Quick answer: in-house hiring means recruiting, employing and payrolling workers directly; a staffing agency sources and, for temporary placements, employs them for you at an hourly markup. In-house usually wins for stable, senior, core roles. An agency usually wins for variable, seasonal, high-volume, urgent or compliance-heavy roles. The honest comparison is not the agency markup against the base wage: it is total cost against total cost. An in-house hire costs about $5,475 to make (SHRM), takes a median 44 days to fill, adds 10 to 18 percent in employer statutory costs on top of salary, and takes months to reach full productivity, and a bad hire costs roughly 30 percent of first-year earnings. Weigh all of that, not just the invoice.

This guide settles the comparison with numbers rather than slogans. It breaks down what in-house hiring truly costs once you count the parts nobody invoices, what a staffing agency costs and what sits inside the markup, which route is faster, which is less risky, and exactly when each one is the right answer. It is written by a staffing agency, so it also says plainly where hiring in-house is the better decision, because a guide that only sells is not one you can trust.

What Is the Real Difference Between Agency and In-House Hiring?

The visible difference is who does the recruiting. The difference that actually matters is who is the employer of record and who carries the cost and risk of the employment relationship.

In-house hiring: you source, screen, interview, hire, onboard and payroll the worker. You are the employer of record from day one. You carry the recruiting cost, the statutory employer costs, the onboarding, the productivity ramp, and the full downside if the hire fails or the role disappears.

Agency staffing (temporary): the agency sources and screens the worker and, crucially, employs them as the employer of record. Under Ontario’s Employment Standards Act rules for temporary help agencies, the agency handles payroll, source deductions and typically workplace coverage, while you direct the work on site. You pay an hourly markup and can end the assignment when the need ends.

Agency staffing (direct placement): the agency finds a permanent hire you employ directly, for a one-time fee. You get the agency’s sourcing and screening speed without the ongoing markup, but you take on the employment relationship from day one.

So the choice is rarely “agency or in-house” in the abstract. It is a role-by-role decision about who should carry the cost, the speed requirement and the risk for that specific position. The rest of this guide gives you the numbers to make it.

Why the framing is usually wrong from the start. Most employers inherit this decision as an identity rather than a calculation: ‘we’re a company that hires our own people’ or ‘we always use temps for the floor.’ Both are policies pretending to be strategy. The businesses that get workforce cost right treat every open role as a fresh allocation question and are comfortable running both models side by side, sometimes for near-identical jobs, because the difference lies in the demand pattern behind the role, not the job title on it.

Two identical jobs, two different answers. Picture two warehouse associate roles. One backs your steady, year-round baseline volume; the other exists only for a ten-week seasonal peak. Same job description, same pay, same site. The first should be an in-house hire you retain and promote; the second should be an agency placement that ends cleanly when the peak does. Anyone who insists both must be handled the same way, whichever model they favour, is optimising for tidiness rather than cost. The demand pattern, not the job, decides.

Culture worries are usually overstated. A frequent objection to agency labour is that temporary workers will not care about the work or will dilute the team. In practice, a well-run agency relationship with good retention, consistent faces returning each peak, and proper site induction produces workers who are as engaged as any short-tenure direct hire. The disengagement employers fear comes from churn and poor onboarding, not from the employment model. Fix those and the model is invisible on the floor.

What Does In-House Hiring Actually Cost?

Far more than the salary, and far more than most employers count. The instinct is to treat an in-house hire as “just their wage” and an agency as “wage plus markup, so more expensive.” That comparison is wrong before it starts, because it ignores four large costs that the in-house route carries and the invoice never shows.

1. The cost to make the hire. Per SHRM’s recruiting benchmarks, the average cost per hire is about $5,475 and the median time to fill a role is 44 days. That covers job-board spend, advertising, and the hours your managers and HR spend sourcing and screening instead of doing their own jobs. Every one of those 44 days is a day the role produces nothing.

2. The statutory costs stacked on salary. A salary is not the cost of an employee. On top of it you pay the employer’s share of CPP at 5.95 percent and EI at roughly 2.28 percent (1.4 times the employee rate), plus vacation pay, public holiday pay, and workplace coverage, per the CRA’s payroll contribution rules. Depending on province and industry, mandatory employer costs add roughly 10 to 18 percent on top of the wage. That is real money you carry on every direct hire and would carry inside an agency markup instead.

