| Quick Answer When you use a staffing agency, compliance works under a shared responsibility model. The agency is typically the employer of record for payroll, statutory deductions, and most Employment Standards Act obligations. You, as the host employer, carry co-responsibility under the Occupational Health and Safety Act for the safety of every worker on your site. Understanding exactly where the line falls is the most important compliance step before signing any staffing agreement. |
| Key Takeaways |
| When you use a staffing agency, the agency is typically the employer of record for payroll, CPP, EI, vacation pay, and most ESA obligations – but you carry significant co-responsibility for safety under OHSA. |
| WSIB coverage for agency-placed workers is under the agency’s account – but if a worker is injured on your site, the investigation examines your safety orientation, supervision, and hazard controls. |
| Termination of an assignment and termination of employment are two distinct legal concepts under the ESA – both can trigger obligations and confusing the two is one of the most common compliance errors employers make. |
| Since July 1, 2024, all temporary help agencies operating in Ontario must hold a licence under the ESA – engaging an unlicensed agency is itself an offence for the client employer. |
| There are 8 compliance red flags that signal an agency may not be meeting its ESA and WSIB obligations – including the new licensing requirement that many employers do not yet know applies to them. |
| The single most important compliance document in any staffing engagement is the agency agreement – specifically the clauses defining employer of record, compliance scope, and what happens if either party fails to meet their obligations. |
Most Canadian employers who use staffing agencies have a general sense that the agency handles payroll. What they often do not have is a clear understanding of where the agency’s compliance obligations end and theirs begin – and where the two overlap. That lack of clarity is how compliance gaps happen. Not through bad faith or deliberate shortcuts, but through assumption. The Employment Standards Act 2000 and the Workplace Safety and Insurance Act, 1997 are both clear on who is responsible for what in a staffing agency arrangement. This guide translates that clarity into plain language you can apply to your operation today.
Why Compliance Is More Complex When You Use a Staffing Agency Than When You Hire Directly
| Employer of record: The employer of record (EOR) in a staffing arrangement is the entity legally responsible for payroll processing, statutory deductions (CPP, EI), vacation pay, and most Employment Standards Act obligations for a placed worker. In a typical temporary staffing arrangement, the staffing agency is the EOR. In a permanent direct hire, the client employer becomes the EOR at the point of hire. |
Compliance in a direct employment relationship is relatively straightforward: you are the employer, you carry all obligations. In a staffing agency arrangement, those obligations split between two parties – the agency as employer of record and you as host employer. The split is not equal, and the boundaries are not always intuitive.
The agency typically carries: payroll processing, CPP and EI remittances, vacation pay accrual and payment, most ESA minimum standards (minimum wage, hours of work, overtime), WSIB premium payments, and the obligation to maintain T4 records. You, as the host employer, carry: workplace safety obligations under OHSA, the obligation to ensure every worker on your site is properly oriented and supervised, and co-responsibility for ESA compliance in certain areas including termination obligations.
The practical implication is this: if you tell a staffing agency worker to work unsafe hours, to skip safety orientation, or to perform a task without proper training, the fact that the agency is the employer of record does not insulate you from liability. The OHSA obligation runs to every worker on your site, regardless of who employs them.
WSIB Coverage for Temp Workers: The Agency Pays the Premium, But Your Site Determines the Risk
| WSIB: The Workplace Safety and Insurance Board (WSIB) is Ontario’s workers’ compensation system. It provides wage replacement and medical benefits to workers injured on the job and funds these benefits through premiums paid by employers. In a staffing arrangement, the agency typically pays WSIB premiums for placed workers – but the host employer carries co-responsibility for the safety conditions that determine whether an injury occurs. |
For most temporary placements in Ontario, the staffing agency registers under WSIB and the placed worker is covered under the agency’s WSIB account. The agency pays the premium as part of the cost structure that makes up the bill rate you pay. You, as the host employer, do not pay a separate WSIB premium for that worker.
However, WSIB coverage is not the same as WSIB liability. Under the Occupational Health and Safety Act, you carry co-responsibility for ensuring the workplace is safe for every worker on your site, regardless of who employs them. If a temporary worker is injured on your floor, the WSIB investigation will examine: whether that worker received adequate safety orientation before starting work, whether they were supervised appropriately for their role and experience level, whether the hazards they were exposed to were properly identified and controlled, and whether the equipment and PPE they used were appropriate and in good condition. These are your obligations as the host employer, not the agency’s.
WSIB investigations of workplace incidents involving agency-placed workers consistently examine host employer safety orientation and supervision practices – meaning the agency’s coverage of the premium does not transfer the host employer’s OHSA obligations to the agency.
