Ontario took a significant step to ensure better protection for temporary workers by amending the Employment Standards Act to include a licensing requirement for temporary help agencies. This move aimed to elevate the standards of employment practices, ensuring fair treatment and legal compliance across the board.

Who is Required to Have a License

A Temporary Help Agency (THA) is an employer that hires workers to assign them to clients on a temporary basis. These agencies provide businesses with temporary staff to meet short-term needs or fill temporary roles. Even if a THA is based outside Ontario, it must comply with licensing requirements if it assigns employees to work within the province.

A recruiter is an entity that, for a fee, helps find employment for job seekers or locates employees for employers in Ontario. The employment can be temporary or permanent. However, certain exceptions apply:

Excluded from the definition:

  • Employees performing recruitment as part of their job duties.
  • Employers hiring directly for their own company.
  • Specific educational institutions assisting their students or alumni.
  • Trade unions and registered charities.
  • Persons engaged in government agreements for employment services.

A recruiter does not need to be based in Ontario to be subject to licensing requirements.

Key Changes with the Licensing Requirement

On July 1, 2023, a new licensing regime was introduced under the Employment Standards Act, 2000 for any temporary help agency (THA) or recruiter operating in Ontario. This regime brought several critical changes:

Mandatory Licensing: All temporary help agencies and recruiters must obtain a license to operate. This involves meeting specific criteria set by the Ministry of Labour, Training and Skills Development. Agencies must apply for a license and renew it regularly.

Security Requirement: Agencies and recruiters are required to provide a $25,000 irrevocable line of credit to be licensed. This aims to ensure that agencies have the financial stability to meet their obligations to workers.

Extensions and Amendments

While the new regime was initially set to take effect on January 1, 2024, the deadline was extended to July 1, 2024, to allow for further consultation. On April 29, 2024, the Ontario government enacted regulatory changes to modify the security requirement and provide more flexibility:

Surety Bonds Allowed: Agencies can now provide a bond of an insurer licensed under the Insurance Act to write surety and fidelity insurance, in addition to the previously required electronic irrevocable line of credit (ILOC) issued by a bank or credit union.
Duplicate Fees Eliminated: The requirement for a single organization to pay duplicate THA and recruiter licensing fees and securities was removed.
Exemptions for Certain Recruiters: Some recruiters are exempt from the requirement to provide security as a condition of becoming licensed.

Amended Security Requirements

Pursuant to regulatory amendments to O. Reg. 99/23, Licensing – Temporary Help Agencies and Recruiters, security may now be provided in either one of two forms:

Electronic Irrevocable Line of Credit (ILOC): Issued by a bank or credit union.
Surety Bond: Issued by an insurer licensed under the Insurance Act to write surety and fidelity insurance.

In either case, the ILOC or surety bond must contain a provision for automatic renewal after the expiry date and permit partial drawing without any conditions. The amount of the required security remains unchanged at $25,000.

Why This Matters to You

For businesses that rely on temporary help agencies for staffing solutions, these changes have significant implications. Ensuring that your recruitment agency partner is licensed under the new standards is not just about legal compliance; it's about safeguarding your business's reputation and ensuring the welfare of the workers who contribute to your success.

The Importance of a Licensed Recruitment Agency

Trust and Reliability: A licensed agency has been vetted and approved by the Ministry, offering peace of mind that they operate within legal frameworks and uphold high standards of employment practices.

Legal Protection: Partnering with an unlicensed agency can expose your business to legal risks, including fines and potential lawsuits for non-compliance with employment standards.

Ethical Responsibility: By choosing a licensed agency, you contribute to promoting fair labor practices and protecting the rights of temporary workers.

How to Verify Your Recruitment Agencies License

It's crucial to confirm whether your current or prospective recruitment agency partner has obtained the necessary license. Here are a few steps to help you verify:

Ask Directly or Check Online: Visit the Government of Ontario website where you can search for licensed agencies 

The amendments to the Employment Standards Act signify a positive shift towards better protection for temporary workers and greater accountability for agencies. As a business, it's essential to ensure that your recruitment agency partner is compliant with these new requirements. Doing so not only protects your business but also upholds the integrity and ethical standards of the employment industry.