3. The productivity ramp. A new hire does not produce at full value on day one. Gallup’s workforce data puts the median time to full productivity at about 8.2 months for a mid-level professional; entry-level roles take one to three months. SHRM estimates lost productivity during ramp-up at over $40,000 per hire once you count reduced output, manager coaching time and early errors. Structured onboarding cuts that ramp by 30 to 50 percent, but it does not remove it.

The ramp is the cost employers most consistently ignore. Because the ramp is invisible, it rarely enters the comparison, yet it is often the largest single item. A mid-level hire at a median 8.2 months to full productivity is producing partial value for most of their first year while drawing full salary and full statutory costs. If that same output could be covered sooner by an experienced agency worker during a surge, the in-house ramp is a real cost you paid for the privilege of building permanent capability, which is worth it for a core role and wasteful for a temporary one.

4. The cost of getting it wrong. A bad hire is commonly put at around 30 percent of the role’s first-year earnings. On a $55,000 role that is roughly $16,500 gone, before you count the disruption, the lost productivity of the empty seat while you re-hire, and the effect on the team that carried the gap. And bad hires are not rare: rushed, single-channel hiring produces them regularly.

Bad hires are a system output, not bad luck. The instinct is to treat a bad hire as an unlucky individual. Usually it is a predictable result of a rushed, single-channel process: one job board, one hurried interview, a decision made under deadline pressure because the seat had already been empty for weeks. The 44-day median time-to-fill is precisely what creates the pressure that produces the bad hire. Speed, sourcing breadth and proper screening are not niceties; they are the controls that keep the 30-percent loss off your books.

Add it up honestly. For one $55,000 role: about $5,475 to hire, roughly $7,700 in statutory costs a year, a multi-month productivity ramp worth tens of thousands, and a one-in-some chance of a $16,500 bad-hire loss. In-house hiring is not free. It is a large, mostly invisible cost stack, and the only fair way to compare it to an agency is to put the whole stack on the table.

Work a real example. Say you need a worker for a 12-week seasonal surge. In-house: roughly $5,475 to recruit, weeks to fill, statutory costs on top of wage, a productivity ramp that barely finishes before the season ends, and a layoff to manage when it does. Agency: a markup on the hourly rate, a worker on site in days, and the assignment simply ends when the season does. For temporary and variable work the agency is not the expensive option; it is obviously the cheaper one once the full stack is counted. The in-house case gets stronger the more permanent the role becomes.

What Does a Staffing Agency Cost?

For temporary placements, an agency charges an hourly markup on the worker’s wage. For permanent placements, a one-time fee. Job seekers are never charged: in Ontario it is illegal for an agency to bill a worker to find them work.

What sits inside the markup. The markup is not mostly margin. The bulk of it is the same employer statutory cost you would pay on a direct hire, the CPP, EI, vacation pay and workplace coverage worth 10 to 18 percent, except the agency carries it instead of you. The rest covers sourcing, screening, payroll administration and the agency’s margin. A markup of, say, 45 to 60 percent sounds large next to a bare wage, but a large slice of it is cost you would pay anyway, just on your own payroll and split across several line items instead of one invoice. When an agency quotes a markup, ask it to show that split.

What the markup buys that never appears as a task. Beyond the statutory costs, an agency absorbs work that has a real internal price: writing and placing ads, fielding and screening applicants, checking references and credentials, running payroll and remittances, handling ROEs and terminations, and covering for no-shows. Done in-house, that is HR and manager hours diverted from running the business. The markup converts a scatter of hidden internal labour into a single, predictable external cost, which is often worth more to a lean operation than the raw dollar comparison suggests.

The invoice illusion. Part of why in-house feels cheaper is purely cosmetic: its costs are scattered across payroll, benefits, job boards, HR salaries and lost productivity, so no single number ever lands on a desk. The agency’s cost arrives as one line on one invoice every week. The same total, made visible, feels larger. Finance teams that itemise their true cost-per-hire almost always find the gap between the two models is far smaller than the raw markup suggests, and sometimes runs the other way.