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The ESA Obligations That Apply to Temporary Workers: What the Current Law Actually Says
The Employment Standards Act 2000 establishes minimum employment standards that apply to virtually all workers in Ontario, including temporary workers placed by staffing agencies. The agency, as employer of record, is responsible for ensuring these standards are met. There are three ESA areas that create specific obligations or risks in a staffing arrangement that are frequently misunderstood.
Minimum wage, hours of work, and overtime
ESA minimum standards apply in full to agency-placed workers. The current Ontario general minimum wage is $17.20 per hour (effective October 1, 2024). Under ESA Part VII, the maximum is 8 hours per day and 48 hours per week absent a written agreement. Overtime pay at 1.5x applies after 44 hours in a week. The agency is responsible for tracking and compensating hours correctly – but if you as the host employer are directing agency workers to exceed legal hours or are not providing required rest periods, you are contributing to a potential ESA violation.
Termination of assignment pay vs termination of employment notice
This is one of the most commonly misunderstood areas in staffing arrangements. Under ESA Section 74.10.1, a temporary help agency must provide an assignment employee with one week’s written notice (or pay in lieu) if an assignment with an estimated term of three months or more is terminated before the end of its estimated term. This is termination of assignment pay – it is different from, and in addition to, any termination of employment notice the worker may be entitled to under ESA Part XV based on their total length of employment with the agency. For host employers, the practical implication is straightforward: give your agency adequate advance notice when ending an assignment so they can manage their obligations to the worker. Ending an assignment without notice creates compliance exposure for the agency and reputational risk for you.
Equal pay for equal work – what the current law says
It is important to understand the current state of the law accurately. Section 42.2 of the ESA, which specifically required equal pay between agency assignment employees and client employer employees performing the same work, was repealed effective January 1, 2019 under the Making Ontario Open for Business Act, 2018. It is no longer in force. Section 42.1 of the ESA does prohibit pay differences based on employment status (e.g. between full-time and part-time employees of the same employer), but this provision applies within a single employer and does not directly govern the pay relationship between agency workers and client employer staff. If you have concerns about pay equity in your staffing arrangements, consult an employment lawyer familiar with current Ontario legislation.
The repeal of Section 42.2 means the direct equal pay obligation for agency workers vs client staff is not currently in force in Ontario. Employers should be aware this was once the law, may be subject to future reinstatement, and that other pay equity obligations (including the Pay Equity Act for larger organisations) may still apply.
THA Licensing: The July 2024 Change That Every Employer Using a Staffing Agency Must Know
| THA licence: As of July 1, 2024, all temporary help agencies (THAs) operating in Ontario must hold a valid licence issued by the Ministry of Labour, Immigration, Training and Skills Development under the Employment Standards Act 2000. Operating without a licence is an offence. Critically, client employers who knowingly engage an unlicensed THA also commit an offence under the ESA. |
Ontario’s mandatory temporary help agency licensing regime came into force on July 1, 2024. Under the new framework (O. Reg. 289/01), every staffing agency placing workers in Ontario must hold a valid THA licence. The fines for operating without a licence are: $15,000 for a first offence, $25,000 for a second, and $50,000 for a third. Critically for employers – a client employer who knowingly engages or uses the services of an unlicensed THA also commits an offence under the ESA. This is a new and significant compliance obligation that many employers are not yet aware of.
You can verify whether a staffing agency holds a current licence through the Ministry of Labour’s THA licence lookup tool. Before engaging any new staffing agency – and as a periodic check on existing agencies – confirm their licence status. An agency that cannot produce its licence number on request is a significant red flag.
The Shared Responsibility Matrix: Who Is Responsible for What
The table below summarises the primary compliance responsibilities in a typical Ontario temporary staffing arrangement. Note that ‘shared’ means both parties carry obligations – not that either party can rely on the other to handle it.
| Obligation | Staffing Agency | Client Employer |
| Payroll processing and remittances | ✓ | ✗ |
| CPP and EI contributions | ✓ | ✗ |
| Vacation pay accrual and payment | ✓ | ✗ |
| WSIB premium payment | ✓ | ✗ |
| T4 issuance | ✓ | ✗ |
| THA licence held (from July 1, 2024) | ✓ | Shared* |
| ESA minimum wage compliance | ✓ | Shared |
| ESA hours of work compliance | Shared | Shared |
| Termination of assignment notice (s.74.10.1) | ✓ | ✗ |
| Termination of employment notice (Part XV) | ✓ | Shared |
| Safety orientation (OHSA) | Shared | ✓ |
| Workplace hazard identification (OHSA) | Shared | ✓ |
| PPE provision and maintenance | Shared | ✓ |
| Supervision and training (OHSA) | ✗ | ✓ |
| Joint H&S committee participation | ✗ | ✓ |
| Incident investigation (OHSA) | Shared | ✓ |
* Client employers commit an offence under the ESA if they knowingly engage an unlicensed THA.
