Staffing Agencies to Require Licensing in Canada: What This Means for Your Company

A 2021 law seeks to strengthen regulatory efforts around staffing companies by adding a licensing requirement, banning non-compete agreements, and creating other rules to which recruiters will be held accountable.

Ontario’s “Working for Workers Act 2021” applies to the over 2,250 staffing agencies operating in the province. Its provisions, including the licensing requirement, have broad support from both workers’ groups and the staffing industry itself.

Here’s What You Need to Know

What Does the New Law Require?

Provisions in the new law change several rules and requirements for recruiting firms, including:

  • Requiring licenses for staffing companies and recruiters
  • Prohibiting client companies from working with unlicensed staffing companies or unlicensed recruiters
  • Banning non-compete agreements for staffing company employees
  • Requiring companies to develop policies for after-hours communications with employees.

Certain parts of the new rules will take effect sooner than others. The ban on non-compete agreements, for instance, is one of the first parts of the new rule to take effect. Companies may use non-compete agreements only for the duration of a worker’s employment. Once the employment ends, the worker is free to take positions at competing organizations. Ontario is one of only two Canadian provinces that currently restricts non-compete agreements.

How Will the New Rules Affect Staffing? 

Although the law was passed in 2021, its requirements don’t take full effect until 2024. Staffing firms and recruiters are hard at work ensuring that they’ll be ready when the new rules take effect.

The licensing provision may have a significant effect on the relationship between staffing firms and their clients. The new law includes penalties for both staffing firms and clients when the recruiter is not licensed.

As a result, staffing firms expect their clients to have questions about the staffing company’s licensing status. Many firms are also preparing to provide indemnity agreements to protect their clients in the event that their license status is misrepresented or changes during the client relationship. These agreements lay a foundation of trust, so that client companies and staffing firms can continue to work together in the client’s best interests.

Have More Questions? Contact EPC Today!

Looking for help with your staffing needs? Talk to the experienced recruiters at Employment Professionals Canada. We help our clients connect to some of the best talent available throughout the Niagara Region and the Golden Horseshoe. Contact us today to learn more.