In 2023, Ontario’s Employment Standards Act, 2000 (ESA) was amended to impose a new licensing requirement on recruiters and temporary help agencies (THAs). The amendments address to whom the licensing requirement applies, how to apply and what is required for the application, deadlines and transition period, the licence term, and other related requirements.
The government also recently announced a delayed start of the new licensing requirement and further updated its guidance to provide more details on the licence application process and specify when a licence would be granted, would be denied, and would expire. Recruiters and THAs now have until June 30, 2024, to submit their applications for licences to the “Director of Employment Standards,” if they wish to continue operating on July 1, 2024.
Quick Hits
1. Starting July 1, 2024, recruiters and temporary help agencies in Ontario must be licensed.
2. The Ontario government has established an outline for the licensing process, including when licenses would be granted or denied.
3. Recruiters and temporary help agencies have until June 30, 2024, to submit licence applications.
A Summary of the New Requirements
On July 1, 2024, individuals or businesses operating as recruiters and THAs will be able to do so only if they hold a licence. Recruiters and THAs who submit licensing applications by June 30, 2024, will be permitted to continue operating on and after July 1, 2024, while awaiting the result of their applications.
Amendments to the ESA, its regulations, and the introduction of a new regulation (O.Reg. 99/23 Licensing – Temporary Help Agencies and Recruiters) set out the new standards for recruiters and THAs. The following is a summary of the key changes.
Defining THAs and Recruiters
The ESA’s definition of a THA remains unchanged: “an employer that employs persons for the purpose of assigning them to perform work on a temporary basis for clients of the employer.”
The term “recruiter,” which had previously not been defined, is now described in the regulations to the ESA 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.”
Exceptions to the definition of “recruiter” include certain educational institutions, trade unions, and registered charities. The exception also applies to individual employees who carry out recruitment tasks as part of their job duties. Those individuals are not recruiters and thus do not need a licence.
The Licence Regime
To apply for a licence, recruiters and THAs must do the following:
1. Complete an application form (which can done on the Ontario government’s website). The form requires the address of each physical location of the recruiter or THA, the organization’s tax compliance verification number, confirming information relating to the employment of foreign nationals, and other information.
2. Pay a fee of $750 for each new license or renewal of a licence.
3. Provide security in the form of an electronic irrevocable letter of credit in the amount of $25,000.
The letter of credit is a form of security, with the intent to draw against amounts owing under the ESA or the Employment Protection for Foreign Nationals Act, 2009 (EPFNA). The government recommends the use of its template letter of credit. In addition to being electronic, the letter of credit must:
- Be made in favour of the Director of Employment Standards
- Be issued by a legislatively prescribed bank or credit union
- State that it is being provided for the applicant’s obligations under the ESA and the EPFNA
- Be in the amount of $25,000
- Be irrevocable during its term
- Renew automatically when it expires, unless the bank or credit union states that it will provide a minimum ninety days’ notice to the Director of Employment Standards of the expiry
- Permit partial drawings without any conditions
- Have no other conditions
Licensing Terms
The term of the licence is one year from the date it was issued. If the recruiter or THA applies to renew a licence before it expires, then the licence remains valid until the Director of Employment Standards approves the licence renewal or serves notice that the renewal application is refused.
Justifications for Not Granting or Renewing Licenses
The Director of Employment Standards may refuse to grant or renew licenses in the following nonexhaustive list of circumstances:
1. 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.
2. The applicant is not registered with the Workplace Safety and Insurance Board.
3. The applicant has been convicted of an offence under the Criminal Code (Canada) or of the Immigration and Refugee Protection Act (Canada).
4. The applicant has not filed a return under a tax statute.
The amendments specifically state that if the Director of Employment Standards refused to issue or renew (or has revoked or suspended) a recruiter’s or THA’s licence, then the employment contracts with its employees are deemed to not be frustrated. In other words, employees will still be entitled to their applicable termination entitlements.
Recordkeeping
Under the new amendments, recruiters will now have recordkeeping requirements, similar to those imposed on THAs. As a result, recruiters will be required to maintain documentation of the name and address of each employer or prospective employer that has engaged or used the services of the recruiter.
In addition, the Ontario government will make available a public record, listing every entity or person that is licenced under the act, along with those that have previously obtained a licence.
Consequences of Noncompliance
Recruiters and THAs contravening these new requirements and the ESA generally could face penalties. Providing false or misleading information can lead to a $15,000 penalty under the act. Second- and third-time violations can result in additional fines of $25,000 and $50,000, respectively, in a three-year period.
Employers Using THAs and Recruiters
The new amendments require businesses that use the services of THAs or recruiters to ensure that these entities are in compliance with the new licensing requirements. It will be a violation of the ESA, as of July 1, 2024, to intentionally hire or use an unlicensed THA or recruiter. THAs and recruiters may continue operating past July 1, 2024, without a licence, so long as the THA or recruiter submitted an application by June 30, 2024. The new law requires THAs and recruiters to take active steps in preparing and submitting a licensing application, to avoid any interruption in daily operations.
Editor’s Note: This article was corrected and updated on November 22, 2023, to reflect that the government of Ontario recently changed the implementation date of the licensing requirement from January 1, 2024, to July 1, 2024.