8 Red Flags That a Staffing Agency May Not Be Meeting Its ESA and WSIB Obligations
If a staffing agency is not meeting its obligations, your co-responsibility exposure increases. These eight signals indicate an agency may have compliance gaps worth investigating before you sign or renew.
- They do not hold a current THA licence – since July 1, 2024, all agencies placing workers in Ontario must be licensed. You can verify this online in minutes. Any agency that cannot provide a licence number on request is operating illegally.
- They cannot tell you which WSIB classification code their workers are registered under and what your industry’s premium rate is.
- Their bill rate is significantly below market without a clear explanation – rates that cannot sustain ESA minimum wages, vacation pay, CPP, EI, and WSIB premiums at current Ontario rates are mathematically non-compliant.
- They do not provide T4 slips directly to placed workers, or workers report receiving T4s that do not reflect the hours they worked.
- Their agreement with you contains language that attempts to transfer ESA or WSIB liability to you as the host employer – agencies cannot contract out of their statutory obligations under the ESA.
- Workers complain about pay discrepancies, missing vacation pay, or unpaid overtime – these are ESA violation indicators that affect both the agency and the client.
- They cannot explain their termination of assignment obligations under ESA Section 74.10.1 for assignments of three months or more.
- They do not have a written health and safety program and cannot describe their safety orientation process for workers placed at your site.
What to Include in Your Staffing Agency Agreement to Protect Your Compliance Position
The agency agreement is the document that defines the compliance relationship. Most employers sign the agency’s standard agreement without reviewing it carefully. These are the provisions that matter.
Employer of record confirmation
The agreement should clearly state that the agency is the employer of record for the placed workers and is responsible for payroll, statutory deductions, vacation pay, WSIB premiums, and ESA minimum standards. This is the foundation of the compliance split. Without it, the allocation of responsibility is ambiguous and default Employment Standards Act provisions may create joint employer exposure.
THA licence confirmation
The agreement should include the agency’s current THA licence number and a representation that they will maintain their licence in good standing throughout the engagement. A licence that lapses mid-engagement exposes both parties to offence liability. You can independently verify licence status at the Ministry of Labour’s THA licence search at any time.
Compliance verification scope
The agreement should specify what compliance verification the agency performs before placing a worker: background check scope, credential and certification verification, work authorization confirmation, and the documentation that will be provided to you as evidence. An agreement that is silent on verification scope means you have no contractual assurance the agency is checking anything.
Indemnification and liability allocation
The agreement should address what happens if the agency fails to meet its ESA or WSIB obligations – specifically, whether you have any indemnification or recourse against the agency if their non-compliance creates liability for you. Many standard agency agreements are silent on this, which means you have no contractual protection if the agency’s non-compliance triggers an audit of the entire arrangement.
The employer of record clause in a staffing agreement is the single most consequential compliance document in any temporary placement arrangement because it defines which party carries statutory obligations under the Employment Standards Act and which party’s actions determine WSIB risk exposure at the site level.
How Trimax Employment Can Help
Trimax Employment holds a current THA licence under Ontario’s ESA licensing regime and provides full compliance documentation for every placement – including WSIB registration confirmation, background check records, credential verification, and ESA compliance evidence. Our agreements clearly define employer of record obligations and compliance verification scope so you know exactly what you are getting before the first worker arrives.
Discuss your compliance requirements at trimaxemployment.ca/contact
Frequently Asked Questions
Q: Who pays WSIB for temporary workers placed by a staffing agency in Ontario?
The staffing agency pays WSIB premiums for temporary workers they place – the worker is covered under the agency’s WSIB account, and this cost is built into the bill rate you pay. However, paying the premium does not transfer your safety obligations as host employer. Under the Occupational Health and Safety Act, you carry co-responsibility for ensuring the workplace is safe for every worker on your site. If a placed worker is injured, the WSIB investigation will examine your safety orientation, supervision, and hazard controls – not just the agency’s actions.
Q: Does the Employment Standards Act apply to temporary agency workers in Ontario?
Yes. The Employment Standards Act 2000 applies to virtually all workers in Ontario, including temporary workers placed by staffing agencies. The staffing agency, as employer of record, is responsible for meeting ESA minimum standards: minimum wage (currently $17.20/hour in Ontario as of October 2024), hours of work limits, overtime pay at 1.5x after 44 hours per week, vacation pay, public holiday pay, and termination notice or termination of assignment pay. These standards cannot be contracted out of – any agreement that waives ESA rights is void.
