Special thanks to our former summer associate Thanusa Sounthararajah for contributing to this update.
On July 1, 2023, the Employment Standards Act, 2000 (“ESA“), was amended to require temporary help agencies (“THAs“) and recruiters to obtain a license to operate in Ontario as of January 1, 2024. In addition, the Ontario government has published three regulations, O.Reg. 99/23, O.Reg. 288/01 and O.Reg. 289/01, that provide guidance on the new licensing regime and related requirements. These regulations also came into force on July 1, 2023.
Summary of Key Changes
The most important changes include:
- Licensing Requirements: THAs and those who are considered recruiters under the ESA will need to apply for licenses to operate in Ontario. The ESA and O.Reg. 99/23 set out additional details on applying, renewing, refusing and revoking a license.
- Record-Keeping Obligations: Recruiters will need to retain records of each prospective employee or employer who engages in the recruiter’s services for three years after the recruiter ceases to provide services to that individual. The recruiter will need to ensure that the records retained are readily available for inspection as required by an employment standards officer, to ensure accurate remuneration for employees.
- Agency and Recruiter Transparency: Under O.Reg. 99/23, businesses and prospective employees in Ontario will now be able to consult the Ontario government’s online database before working with a THA or recruiter, to check if they have met the province’s licensing requirements. It will be a violation of the ESA if businesses knowingly engage and use unlicensed agencies.
- Penalties: There are prescribed penalties in the ESA for when someone provides false or misleading information in a THA or recruiter license application. The amount can range from $15,000-$50,000. Furthermore, employment standards officers will issue penalties to THAs and recruiters if they operate without a license, and to those who knowingly use an unlicensed THA or recruiter. If businesses hire unlicensed recruiters, they will be responsible for compensating workers for any illegal fees charged to them. The penalties for each contravention are outlined in O.Reg 289/01.
- Termination and Severance of Employment: Under O.Reg. 288/01, if an employment contract is terminated because the Director of Employment Standards has refused, revoked or suspended a license, the employment contract is not frustrated. The employee may still be entitled to termination or severance pay as per the ESA.
The Ontario government implemented these new licensing requirements to protect employee rights and to ensure that THAs and recruiters are all competing on a level playing field.
THAs and recruiters under the ESA should ensure that they are onside with the new requirements by the prescribed deadlines. Additionally, businesses and those working with THAs and recruiters must ensure that they are aware of and comply with these new amendments.
If you have any questions or need assistance with any of the above, please contact someone from our team.