What you are actually buying. A screening, compliance and payroll capability that is already built and running, plus the ability to convert a fixed cost into a variable one. You pay for workers when you have work and stop paying when you do not, which is the entire economic argument for the model. The full menu of what a good agency does, and how to tell whether yours is delivering it, is set out in the 10 benefits of using a staffing agency over in-house hiring.

Flexibility has a dollar value. The ability to scale headcount down is worth as much as the ability to scale it up, and it is the half employers forget. Carrying ten workers you no longer need through a slow quarter costs their full loaded wage for weeks. With the temporary model that cost disappears the day the assignment ends. When you price an agency markup, price the layoffs, severance and idle-time you are not paying against it, not just the wage you are.

Agency vs In-House: The Side-by-Side

How to read this table. Neither column is the winner. The table is a router. Run each open role down it and ask which column carries the cost, speed and risk more efficiently for that role. A permanent operations manager belongs in the left column. Forty warehouse associates for a ten-week peak belong in the right. Most operations need both, which is why the real skill is allocation, not loyalty to one model.

Most operations already run a hybrid without admitting it. Almost every business that says it ‘hires in-house’ still reaches for temps at Christmas, or a contractor for a project, or an agency when someone quits mid-peak. The question is not whether you use both models but whether you use them deliberately. Ad-hoc agency use at premium emergency rates is expensive; planned agency use at agreed rates is not. The saving is in the planning, not the model.

Which Is Faster: Agency or In-House?

An agency, decisively, and the gap is larger than most employers assume because there are two clocks, not one.

The hiring clock. An internal search runs a median of 44 days from open req to signed offer (SHRM). A staffing agency working from a pre-screened pool can place a worker in days, and for standard high-volume roles sometimes within hours. When a 3PL operator needed 60 warehouse associates ahead of peak, Trimax placed 58 verified workers in under a week with a 94 percent retention rate through the full peak, because the screening was done before the call, not after.

The productivity clock. This is the one people forget. Even after you hire in-house, the worker takes months to reach full output, up to a median 8.2 months for a mid-level role. An agency worker who has done the same role on other sites arrives closer to productive. So the agency does not just win the 44-day hiring race; it also shortens the ramp that follows it.

Be honest about your own pipeline. The in-house case rests on an assumption worth testing: that you can actually attract good candidates in reasonable time. Many operations believe they can and cannot. If your last three hires each took two months and one has already left, your real in-house cost is far higher than the benchmark, and the agency comparison shifts. Look at your own historical time-to-fill and first-year attrition before assuming in-house is the cheaper path; the averages are not your numbers.

Measure your own baseline before you outsource or insource anything. Pull three numbers for the last twelve months: your real average days-to-fill, your true all-in cost per hire, and your first-year attrition rate. Most operations have never calculated them and are startled by the result. Those three numbers are the entire in-house side of the comparison, and until you know them you are comparing an agency quote against a guess. Once you know them, the decision stops being ideological and becomes arithmetic, which is exactly where you want it.

When speed is the whole decision. If a line is down, a peak has landed, or a resignation has left a gap that is costing you throughput every day, the cost difference between agency and in-house is trivial next to the cost of the empty seat. Technology has widened this gap further: data-driven staffing tools now fill roles faster than a manual internal search ever could.

Speed compounds. A day saved on filling a role is not just a day of that role’s output; it is a day your existing team is not absorbing the extra load, a day you are not paying overtime to cover, and a day of errors avoided from a short-staffed line. On a high-throughput operation those knock-on costs dwarf the markup. This is why speed-critical roles are the clearest agency win of all, and why haggling over markup on an urgent role is usually a false economy.

Which Is Less Risky?

It depends on the risk you are most exposed to, and there are three worth separating.

Bad-hire risk favours the agency. A failed direct hire costs you roughly 30 percent of first-year earnings and weeks of re-hiring. A failed agency assignment simply ends, and the agency supplies a replacement. For hard-to-assess or high-turnover roles, temp-to-hire lets you see a worker perform on your floor before you commit, which is the single cleanest way to lower bad-hire risk.

