Ontario, Canada: Licensing Framework for Temporary Help Agencies and Recruiters in Force July 1, 2023

Updated December 21, 2023: Originally slated to commence on January 1, 2024, the new licensing requirement for Temporary Help Agencies and recruiters was subsequently delayed until July 1, 2024.  (See O. Reg. 339/23 made under the Employment Standards Act, 2000).

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In December 2021, Ontario passed Bill 27, Working for Workers Act, 2021, which amended the Employment Standards Act, 2000 (ESA) to, among other things, establish a licensing regime for temporary help agencies (THAs) and recruiters.  The amendments:

  • added licensing requirements for THAs and recruiters;
  • prohibited persons from operating an unlicensed THA or recruiter, and from engaging or using the services of an unlicensed THA or recruiter; and
  • expanded the list of acts for which reprisals are prohibited to include inquiries about whether a person holds a license to operate as a THA or to act as a recruiter.

These amendments to the ESA did not come into force immediately because the licensing framework first had to be prescribed by Regulation.

On June 10, 2023, new Regulations were passed to establish the licensing framework [namely, Reg. 99/23 (Licensing – Temporary Help Agencies and Recruiters), Reg. 101/23 (Termination and Severance of Employment), and Reg. 100/23 (Penalties and Reciprocal Enforcement)].  These Regulations came into force on July 1, 2023.

Commencing January 1, 2024:

  • a THA or recruiter operating in Ontario must have a license to operate, or they must have applied for such a license; and 
  • no person may engage or use the services of an unlicensed THA or recruiter.

Failure to comply with these requirements will be a violation of the ESA.

Licensing of Temporary Help Agencies and Recruiters

With respect to licensing, Reg. 99/23:

  • defines a recruiter as (1) “any person who, for a fee, finds, or attempts to find, employment in Ontario for prospective employees” or (2) “any person who, for a fee, finds, or attempts to find, employees for prospective employers in Ontario,” and lists specific exemptions to these definitions;
  • specifies the information that must be included when applying for a license or a license renewal, the fee ($750 per application) that must be paid, and the security that must be provided (an electronic irrevocable letter of credit in the amount of $25,000);
  • specifies additional circumstances when a license will not be issued or renewed, e.g., if 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,
    • is not registered with the Workplace Safety and Insurance Board,
    • is in default of filing a return under a tax statute, or
    • has been convicted of select Criminal Code (Canada) or Immigration and Refugee Protection Act (Canada).
  • outlines the process for license refusals, revocations and suspensions;
  • specifies the information regarding licensed persons to be included in a public record created by the Government of Ontario on its website; 
  • outlines operations during a license review period; and
  • as noted above, describes transition period requirements.

Termination and Severance of Employment

With respect to termination and severance of employment, Reg. 101/23 specifies that a contract of employment has not become impossible to perform or been frustrated (for purposes of exemptions from entitlements to notice of termination or termination pay per s. 2 of Reg. 288/01 and for purposes of exemptions from severance pay per s. 9 of Reg. 288/01) if the employment is terminated because the Director of Employment Standards has refused to issue or renew, or has revoked or suspended, a license to operate a temporary help agency or to act as a recruiter.

Penalties and Reciprocal Enforcement

Reg. 100/23 implements new administrative penalties for non-compliance, including:

  • A $15,000 penalty for providing false or misleading information under the Act, and fines of $25,000 and $50,000 for the second and third violation in a three-year period, respectively; and
  • A $250 penalty for any other contravention of the Act, and fines of $500 and $1,000 for the second and third violation in a three-year period, respectively.

Bottom Line for Employers

Commencing January 1, 2024, employers will be in violation of the ESA if they knowingly engage or use the services of a THA or recruiter that is unlicensed. Accordingly, employers that use such services on January 1, 2024, and thereafter are encouraged to contact their THA or recruiter to confirm their compliance with the new licensing requirements.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.