A new requirement affecting the contingent workforce ecosystem in Ontario, Canada, has been delayed until July 1, 2024. Initially slated to take effect on Jan. 1, the requirement calls for temporary staffing firms and recruiters to obtain a license to operate in the province.

Under the new regulations, enterprise organizations that knowingly engage or use the services of an unlicensed temporary help agency or recruiter will be in a violation of the Employment Standards Act. Penalties could be issued not only against unlicensed firms and recruiters but also the companies that use them, with proactive inspection measures to ensure compliance with applicable requirements.

First proposed in October 2021 and passed in December 2021, the licensing plan requires staffing firms to provide C$25,000 (US$18,474) in the form of a revocable letter of credit. The delay of the regulation comes amid concerns the rule would be too burdensome for small staffing firms, according to an article by Nicole Deniset of law firm McCarthy Tétrault LLP.

In a letter to recruiters, Minister of Labour, Immigration, Training and Skills Development David Piccini confirmed that he instructed the province to take the time over this six-month extension to consider further changes to the licensing framework, including narrowing the scope of who needs to provide a letter of credit as well as potentially accepting alternate forms of security, the post states.

As the regulations currently stand, when applying for a new license, an applicant must provide an electronic irrevocable letter of credit in the amount of C$25,000. However, The Association of Canadian Search, Employment & Staffing Services, which has worked closely with the minister’s office on the regulation, has recommended that a surety bond be considered an acceptable form of security to replace a letter of credit.