Temp-to-hire is the underused middle option. Most employers frame this as a binary, hire them or use a temp, and miss the option that removes the most risk: bring the worker in through the agency, watch them do the actual job on your actual floor for a defined period, then convert the ones who prove themselves to permanent staff. You replace a guess made in a 45-minute interview with weeks of real performance data, and Ontario law lets you convert without a fee once six months have passed. For any role where a bad hire is expensive and hard to predict from a CV, this is the lowest-risk path there is.

Compliance risk is shared, and it does not transfer with the payroll. For agency temps, the agency is the employer of record and typically carries WSIB coverage, but you control the worksite and keep the duty to provide a safe environment and supervision. Clients can also be held jointly and severally liable for unpaid wages. And the agency itself must be licensed: since 1 July 2024 every temporary help agency in Ontario must hold a licence, and knowingly using an unlicensed one is illegal under the THA licensing rules. The full split is laid out in our guide to WSIB and the ESA when you use an agency.

Get the safety split on paper, not on trust. The most common compliance failure with agency labour is not a dispute; it is an assumption, where the client believed the agency handled site safety and the agency believed the client did. Agree explicitly and in writing who verifies credentials, who delivers site orientation, who supervises, and who reports incidents. It costs nothing and closes the exact gap that turns an injury into a liability. The agency’s WSIB coverage does not move your worksite duties onto them, and no invoice ever will.

Misclassification risk favours doing it properly, either way. Trying to save money by paying someone as an “independent contractor” when they function as an employee is a costly mistake: the CRA can reassess unpaid CPP, EI and tax plus penalties. A legitimate agency relationship, where the agency is the clear employer of record, actually removes this risk rather than creating it, because the employment relationship is unambiguous.

The contractor shortcut is the expensive one. Employers reaching for ‘independent contractors’ to dodge CPP, EI and vacation pay are trading a small visible saving for a large hidden liability. If the CRA or a tribunal finds the person functioned as an employee, you owe the back contributions, the vacation and holiday pay, and penalties, often years later and all at once. A proper agency relationship costs a transparent markup today and removes that exposure entirely. Cheap-looking and cheap are not the same thing.

When Is In-House Hiring Genuinely the Better Choice?

Often. A staffing agency wrote this guide, and it would be dishonest to pretend the agency model wins everywhere. It does not.

• Stable, permanent, core roles. If a role is central to your operation and you expect to hold it for years, hire directly. The markup on a permanent, predictable role buys you nothing over time, and the person you want is looking for permanence.
• Senior and leadership roles. Supervisors, managers, estimators, specialists. These need deep institutional knowledge and long tenure, and they are worth the full in-house search and ramp.
• Roles central to your culture or IP. Where the work requires trust, proprietary knowledge, or long relationships with your customers, a directly employed worker is the right call.
• When you have time and a strong pipeline. If the role is not urgent and you already attract good candidates, the in-house economics are fine. Speed is not always the constraint.

The rule of thumb. The more permanent, senior and predictable the role, the more in-house wins. The agency model earns its keep at the other end of that spectrum.

Retention is the in-house payoff you must actually earn. The whole case for hiring core roles in-house rests on tenure: you pay the search and ramp once and keep the person for years. That only works if you retain them. With Canadian turnover averaging 11.9 percent and reaching 25.9 percent in retail and wholesale (Mercer), a core hire who leaves inside a year converts your in-house investment into an agency-sized cost with none of the flexibility. If your retention is weak, the in-house economics you are counting on may not exist, and fixing retention matters more than the agency-versus-in-house question itself.

When Does a Staffing Agency Win?

• Variable or seasonal demand. When volume swings with peaks, promotions or container weeks, permanent headcount fitted to an average is wrong almost every day. The agency converts that fixed cost to a variable one.
• Speed-critical gaps. A line down, a sudden resignation, a peak that landed early. When the empty seat costs you throughput daily, the 44-day internal search is the expensive option.
• High-volume hiring. Standing up 40 or 60 workers at once is a screening and payroll operation most in-house teams are not built to run quickly. An agency is.
• Hard-to-fill or compliance-heavy roles. Certified trades, licensed roles, anything where verification matters. A specialist agency that verifies credentials before mobilisation removes a risk you would otherwise carry.
• Trial-to-permanent. When you want to see someone perform before committing, temp-to-hire is the lowest-risk path to a permanent hire.

