Employers in Ontario That Leverage Recruiters and Temporary Help Agencies Take Note – New Licensing Requirements Effective January 1, 2024

As of January 1, 2024, temporary help agencies and recruiters operating in Ontario must be licensed. As set out below, businesses that leverage unlicensed temporary help agencies or recruiters will be subject to significant fines.

This new licensing requirement is a result of the Working for Workers Act, 2021, which amended the Ontario Employment Standards Act, 2000 (the “ESA”). To put the new licensing requirements into context, even prior to the new legislation, temporary help agencies in Ontario were still subject to significant limitations. Such limitations included prohibitions against charging fees to their own employees, whom they assign to clients. And if their own employees elected to accept employment from such clients, the ESA prevented temporary help agencies from interfering, subject to narrow exceptions.

The licensing framework is effectively the latest policy decision intended to protect temporary workers, many of whom are foreign nationals recognized as being acutely vulnerable to exploitation.

Deadlines and Definitions

The licensing regime has been implemented in a two-stage process: the application stage became available on July 1, 2023; and the mandatory licensing stage takes effect on January 1, 2024.

Under the new licensing regime, a “Temporary Help Agency” and a “Recruiter” are statutorily defined terms.

  • Essentially, a “Recruiter” is any person or organization that attempts to find prospective candidates employment in Ontario – for a fee.
  • A “Temporary Help Agency” is an employer that outsources the services of its own employees to its clients on a temporary basis.

We note that there are common-sense exemptions under the licensing regulations. For example, a Recruiter is not an employee who recruits other employees as a duty of their position, or an employer who recruits employees to be employed in its own organization.

The six-month window which began July 1, 2023, is meant to provide current Temporary Help Agencies and Recruiters a grace period to apply for formal licensing. As long as applicants submit their online application by December 31, 2023, they will be permitted to continue to operate until their application is either accepted or declined.

Application Process

To complete the licensing application, there is an application fee of $750 payable at the time of submission. An applicant must provide an electronic irrevocable letter of credit in the amount of $25,000, which meets specific content requirements.

The application itself is not particularly complex. Among other elements, the application requires applicants to answer questions with respect to compliance with the Ontario ESA, the related Employment Protection for Foreign Nationals Act, 2009, the Occupational Health and Safety Act and the Workplace Safety and Insurance Board.

If a licensing application is refused, revoked or suspended, an applicant will be provided with corresponding written reasons and will be entitled to appeal the decision to the Ontario Labour Relations Board. Notably, in the event a licensing application is refused, revoked or suspended, the Temporary Help Agency or Recruiter must provide broad written notice to their clients, prospective clients, candidates and employees within 30 days.

Key Takeaways for Ontario Employers

Any Temporary Help Agency or Recruiter operating in the province should begin the application process as soon as possible. If compliance gaps exist, there is still time to remedy those issues prior to the deadline.

For all other businesses in Ontario that leverage a Temporary Help Agency or Recruiter, they should engage their vendors to ensure their licensing applications are underway. As of January 1, 2024, knowingly using an unlicensed Temporary Help Agency or Recruiter represents a breach of the ESA and exposes the business to penalties ranging from $15,000 up to $50,000, in the case of multiple contraventions. Fortunately, the Ontario government has created a database of licensed businesses for ease of reference.

If you have questions or require assistance with these new licensing requirements, do not hesitate to reach out to a member of the Workplace Law Group. In addition, our 2023 Workplace Law Summit will be held November 14 from 8:30 a.m. to 1:30 p.m. This in-person event will provide clear and succinct guidance on issues facing employers. Click here for full details and to register.