Ontario employers who are recruiters or temporary help agencies or who use the services of recruiters or temporary help agencies take note — amendments to the Employment Standards Act, 2000 have now taken effect.

Amendments in Two Stages

As noted in a previous Blakes Bulletin, the Working for Workers’ Act, 2021 introduced several changes to employment laws in Ontario. In particular, the act amended Ontario’s Employment Standards Act, 2000 (ESA) to create a licensing regime for temporary help agencies and recruiters. The amendments and the corresponding regulations under the ESA have now been proclaimed into force. The Ontario government has adopted a staggered approach for implementing the changes.

• July 1, 2023: The provisions creating the licensing regime take effect and agencies and recruiters may begin their licensing applications.

• January 1, 2024: A prohibition on operating an unlicensed agency, acting as an unlicensed recruiter or knowingly engaging or using the services of an unlicensed agency or recruiter will take effect.

Accordingly, agencies and recruiters will have a six-month window to become licensed and come into compliance with the legislation. A transitional grace period will apply to unlicensed agencies and recruiters who apply to be licensed before the January 1, 2024 deadline.

Definition of “Temporary Help Agency” and “Recruiter”

The ESA and its regulations provide the following definitions which clarify to whom the new licensing regime applies. Note that the definitions are broadly worded.

• A temporary help agency is defined as “an employer that employs persons for the purpose of assigning them to perform work on a temporary basis for clients of the employer.”

• A recruiter is defined as “any person who, for a fee, finds, or attempts to find, employment in Ontario for prospective employees” or “any person who, for a fee, finds, or attempts to find, employees for prospective employers in Ontario.” There are a number of detailed exceptions to the new definition set out in the regulations.

The Licensing Regime – Key Aspects

Licensing applicants will be required to disclose a range of information to the Director of Employment Standards (Director) and pay a prescribed fee of C$750 for each application and renewal. Applicants will also have to provide security to the Director in the form of a C$25,000 irrevocable letter of credit.

Not all applications will be approved. Licences may be refused, revoked or suspended in certain prescribed circumstances, including where the agency is not registered and in good standing with the Workplace Safety and Insurance Board.

The Director also retains the right to deny licensing, where the Director believes upon reasonable grounds that the applicant will not carry on business with honesty and integrity and in accordance with the law due to the past or present conduct of the applicant, its officers, directors or representatives.

The amended regulations also dictate that if employment is terminated because the Director has refused to issue or renew a licence, or has revoked or suspended the same, the employment contract will not be deemed to be impossible to perform or frustrated. Therefore, it is possible that such employees would still be entitled to termination or severance pay under the regulations.

Employers Take Note

Going forward, Ontario employers should ensure they are engaging the services of licensed recruiters or temporary help agencies only. To reiterate, as of January 1, 2024, it will be a violation of the ESA for employers to knowingly use the services of an unlicensed agency or recruiter. Under the amended regulations, employers who contravene this prohibition may be subject to new administrative penalties ranging from C$15,000 for a first violation up to C$50,000 for subsequent violations.

The Ontario government will also be launching an online database, which will include the name of every person licensed under the ESA and the status of applications, renewals and expired or suspended licences. This will serve as a helpful resource to assist employers to meet their obligations. Further, we note that where a licence is refused, revoked or suspended, the agency or recruiter will be required to provide written notice to every client and assignment employee of the agency within 30 days.