As of July 1st 2024, all recruitment and temporary staffing agencies operating in Ontario must be licensed under provincial legislation. On today’s Argentus Blog, we’re doing a primer on the new requirements. Here’s the background, the facts, and the (big) risks for companies who use unlicensed recruiters.

For many years, recruitment was an unregulated profession in Ontario. Anyone could declare themselves a recruiter, and begin filling jobs for clients.

As you might expect, that lack of regulation led to many fly-by-night outfits hanging up their shingle. Within this unregulated environment, there were also many recruitment firms that aimed for professionalism and transparency in their recruitment process—and at Argentus, we have aimed to be among the latter group. But for companies looking to use an external partner to hire, it was often hard to tell the difference between the two. Is a recruitment agency an established player with strong candidate relationships and ethics in their recruitment practice? Or are they a fly-by-night outfit, hoping to make a few placements and land a fee without actually building a specialty? 

Now, the situation has changed in Ontario: as of July 1st 2024, all recruitment agencies and temporary staffing agencies working in Ontario must be licensed. It’s a tremendous step forward for the industry. 

We wanted to write a post to comment on these new standards, and what they mean for companies who hire using recruiters, or are considering doing so. Because if you hire using a recruiter, and don’t follow the guidelines, you could be opening yourself up to huge risk and significant penalties.

Background: First of all, why did this requirement come about? 

In 2021, the Ontario Government passed the Working for Workers act, which made some changes to Ontario’s employment legislation, with new provisions aimed at protecting workers and employees, especially temporary workers. This followed some high-profile scandals among temporary help agencies in the province. Inspections found a number of agencies who were mistreating workers, including foreign workers, in some cases by withholding passports and paying them below minimum wage, among other violations of the Employment Standards Act.

After passing these changes in 2021, the provincial ministry of Labour, Immigration, Training and Skills Development worked to implement new licensing requirements. The deadline for agencies to become licensed was originally slated for January 1st 2024. After consultation with the industry, this date was pushed back to July 1st, when it officially came into effect.

The Facts: How does the new licence system work? 

The main requirement is that any recruiter operating in Ontario must obtain a licence from the government, whether they’re hiring temporary or permanent staff. Interestingly, this even includes agencies based outside Ontario who are recruiting for staff within the province. 

Agencies must register for the program with the Ontario Government, and provide a variety of company information, as well as information indicating their compliance with key employment legislation including the Employment Standards Act, Employment Protection for Foreign Nationals Act, Occupational Health and Safety Act, as well as the Workplace Insurance and Safety Act. In addition, many temporary staffing companies will need to provide a security in the amount of $25,000, which is meant to be paid out to temporary staff if the agency is found to be paying them below minimum wage. Any recruiter operating in Ontario who fails to comply with the program has 30 days to cease operating, and licences must be renewed every year. 

Most importantly, the province has launched an online portal (located here) where candidates and companies can view a database of licensed recruiters, and learn more about the program. 

The Risks: Fines for businesses who work with unlicensed recruiters

Here’s where things become mission critical for companies who are using a recruiter, or considering doing so.

Under the new licensing standard, companies face penalties under the Employment Standards Act if they use unlicensed recruiters to hire for either permanent or temporary positions. These penalties start at $15,000 for a first offence, and proceed upward to $25,000 for a second offence in a three year period, and go up to $50,000 for a third offence. So if you’re considering using a recruiter to hire, plug their company name into the directory and see if they’re legally able to operate. 

If they aren’t, you risk considerable fines by using them.  

A note: the government is currently working through a very large backlog of licence applications as the program rolls out. If you check the portal, the vast majority of agencies will be listed as “Under review,” while the government processes applications. But that doesn’t mean that the rules are on hold. As of July 1st, the rules are in effect, and the ministry has added an “explanation” field indicating whether the agency is allowed to operate, meaning their application is in good standing, or whether they’re prohibited from operating.

Of course, the new licence requirements don’t guarantee that you’ll have a great experience with a recruiter. The same could be said for using a doctor, a lawyer or other professional who needs a licence. But like those other licences, it does allow companies to place more trust in the agencies that they use—while also shielding them from bad experiences, and punishing bad actors. 

As we said above, it represents a significant step forward for recruiting, which is our passion and vocation.

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As always, we hope you found this post informative. Stay tuned for more content in the coming weeks about the intersection of supply chain, talent development and hiring. And if you have any immediate or upcoming hiring needs in Supply Chain Management, Procurement, Logistics, Change Management or Planning, reach out to Argentus today! Send an email outlining your requirements to recruit@argentus.com.