The clearest single test: choosing between temporary and permanent staffing models comes down to how variable and how urgent the demand is. High variability or high urgency points to an agency; stability and patience point in-house.

Urgency changes the maths entirely. The same role can belong in either column depending only on timing. A picker you need in six weeks with a healthy pipeline is an in-house hire. The identical picker you need on Monday because someone quit and the trucks are arriving is an agency call. Nothing about the job changed; the cost of the empty seat did. Always price the role against the calendar, not just the org chart.

The empty-seat cost is the number that settles most arguments. Every day a role sits open has a cost, and it is rarely zero. On a revenue-generating or throughput-critical seat it can be hundreds or thousands of dollars a day in lost output, overtime to cover, and errors from a stretched team. Multiply that by the 44-day median time to fill and the in-house route can quietly cost more in vacancy than the entire agency markup would have. Employers who put a real daily figure on an empty seat almost never argue about markup on an urgent role again.

How Do You Actually Decide, Role by Role?

Stop asking “agency or in-house” as a company-wide policy. Ask it per role, against four questions.

1. Is the demand stable or variable? Stable baseline work points in-house. Variable, seasonal or surge work points to an agency. Most operations have both, and the mistake is treating all of it as one.

2. How urgent is it? If the seat costs you money empty, speed wins and the agency’s days-not-weeks fill is worth the markup. If you can wait, in-house economics improve.

3. How permanent and senior is the role? The more central and long-term, the more the in-house ramp and search pay back. The more peripheral and temporary, the more the agency’s flexibility pays back.

Volume tips the balance too. Even a permanent role can favour an agency’s direct-placement service when you are hiring many at once. An in-house team that comfortably makes two hires a month is not built to screen and onboard forty in three weeks without either slipping the timeline or dropping the screening bar, and dropping the bar is how the 30-percent bad-hire cost multiplies across a whole cohort. High volume, compressed into a short window, is a capability question as much as a cost one.

Seniority is the cleanest dividing line. If you had to pick one variable to decide the whole question, pick seniority. Entry-level, high-volume, interchangeable roles are where agencies dominate on speed and flexibility. Senior, specialised, relationship-heavy roles are where in-house dominates on knowledge and tenure. Most of the genuinely hard calls sit in the middle, and that is exactly where the four-question test earns its keep.

4. How much compliance or verification risk does it carry? Certified, licensed or safety-critical roles favour a specialist agency that verifies before mobilisation. Low-risk roles you can run in-house.

Put the four answers in a grid. Score each open role on the four questions, stable-or-variable, urgent-or-patient, permanent-or-temporary, high-or-low compliance risk. Roles that come back variable, urgent, temporary or high-risk belong with an agency; roles that come back stable, patient, permanent and low-risk belong in-house. The genuinely mixed results, a permanent role you need urgently, or a stable role that is compliance-heavy, are where direct placement or temp-to-hire bridges the two. The grid turns an argument into a decision.

The hybrid most operations actually need. A permanent core, hired in-house and invested in. A planned temporary layer for peaks and projects, agreed with an agency ahead of time. And a warm on-demand agreement for genuine emergencies. Running only the first and treating everything else as a crisis is one of the most common and expensive workforce planning mistakes, and it is why a standing staffing plan before each hiring season beats improvising every time.

Is Your Agency a Vendor or a Partner?

If you decide an agency is right for a set of roles, the next question decides whether it works: are you buying a transaction or a relationship?

A vendor sends bodies against a req and competes on markup. A partner learns your site, your shifts, your racking, your busy season and your standards, and gets better at filling your roles over time. The difference shows up in the numbers that matter, fill rate, no-show rate and retention, not in the headline markup. An agency you review monthly on a shared scorecard behaves differently from one you only ever tell the rate is too high. The six questions that reveal whether your agency is a vendor or a partner are worth asking before you sign, not after a bad peak.

Give the agency what it needs to perform. Half of the fill-rate and no-show problems employers blame on agencies trace back to a vague brief, a rate set below the local market, an unattractive shift, or a three-stage approval chain for a general-labour hire. An agency cannot beat a rate you priced too low or fill a shift nobody wants. Before you judge an agency’s numbers, check that you gave it a precise role, a market rate, a clear shift and one decision-maker who can say yes the same day. The best-run agency in the country will stall on a bad brief.

