."

The changes will apply to all industries and regions. The TFW program is widely used, though tends to be more valuable in labour-starved Western Canada. The program has been used by various sectors for a range of jobs, from low-skilled hotel employees to bank executives.

Last month's budget document announced $11-million per year, and $3.5-million per year following that, to beef up the LMO system "by realigning the application streams," focusing on certain applications, reining in the program across high-unemployment areas and increasing "prevention, detection and response to employer non-compliance."

Since 2006, Canada has brought in more than 500,000 TFWs. Under the program, most employees can work in Canada for a cumulative total of four years. During that time, they can apply for permanent residency. If they don't receive it, however, they must then leave Canada after four years of cumulative work and can't return for another four years.

Among the most high-profile cases of abuse was one last year, where RBC employees were training TFWs meant to ultimately replace them. The government cracked down, announcing changes in April, 2013. In a more recent case, 65 Alberta iron workers claimed in February they were laid off from jobs set to be filled by TFWs, a potentially serious abuse Mr. Kenney's office pledged to investigate. They were subsequently rehired.

The program once allowed some workers to be paid up to 15 per cent below the average wage, raising fears foreign workers could undercut Canadian wages. TFWs now must be paid the prevailing wage, and can only be hired with a "Labour Market Approval" document from the government, certifying essentially that no Canadians can fill the gig. Changes made last year brought in a fee for the LMO process aimed at strengthening the program and discouraging companies from applying for permits they weren't using.

Since the changes last year, however, wait times for LMOs have soared, prompting objections, particularly from high-skilled fields – banks and software development companies, for instance, said it was hurting their ability to recruit top talent.

The government is trying to rein in the TFW program as a part of broad changes to its immigration policy. Chief among those is the introduction of an Expression Of Interest immigration program next year, which is meant to better pair prospective Canadians with job openings – and, ultimately, reduce the demand for TFWs.

With files from Bill Curry