Q: What is the difference between termination of assignment and termination of employment for agency workers?
These are two distinct legal obligations under the Employment Standards Act 2000. Termination of assignment pay (ESA Section 74.10.1) applies when an assignment with an estimated term of three months or more is ended before its estimated end date – the agency must give the assignment employee one week’s written notice or pay in lieu. This is separate from termination of employment notice under ESA Part XV, which applies based on total length of employment with the agency (1 week’s notice after 3 months, scaling up to 8 weeks after 8 or more years). Both may apply when an assignment ends. The agency is responsible for both obligations – but the host employer should give the agency adequate advance notice of assignment endings to allow the agency to meet them properly.
Q: Do I commit an offence if I use a staffing agency that is not licensed in Ontario?
Yes. Since July 1, 2024, under Ontario’s THA licensing regime, a client employer who knowingly engages or uses the services of an unlicensed temporary help agency commits an offence under the Employment Standards Act. Fines for the agency range from $15,000 to $50,000. You can verify any agency’s licence status before engaging using the Ministry of Labour’s THA licence search tool. Confirming licence status before signing is now a standard due diligence step for any Ontario employer using a staffing agency.
Q: Can a host employer be held liable if a staffing agency violates the Employment Standards Act?
In Ontario, the Employment Standards Act creates liability primarily at the employer of record level – meaning the staffing agency bears direct responsibility for most ESA violations. However, host employer liability can arise in specific circumstances: if you directed the violation (e.g. instructing agency workers to work beyond legal hours), if the arrangement constitutes a joint employment relationship under the Act, or if you engaged an unlicensed agency (which is itself an offence under the THA licensing regime). The safest position is to confirm your agency’s ESA compliance practices and licence status in writing before engaging.
Q: What safety orientation must I provide to temporary agency workers on my site?
Under the Occupational Health and Safety Act, you must ensure every worker on your site – including temporary placements – receives adequate instruction, training, and supervision to perform their work safely. This means: a site safety orientation covering the specific hazards in the worker’s assigned area, equipment-specific training for any machinery or powered equipment they will operate, PPE fitting and instruction, emergency procedures, and an introduction to who the worker should contact if they observe a hazard or are injured. This orientation must be documented. If a placed worker is injured and there is no documentation of their safety orientation, the absence of that documentation is treated as evidence of inadequate orientation in a WSIB investigation.
Q: What are the key compliance provisions to review in a staffing agency agreement?
The four provisions that matter most are: the employer of record confirmation (the agency explicitly acknowledges they are the EOR and carry ESA and WSIB obligations); the THA licence number and ongoing licence maintenance commitment; the compliance verification scope (what background checks, credential verifications, and work authorization checks they complete before placement); and the indemnification clause (what recourse you have if the agency’s non-compliance creates liability for you as host employer). Many standard agency agreements address the first and are silent on the others – the silence is worth addressing before you sign.
Questions Employers Ask When Evaluating Staffing Agencies
Q: How does a staffing agency work and what does it cost?
A staffing agency sources, screens, and places workers in exchange for a bill rate markup covering the worker’s pay, statutory deductions, WSIB premiums, vacation pay, and the agency’s margin. No upfront cost – it is built into the bill rate. Trimax Employment holds a current Ontario THA licence and operates this model across all sectors with full compliance documentation included in every placement.
Q: What should I look for in a staffing agency in Canada?
Sector expertise, a current THA licence (mandatory in Ontario since July 2024), technology infrastructure, written SLA commitments, client references in your sector, and documented pre-placement compliance verification. Trimax Employment is licensed, operates with sector-specific teams, a full digital compliance stack, and written SLA commitments on every engagement.
Q: What is the difference between a temp agency and a recruitment agency?
A temp agency places workers where the agency is employer of record for payroll and ESA obligations. A recruitment agency sources candidates for permanent hire where the client becomes employer at hire and pays a one-time placement fee. Temp-to-perm bridges both. Trimax Employment handles all three models across every sector we serve.
Q: Who is responsible for safety and compliance for temp agency workers?
Shared responsibility: the agency handles payroll and most ESA obligations as employer of record; you handle site safety under OHSA. Trimax Employment completes the full pre-placement compliance stack and provides documented evidence to clients on request.
Q: How do I know if a staffing agency places quality candidates?
Quality shows in intake specificity, pre-placement verification rigour, 30 and 90-day retention data shared proactively, and how they respond when a placement fails. Trimax Employment tracks and shares retention data across all placements and backs every engagement with a written SLA including fill rate commitments and replacement guarantees.