Licensing Framework for Temporary Help Agencies and Recruiters Coming into Force
Date: May 30, 2023
Bill 27, Working for Workers Act, 2021, amended the Employment Standards Act, 2000 (ESA) to introduce a new licensing regime for temporary help agencies (THAs) and recruiters that operate in Ontario. We reviewed Bill 27 in detail in previous editions of the FTR Now on October 26, 2021 and again on December 1, 2021.
The Ontario government recently issued proclamations to bring into force the new licensing requirements for THAs and recruiters, which will come into force in a staged fashion. Stage 1 will commence on July 1, 2023, at which time the bulk of the licensing provisions will come into force to facilitate THAs and recruiters to prepare and submit their licence applications. Stage 2 will commence on January 1, 2024, on which date the remaining provisions (including the prohibition on operating without a licence) will take effect.
The government has also published a series of regulations providing greater guidance on the licensing regime for THAs and recruiters, including providing detail on additional licensing requirements. These regulations (O. Reg. 99/23, O. Reg. 100/23 and O. Reg. 101/23) will also generally come into force on July 1, 2023 to facilitate the application process.
O. Reg. 99/23, Licensing – Temporary Help Agencies and Recruiters, sets out additional details for the licensing framework. These are some of the key elements:
- A new definition of “recruiter,” which is defined 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.” There are several exceptions from the definition of “recruiter” including a range of educational institutions that find or attempt to find employment for students or alumni, trade unions, registered charities and others. The exceptions also clarify that individual employees who perform recruitment activities as part of their employment duties are not recruiters requiring a licence.
- Additional information and statements that applicants must provide when applying for a licence or the renewal of a licence. Some examples include the following: disclosure of orders issued under the ESA, the Employment Protection for Foreign Nationals Act, 2009 (EPFNA) or the Occupational Health and Safety Act and their compliance status; whether the applicant has ever taken possession or retained a passport in contravention of the EPFNA; statements regarding the applicant’s tax compliance; and, registration with the Workplace Safety and Insurance Board and compliance with its obligations.
- Related to the above point, O. Reg. 99/23 also prescribes additional situations where the Director of Employment Standards (Director) must refuse to issue or renew a licence; these include many of the newly prescribed requirements.
- In certain circumstances where the Director is required to refuse to issue or renew a licence, or chooses to revoke a licence, the Director is to provide 60 days’ notice to the applicant or licence holder to show evidence of compliance.
- Applicants will be required to pay a fee of $750 when applying for a licence or the renewal of a licence. If an applicant files for more than one licence, a separate fee will apply to each application.
- Applicants will also have to provide security in the form of a $25,000 irrevocable letter of credit which may be “drawn down” to cover amounts owing under the ESA or the EPFNA. As with the licence fee, if an applicant files for more than one licence, a separate irrevocable letter of credit must be provided for each application.
O. Reg. 100/23 will amend the ESA’s Penalties and Reciprocal Enforcement regulations. It outlines the types of contraventions that could lead to an administrative monetary penalty being issued against a non-compliant THA or recruiter, or a client of a THA or recruiter. For more serious violations, the penalties will start at $15,000 for a first-time contravention and would increase for additional contraventions within a three-year period, up to $50,000.
O. Reg. 101/23 will amend the ESA’s Termination and Severance of Employment regulations. The amendments clarify that if an employee is terminated or severed because the Director “has refused to issue or renew, or has revoked or suspended, a licence to operate a [THA] or a licence to act as a recruiter,” the employee’s contract of employment has not been frustrated. This would mean that the employee would likely still be entitled to termination pay and severance pay under the ESA unless another exemption was engaged.
Considerations for Employers
As we noted at the outset, the amendments are coming into force in a staged fashion that will give THAs and recruiters a six-month period, beginning on July 1, 2023, to prepare and file their applications for licences. Notably, the licensing regulations contain transition provisions that will permit THAs and recruiters to continue operating on January 1, 2024 without a licence but only if they have submitted their applications before that date (i.e., by no later than December 31, 2023).
To best ensure that there is no interruption to their operations, THAs and recruiters will need to begin to prepare their applications and take the required steps to secure their licences in a timely fashion. While we have outlined some of the key requirements in this publication, there are other requirements that are prescribed and THAs and recruiters should carefully consult the text of the ESA and the new licensing regulations for full details.
For clients of THAs and recruiters, we remind you that beginning January 1, 2024, it will be a violation of the ESA to knowingly use an unlicensed THA or recruiter.
Should you have any questions about the new licensing requirements, please contact your regular Hicks Morley lawyer for assistance.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©