New Licensing Regime for Temporary Help Agencies and Recruiters Now In Force
As of July 1, 2023, Ontario will require temporary help agencies (THAs) and recruiters to participate in a new licensing regime as part of the Ontario Employment Standards Act, 2000 (the “ESA”). The legislative amendment is quite broad and applies to THAs and recruiters (anyone who provides services for indefinite employment placement). The legislation is being rolled out in two parts, with the second part to follow on January 1, 2024.
Definition of Recruiter
As part of the new regime, a new regulation O. Reg 99/23 establishes the definition of who is a “recruiter” as “(i) “any person who, for a fee, finds, or attempts to find, employment in Ontario for prospective employees” or (ii) “any person who, for a fee, finds, or attempts to find, employees for prospective employers in Ontario”, with specific exemptions.
Application Process and Renewal
Between July 1, 2023 and January 1, 2024, any THA or “recruiter” should begin the process to apply for licensing. Licensing and licensing renewal costs $750.00 and the applicant must provide an irrevocable letter of credit as security to the Director of Employment Standards (“DES”) for $25,000.00. This security will be used by the Ministry of Labour as a draw against any amounts owing under the ESA or the Employment Protection for Foreign Nationals Act in the event of any violations of the ESA.
Every legal entity must apply separately for a license. Legal entities are treated as one employer under the ESA. Each application requires its own licensing fee and letter of credit. If a legal entity operates as a THA and acts as a recruiter, it must submit two (2) separate applications to operate as a temporary help agency and to act as a recruiter. Again, each application requires a separate application fee and separate letter of credit.
There are circumstances where the Ministry may refuse to grant a license or renew a license. For example, a license may not be granted or renewed if the applicant is not registered with WSIB or is in default of filing a return under a tax statute.
It is currently unclear how frequently the renewal process will be – this detail does not appear to be published by the Ministry and is not referenced in the legislation.
The Ministry will maintain a public database of every person licensed along with the status of their license, applicants seeking a license, and any other pertinent information required by the ESA to be published.
Information Required for the Application
In addition to the filing fee and the letter of credit, the following information is required to apply for a licence under the regime:
Contact information, including email addresses, for one or more individuals who may be contacted if the Ministry has questions about the application
The address of each location where the applicant carries on business inside and outside of Canada
If the applicant is a corporation, the names and addresses of each corporate officer and director
If the applicant is a partnership, the names and addresses of each partner
Information with respect to the applicant, corporate officers and directors, and partners about similar applications and licences in other Canadian jurisdictions
Information about certain criminal convictions of the applicant, corporate officers and directors, or partners, and whether they are subject to a ban under the Ontario Immigration Act, 2015
Information about other legal persons (which include businesses and individuals) the applicant engages or uses in connection with the recruitment or employment of foreign nationals
Information about compliance with the:
Employment Standards Act, 2000
Employment Protection for Foreign Nationals Act, 2009
Occupational Health and Safety Act
Workplace Safety and Insurance Act, 1997
Tax compliance verification number obtained from the Ontario Ministry of Finance showing tax compliance
Penalties for Contravention of the ESA or Where License Not Renewed
As of January 1, 2024, it is a violation of the ESA to be operating as a THA or a recruiter without a license, and/or to use the services of a THA or recruiter knowing that the entity does not hold a license.
Penalties are set out under O. Reg 289/01 of the ESA for contravention of the licensing scheme. Some of these penalties include:
Providing false or misleading information under the ESA: $15,000.00 fine with additional fines of $25,000.00 and $50,000.00 for the second and third violation in a three-year period.
Contravention of the ESA: $250.00 fine with additional fines of $500.00 and $1,000.00 for the second and third violation in a three-year period.
No Frustration of Contract
O. Reg. 288/01 provides some guidance on how the licensing scheme may impact termination and severance of employment. Specifically, where the DES refuses to issue or renew a license, or has revoked or suspended a license to operate as a THA or as a recruiter, this does not create a frustration of contract scenario. Consequently, where a THA or recruiter does not receive a license or comply with renewal requirements, and must terminate all of their employees because it cannot continue operations, they will be required at a minimum to pay each person’s statutory termination and severance obligations.
Key Takeaways
THAs and recruiters who are captured by the new regulations should begin the application process for licensing as soon as possible, and by no later than December 31, 2023. The government of Ontario has advised that where applications are made before January 1, 2024, there is a transitional rule that may apply. What this means is that if the application is submitted before January 1, 2024 but a decision has not been received by January 1, 2024, then the THA or recruiter is allowed to continue to operate on and after January 1, 2024 until the Ministry provides the outcome of the application.
We understand that this brand new licensing process may be daunting. If you are a temporary help agency or recruiter wondering whether you are captured by the regulation or seeking assistance with your application, the team at Goulart Workplace Lawyers is pleased to assist you.
