Ontario’s Bill 27: a new licensing regime for recruiters and temporary help agencies

Bill 27, the Working for Workers Act, 2021, amended the Employment Standards Act, 2000 (the ESA) to introduce new licensing requirements for recruiters and temporary help agencies (THAs) providing services in Ontario. Certain aspects of the licensing regime came into force on July 1, 2023, including a formal licence application process, record-keeping requirement, and administrative penalties for non-compliance. On January 1, 2024, remaining provisions will take effect that will prohibit recruiters and THAs from operating without a licence.

Additional guidance on the licence requirements is provided in three new regulations: O. Reg 99/23, O. Reg 100/23 and O. Reg 101/23. Notably, O. Reg 99/23 provides a new definition for “recruiter”, which is defined as “any person who, for a fee, finds, or attempts to find, employment in Ontario for prospective employees, but not the following” and “any person who, for a fee, finds, or attempts to find, employees for prospective employers in Ontario”. Exceptions to the definitions include school boards, trade unions and registered charities

THAs have for a long time been regulated under the ESA as “an employer that employs persons for the purpose of assigning them to perform work on a temporary basis for clients of the employer.” Further guidance on what type of business qualifies as a THA can be found on the Government of Ontario’s website.

Key elements of the amendments and associated regulations

• The licence application package includes providing the applicant’s legal name, the address of each physical location and five statutorily prescribed statements set out in the ESA relating to the employment of foreign nationals, among other requirements. The fee for each licence application is $750, payable at the time the application is submitted.
• A licence expires one year after the date it was issued or renewed. However, if, before an applicant’s licence expires, the applicant applies for a licence renewal, the licence remains valid until the licence is renewed.
• Applicants must post security in the amount of $25,000, in the form of an electronic irrevocable letter of credit.
• Recruiters must comply with new record-keeping requirements, which includes maintaining documentation of the name and address of each employer or prospective employer who has engaged or used the services of the recruiter.
• Employers (including recruiters and THAs) are prohibited from retaliating against employees or prospective employees who inquire as to whether the employer holds a licence to operate as a THA or a recruiter.

The deadline for becoming licensed is January 1, 2024. The six-month period between now and then will provide businesses who may fall into the definitions of recruiters and THAs a reasonable opportunity to prepare and file their applications. Where applications are made before January 1 and applicants have not received a decision by that date, a transitional rule applies such that applicants may continue operating as a recruiter or THA on and after January 1. This transitional rule applies until the applicant is notified that they have been issued or refused a licence.

Key takeaways for employers

• Recruiters and THAs must ensure that their application packages are prepared and filed before January 1, 2024. For further guidance on preparing an application, contact a member of Osler’s Employment and Labour group.
• Employers will be in breach of the ESA if they knowingly engage the services of an unlicensed recruiter or THA on or after January 1, 2024. Fines could range from $15,000 to $50,000. As a result, employers should be proactively asking for licence verification and building appropriate representations and indemnities into their commercial agreements with these service providers.