Employment Standards Act to Require Licensing of Temporary Help Agencies: The New Regime at a Glance

August 24, 2023

Written By David Cassin and Tom Feore

As of January 1, 2024, the Employment Standards Act will require temporary help agencies to be licensed by the Ministry of Labour in order to operate. The Ontario government previously amended the Employment Standards Act in December 2021 to include the new licensing requirements for temporary help agencies and recruiters and has been in the process of implementing the Regulations on a rolling basis since then.

Beginning on January 1, 2024, section 74.1.1 of the Employment Standards Act will prohibit clients of temporary help agencies from "knowingly engag[ing] or us[ing] the services of a temporary help agency unless the person who operates the temporary help agency holds a license for that purpose."

Temporary help agencies can begin to apply for licenses as of July 1, 2023 and must provide a $25,000 irrevocable letter of credit in favour of the Director of Employment Standards for the purpose of repaying owed wages to employees should the need arise. Licenses must be renewed annually.

Penalties for providing false or misleading information in an application (or renewal) for a license will start at $15,000 and can increase to $25,000 and $50,000 for any second and third violations in a three-year period, respectively. If a client of a temporary help agency is found to have knowingly engaged an unlicensed temporary help agency, the penalty will be $250 per worker affected, with additional fines of $500 and $1,000 per worker affected for any second and third violation in a three-year period, respectively.

A transitional rule will be in effect for any agency that applies for a license before January 1, 2024, which will permit such agencies to continue operating without a license until the license is either issued or refused. If the agency is refused a license, it may nonetheless continue to operate without a license for 30 days after it is served with the notice of refusal. During that 30-day period, a client would not be prohibited from engaging or using the temporary help agency's services.

The circumstances in which the Ministry will refuse to grant a license are set out in the Employment Standards Act and the accompanying Regulation and include:

• the applicant has not complied with an order issued under the Employment Standards Act or the Employment Protection for Foreign Nationals Act, 2009;
• the applicant has ever charged a fee to a foreign national in contravention of subsection 7 (1) of the Employment Protection for Foreign Nationals Act, 2009 or the applicant engages or uses the services of any person, other than an employee of the applicant, that has ever charged a fee or collected a fee charged to a foreign national in contravention of subsection 7 (1) of that Act;
• the applicant fails to meet the requirements set out in the Employment Standards Act and the regulations for the licence;
• the applicant has ever taken possession of or retained a passport or a work permit of a foreign national in contravention of subsection 9 (1) or (2) of the Employment Protection for Foreign Nationals Act, 2009.
• the applicant, or any officer, director or partner of the applicant, has been convicted of an offence under subsection 279 (1) or (2), 279.01 (1), 279.011 (1), 279.02 (1) or (2), 279.03 (1) or (2) or 279.04 (1) of the Criminal Code (Canada) or subsection 118 (1) of the Immigration and Refugee Protection Act (Canada) for which a record suspension under the Criminal Records Act (Canada) has not been ordered.
• the applicant is not registered with the Workplace Safety and Insurance Board, as required under subsection 75 (1) of the Workplace Safety and Insurance Act, 1997.
• the applicant has not provided the Workplace Safety and Insurance Board with information that, under sections 75 to 78 of the Workplace Safety and Insurance Act, 1997, the applicant is required to provide.
• the applicant has not paid the Workplace Safety and Insurance Board premiums or other amounts owing that, under sections 88 and 89 of the Workplace Safety and Insurance Act, 1997, the applicant is required to pay.
• the applicant, or any officer, director or partner of the applicant, is subject to a ban under section 19 of the Ontario Immigration Act, 2015.
• the applicant is in default of filing a return under a tax statute administered and enforced by the government of Ontario, or of paying any tax, penalty or interest assessed under any such statute for which payment arrangements have not been made.
• if the applicant has a business number with the Canada Revenue Agency, the applicant is in default of filing a return under the Taxation Act, 2007, the Income Tax Act (Canada), Part IX of the Excise Tax Act (Canada) or an Act of another province or territory that imposes a tax on corporations and is administered and enforced by the Canada Revenue Agency.

If you have any questions or concerns about the incoming changes to the Employment Standards Act and how they will impact your business, please contact one of the authors.

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