Concentration buys you attention. Splitting volume across several agencies feels like insurance and rarely is; each gets a fraction of your work and none learns your operation. One primary partner, plus one warm backup, gets you the good workers, because in a tight market the agency’s best people go to the client who matters most to them.

Why splitting volume backfires. The logic of using three agencies is that competition keeps rates honest. In practice it does the opposite. Each agency, holding a third of your volume and knowing two rivals are watching, has little incentive to invest in learning your site or reserving its best workers for you. The client who commits volume to one partner becomes that partner’s priority, gets first call on scarce workers, and can negotiate transparent pricing precisely because the relationship is worth protecting. Fragmented buying feels prudent and quietly makes you nobody’s priority.

Partners plan; vendors react. The practical test of a partner is whether they contact you before your busy season or only after you call in a panic. A partner who knows your calendar lines up screened workers six to eight weeks out, so day one of peak is staffed with people who are already inducted. A vendor waits for the emergency and bills the emergency rate. Over a year, the partner relationship is both cheaper and calmer, and neither shows up in a markup comparison done on a spreadsheet.

Review it, do not just buy it. The single practice that separates employers who get value from an agency from those who complain about one is a standing monthly review of shared numbers: fill rate, no-show rate, 30- and 90-day retention, and cost per hour worked. An agency that sees its own scorecard improves against it. An agency that only ever hears ‘your rate is too high’ responds by sending cheaper, less-screened workers. You largely get the agency you manage.

The Bottom Line

The agency-versus-in-house debate is usually framed as a cost fight, and it is the wrong fight. In-house hiring is not free: it costs about $5,475 and 44 days to make a hire, adds 10 to 18 percent in statutory costs on top of salary, carries a multi-month productivity ramp worth tens of thousands, and exposes you to a bad-hire loss of roughly 30 percent of first-year pay. An agency markup looks larger than a bare wage only because it bundles into one number the costs the in-house route hides across many.

So do not choose a side. Allocate. Hire your stable, senior, core roles in-house and invest in them. Use an agency for the variable, urgent, high-volume and compliance-heavy roles where speed and flexibility are worth more than the markup. Decide role by role against demand, urgency, permanence and risk. And if you use an agency, choose a partner you review on real numbers, not a vendor you haggle with on rate. Done that way, the two models stop competing and start covering each other.

Build the allocation once, revisit it each season. The output of this guide is not a verdict; it is a standing allocation. Map your roles into permanent-core, planned-temporary and on-demand tiers, agree the temporary layer with a partner ahead of each season, and keep a warm agreement for emergencies. Then revisit it each quarter as demand shifts. Operations that do this stop treating staffing as a series of panics and start treating it as a managed cost, and the agency-versus-in-house question stops being an argument and becomes a routine line on a plan.

The five-question gut check before you decide anything. Is this role stable or spiky? Do I need it filled this week or this quarter? Will I still need it in two years? Does it carry certification or safety risk? And can I actually attract good candidates for it myself, on my own historical evidence? Answer those five honestly for each open role and the agency-versus-in-house choice usually makes itself. The mistake is never asking them and defaulting to whatever the company did last time.

A word on the market you are deciding inside. This decision is not happening in a vacuum. Statistics Canada’s employment services sector, worth $24.3 billion in 2024, actually contracted 1.7 percent that year on a softer labour market, the first drop outside the pandemic in the comparable series. Yet national job vacancies rose again to 506,700 in Q1 2026, the first increase since 2022. Translation: demand for workers is turning back up while the staffing market is lean, which means agencies are competing for your business right now. That is a good moment to negotiate transparent, itemised pricing rather than accept a blended markup.

Deciding which roles to hand to an agency? Trimax Employment is a THA-licensed Canadian staffing agency that verifies every worker through Trimax Verify before they reach your floor, with transparent, itemised pricing so you can see exactly what sits inside the markup. Tell us the roles you are weighing and we will show you, honestly, which ones an agency should carry and which you are better off hiring yourself. If those roles are in a warehouse or the trades, our complete guides to warehouse staffing and skilled trades hiring go deeper on each.

Frequently Asked Questions

Is a staffing agency cheaper than hiring in-house?

