New licensing requirements for temporary help agencies and recruiters
Temporary help and recruitment agencies can offer valuable services to both employers and employees. For employers, they can greatly assist with the hiring and recruitment process, especially when roles are temporary or need to be filled quickly. For employees, working with a good agency may help the employee find work in a tricky market or save some of the headache of searching for suitable roles.
Despite the useful services these agencies may be able to offer, there is also the potential for abuse. Previously, the lack of regulation of these agencies meant vulnerable workers could be exploited or mistreated, with little recourse.
This is changing. As a result of amendments to the Employment Standards Act (the "ESA"), effective January 1, 2024, all temporary help agencies and recruiters in Ontario will need to be licensed to lawfully operate. Below we have highlighted some of the key information about these amendments and how they may impact your workplace.
1. What are the key changes?
Licensing:
The biggest change is that temporary help agencies and recruiters will be prohibited from operating unless they are licensed. To help enforce this, clients/employers will also be prohibited from knowingly using the services of a temporary help agency or recruiter which is not licensed. Operating as an unlicensed agency, or knowingly using their services, can trigger significant penalties, outlined below.
Termination of employment:
The ESA regulation governing termination of employment has also been updated to clarify that if an employee is terminated due to a temporary help agency or recruiter not being granted a license, this will not amount to a frustration of employment. Meaning, the employee will need to be provided with their statutory termination entitlements in accordance with the ESA.
Record Keeping:
Licensed agencies will also need to maintain and retain certain records for up to 3 years:
- Temporary help agencies: In addition to other records as may be required by the ESA, temporary help agencies will still need to keep records of (i) the number of hours worked by each assignment employee for each client in each day and each week; and (ii) retain a copy of certain written notices provided to assignment employees. Clients of temporary help agencies also need to keep records of the assignment employees used and their hours of work.
- Recruiters: Recruiters will need to keep records of each prospective employee and employer who uses their services.
Transparency:
As of January 1, 2024, the public will be able to check whether a temporary help agency or recruiter is licensed on the Ministry of Labour's website: https://mltsd-tha.my.site.com/portal/s/public-faci...
It is important to understand who the licensing requirement does and does not apply to. Both temporary help agencies and recruiters are defined terms under the ESA, as follows:
- Temporary help agency: "means an employer that employs persons for the purpose of assigning them to perform work on a temporary basis for clients of the employer." The Guide to the ESA further clarifies that if the temporary help agency is located outside Ontario, but assigns employees to work in Ontario, the licensing requirements apply.
- Recruiter: "means any person who, for a fee, finds, or attempts to find, employment in Ontario for prospective employees". However, there are a number of important carve outs, including individuals who act as in-house recruiters for an employer, certain educational institutions, trade unions and charities, among others.
3. How do agencies apply for licensing?
The licensing application process opened on July 1, 2023, and all temporary help agencies and recruiters must apply by January 1, 2024. Failure to apply by the deadline will mean the agency cannot operate unless and until the ministry issues a license to the agency.
Agencies can apply online and there is an application fee of $750. At the time of applying, agencies will need to provide details and information about their business and operations, including information on any criminal convictions, compliance with certain employment legislation and tax compliance, among other things. Agencies will also need to provide an electronic irrevocable letter of credit worth at least $25,000.
4. What are the consequences for non-compliance?
Failing to comply with these new ESA requirements may trigger hefty penalties. Not only can unlicensed agencies face consequences, clients or employers who knowingly use the services of an unlicensed agency can also face significant repercussions. Employment standard officers will have the power to issue fines, as follows:
- Up to $15,000 for a first contravention;
- Up to $25,000 for second contravention in a three-year period; and
- Up to $50,00 for a third contravention in a three-year period.
Takeaways:
While these changes certainly impact businesses which operate as temporary help agencies or recruiters, all employers and employees should take note of these new requirements. For employers, it will be critical to ensure that any temporary help agency or recruiter that you work with are and remain licensed as required. Fortunately, this can be easily done by checking the online registry. Employees who are considering working for or with a temporary help agency or recruiter should also always check that they are properly licensed. Doing so may help prevent the employee from winding up in a situation where they are not treated in accordance with their legal rights.
If you have any questions, please do not hesitate to reach out to a member of the Lee Workplace Law team. We would be happy to help.
