In 2021, the Ontario government passed the Working for Workers Act, 2021. This Act amended the Ontario Employment Standards Act, 2000, as amended (the ESA) to, among other things, establish a licensing framework for temporary help agencies (THAs) and recruiters.
Initially, there was no timeline for when the licensing requirements would become effective and many of the practical considerations of the licensing program were not specified. However, on July 1, 2023, the Ontario government proclaimed the licensing framework into force and provided much-needed clarity on how this licensing framework will work. Importantly, the applications for licensing for THAs and recruiters are now open and all THAs and recruiters must hold valid licences by January 1, 2024.
Below is an outline of the new licensing framework for THAs and recruiters in Ontario.
THAs and recruiters now have until January 1, 2024, to become licensed and comply with the legislation. Those who apply for a licence before January 1, 2024, will have a transitional grace period to comply, meaning that those applicants may continue to operate as a THA without a licence until their application for a licence is either granted or refused by the Director of Employment Standards (the Director).
The basics of the new licensing regime
Under the new licensing framework:
- All THAs and recruiters are required to hold a valid licence;
- All persons are prohibited from 1) operating a THA or as a recruiter without a licence, and 2) from engaging or using the services of an unlicensed THA or recruiter;
- Licences may be suspended, revoked or refused in specific enumerated circumstances;
- There are administrative penalties for non-compliance; and
- Reprisals against employees for inquiring about whether a person is licensed to operate as a THA or recruiter are prohibited.
Who are temporary help agencies and recruiters?
The ESA has defined “temporary help agencies” and “recruiters” who are subject to the licensing framework as follows:
- A “temporary help agency” is defined as “an employer that employs persons for the purpose of assigning them to perform work on a temporary basis for a client of the employer.”
- A “recruiter” is defined as “any person who, for a fee, finds, or attempts to find, employment in Ontario for prospective employees” or “any person who, for a fee, finds or attempts to find, employees for prospective employers in Ontario.” There are a number of exemptions from this definition including individuals who perform recruiting activities for their own organization (e.g., an internal recruiter) as well as trade unions and registered charities.
Any person who fits into these definitions must comply with the new licensing framework established in the ESA. Importantly, a THA or recruiter does not need to be located in Ontario for the licensing requirement to apply. If, for example, a THA is located outside of Ontario, but assigns employees to work in Ontario, the licensing requirements apply.
How do THAs and recruiters become licensed?
THAs and recruiters must apply to the Director for a licence and can do so online. As part of this application, THAs and recruiters must:
- Disclose certain information to the Director (including, for example, the applicant’s business address, e-mail address, if any, and telephone number; whether the applicant has been issued and complied with any order under the ESA or the Ontario Occupational Health and Safety Act; whether the applicant, or any officer, director or partner of the applicant, has been refused a licence to operate as a THA or similar agency, or as a recruiter or in a similar capacity, in another Canadian jurisdiction or has had such a licence revoked or suspended in another Canadian jurisdiction; and proof that the applicant has verified its tax compliance status with the Ministry of Finance);
- Pay a fee of CA$750; and
- Provide security in the form of an electronic, irrevocable letter of credit in the amount of CA$25,000.
Further information about the application process and how to apply online can be found on the Ontario government’s website.
When will licences be refused, suspended or revoked?
The Director may refuse to issue, revoke or suspend a licence in certain circumstances enumerated in the ESA, including for example, if:
- The applicant is not registered with, has not provided certain information to, or has not paid premiums to the Workplace Safety and Insurance Board (WSIB);
- The applicant is in default of filing a return under a tax statute administered by the government of Ontario (and, if applicable, the Canada Revenue Agency), or paying any tax, penalty or interest under any such statute for which payment arrangements have not been made;
- The applicant has ever taken possession of or retained a passport or a work permit of a foreign national in contravention of the Employment Protection for Foreign Nationals Act, 2009; or
- The applicant or any officer, director or partner of the applicant, has been convicted of certain offences under the Criminal Code or the Immigration and Refugee Protection Act.
What if a company uses an unlicensed THA or recruiter?
As of January 1, 2024, the ESA prohibits employers from “knowingly” engaging or using the services of an unlicensed THA or recruiter.
Accordingly, employers who use THAs or recruiters from January 1, 2024, onwards would be wise to request proof of the THA’s or recruiter’s licence and contact their THA or recruiter to confirm compliance with the new licensing regime. Employers who fail to do so risk having to pay steep penalties as outlined below.
What are the penalties for failing to comply?
If any person provides false or misleading information in the context of a licensing application, the officer can issue a notice of contravention with monetary penalties ranging from CA$15,000 for a first violation, and CA$25,000 and CA$50,000 for second and third violations within a three-year period, respectively.
The officer can also issue a notice of contravention with the same monetary penalties if, as of January 1, 2024, the officer finds a contravention of any of the following:
- Operating as a temporary help agency without a licence;
- Acting as a recruiter without a licence;
- Clients knowingly using an unlicensed temporary help agency; or
- Employers, prospective employers or other recruiters knowingly engaging or using the services of an unlicensed recruiter.
What about employees of THAs that do not have a licence?
The ESA now stipulates that if an employee’s employment is terminated because the Director has refused to issue or renew, or has revoked or suspended, a licence to operate a THA or to act as a recruiter, the contract of employment is not deemed impossible to perform or frustrated. Accordingly, employees whose employment ends as a result of a licence refusal, suspension or revocation, are likely entitled to termination or severance pay under the ESA (and, possibly, to common law notice or pay in lieu of notice if the employment agreement does not have enforceable termination provisions).
If you have any questions about this topic, please reach out to the authors, Janice Pereira and Kyle Isherwood.
