Legislative Update: Recruitment License for Temporary Help Agencies & Recruiters postponed to July 1, 2024

The Ontario government has implemented legislation requiring temporary help agencies and recruiters to obtain formal licenses. A takeaway for employers is that businesses that use temporary help agencies or recruiters should be aware that as of July 1, 2024, it will be a violation of the Employment Standards Act to knowingly engage or use the services of a temporary help agency or recruiter who is not licensed. Originally the compliance date was January 1, 2024; it has now been extended to July 1, 2024. 

When will this legislation come into effect?  

After being extended to July 1st, 2022, section 74.1.1 of the Employment Standards Act states all temporary agencies and recruiters in Ontario must hold a license or have a pending licensing application with the government. If a company applied for a license prior to this date and has not yet received a decision, they may continue to operate under a transnational rule. However, any applications submitted on or after July 1, 2024 (originally January 1, 2024), are prohibited from functioning as temporary help agencies or recruiters until they receive a license from the ministry. 

Who qualifies as a temp agency and/or recruiter?  

A temporary help agency is an employer that employs persons for the purpose of assigning them to perform work on a temporary basis for clients of the employer. Licensing requirements will also apply to any temporary help agency that is located outside of Ontario but assigns employees to work in Ontario.  

Recruiters, in this context, are individuals or entities that, for a fee, seek and match candidates for clients within Ontario. It’s important to note that even recruiters located outside of Ontario but connecting candidates with Ontario-based companies must obtain a formal license.  

Recruiters do not include those finding candidates for their own company, employees performing specific duties, or those working on behalf of educational institutions, trade unions, registered charities, government agreements, or candidates receiving services for developmental disabilities. 

Financial Implications & Potential Penalties.  

Prospective agencies and recruiters must pay a $750 application fee. Applicants must also provide security in the form ‎of ‎an electronic irrevocable ‎letter ‎of credit. The letter of credit must be in ‎the amount of ‎‎$25,000.‎  

Non-compliance with these requirements carries substantial risks, including financial penalties of up to $50,000 for agencies or recruiters providing misleading information during their application or operating without a license. Companies collaborating with unlicensed agencies or recruiters are also subject to similar financial penalties, underscoring the importance of verifying the licensing status of their partners. 

Conclusion: 

Overall, the introduction of the recruitment license in Ontario is expected to have a transformative and positive impact on the temporary and recruitment agency sector. Prospective agencies and recruiters can apply through the Government of Canada website. Given there is a fair amount of information required to complete the process, RLB People has created a checklist. Contact us at [email protected] to receive this checklist!  

To find out more about the wide variety of services RLB People can provide you with contact the team at [email protected] or visit their website at people.rlb.ca.