It depends on the role, and the honest comparison is total cost against total cost. In-house hiring costs about $5,475 per hire and a 44-day median time to fill (SHRM), plus 10 to 18 percent in employer statutory costs on salary, a multi-month productivity ramp, and roughly 30 percent of first-year earnings if the hire fails. For variable, urgent or high-volume roles an agency usually wins on total cost; for stable, senior, core roles, in-house is usually cheaper over time.

What does a staffing agency markup actually cover?

Mostly the same employer costs you would pay on a direct hire. The largest part of a temporary markup is the statutory employer cost, CPP at 5.95 percent, EI at roughly 2.28 percent, vacation pay, public holiday pay and workplace coverage, worth 10 to 18 percent, carried by the agency instead of you. The rest covers sourcing, screening, payroll administration and the agency’s margin. Ask any agency to show you the split.

What is the true cost of hiring an employee in Canada?

Well above the salary. Making the hire averages about $5,475 (SHRM). On top of salary you pay employer CPP (5.95 percent), EI (about 2.28 percent), vacation and holiday pay and workplace coverage, per the CRA, adding roughly 10 to 18 percent. Then a new hire takes months to reach full productivity, with lost ramp-up productivity estimated at over $40,000 per hire, and a bad hire costs around 30 percent of first-year earnings.

Which is faster, an agency or in-house hiring?

An agency, on both clocks. An internal search takes a median 44 days to fill (SHRM), while an agency working from a pre-screened pool can place a worker in days or, for high-volume roles, hours. An agency worker experienced in the role also ramps to full productivity faster than a fresh hire, who can take a median 8.2 months for a mid-level role.

When should I hire in-house instead of using an agency?

For stable, permanent, senior and core roles, supervisors, managers, specialists, and any role central to your culture or long-term operation. The markup on a permanent, predictable role earns you nothing over time, and those roles reward the deeper institutional knowledge that comes with direct, long-tenure employment.

When is a staffing agency the better choice?

For variable or seasonal demand, speed-critical gaps, high-volume hiring, hard-to-fill or compliance-heavy roles, and trial-to-permanent situations. In each case the agency’s flexibility, speed or verification capability is worth more than the markup. Choosing between temporary and permanent staffing comes down to how variable and urgent the demand is.

Does using a staffing agency reduce hiring risk?

For bad-hire risk, yes: a failed assignment simply ends and the agency replaces the worker, versus roughly 30 percent of first-year earnings lost on a failed direct hire. Temp-to-hire lets you trial a worker before committing. Compliance risk is shared, the agency is the employer of record but you keep site safety duties, so use a licensed agency and get the split in writing.

Do staffing agencies need a licence in Ontario?

Yes. Since 1 July 2024 every temporary help agency operating in Ontario must hold a licence, and it is illegal for a business to knowingly use an unlicensed one, under the province’s temporary help agency licensing rules. Always ask for the licence number before engaging an agency.

Can I hire a temp agency worker permanently?

Yes. Under Ontario’s ESA rules for temporary help agencies, an agency cannot prevent a client from hiring an assignment employee directly, and it generally cannot charge a conversion fee once six months have passed from the day the worker first started with you. Temp-to-hire is a common, low-risk route to a permanent hire.

How big is the staffing industry in Canada?

Substantial. Statistics Canada reported employment services operating revenues of $24.3 billion in 2024, with temporary staffing the largest segment at 48.2 percent of sales and permanent and contract placements at 42.7 percent. Revenue dipped 1.7 percent that year on a softer labour market, the first drop in the comparable series outside the pandemic.

How do I choose between multiple staffing agencies?

Filter first on a valid THA licence, then compare on fill rate, no-show rate and 30/90-day retention rather than headline markup, and decide whether each behaves like a vendor or a partner. The six questions that reveal a vendor from a partner are the fastest test. Concentrating volume with one primary partner usually beats splitting it across several.

What is the biggest mistake employers make with this decision?

Treating it as one company-wide policy instead of a role-by-role allocation, and comparing the agency markup against the bare wage instead of the full in-house cost stack. The related error is running only a permanent core and treating every surge as an emergency, one of the most common workforce planning mistakes, which a standing staffing plan prevents.