This guest article was authored by Ksenija Trahan, Associate, Corporate Immigration Law Firm.
As per a recent announcement by Ontario’s Minister of Labour, Training and Skills Development, Monte McNaugton, the province is making good on the promise to crack down on unregulated temporary help agencies (THAs), recruiters, and businesses who are exploiting vulnerable temporary workers. The new legislation gives new enforcement powers, increases regulation, and enables fines and other punitive measures to be levied against those who continue to abuse workers.
To start off, THAs and recruiters will be required to have a license to operate in the province. A new dedicated team of inspectors would be tasked with vetting THAs and recruiters before issuing the license. To obtain a license, THAs and recruiters will need to provide an irrevocable letter of credit that could be used to repay owed wages to workers. Businesses who use deceitful recruiters will be required to repay workers for illegal fees charged. A system is put in place to completely shut down agencies who are found to be exploiting staff. The government intends to require licenses as early as 2023.
On the face of it, it sounds like a move in the right direction. Minister McNaugton expressed confidence that this would create the strongest temporary worker protections in Canada, balancing the scales between vulnerable workers and big business. The need for governmental action is, indeed, dire. More than 2,000 THAs in Ontario place hundreds of thousands of workers in seasonal and short-term office, agriculture, hospitality, and other sectors. Some of these firms have been caught failing to comply with Ontario employment law on paying workers minimum wage, overtime and vacation pay.
A recent enforcement campaign by Ontario’s Ministry of Labour investigated temp agencies supplying workers to retirement homes, food processing plants, and warehouses, found evidence of $3.3 million in unpaid wages. This loss of income comes at the expense of vulnerable temporary workers who are receiving less than minimum wage, no holiday or overtime pay, and are sometimes charged illegal hiring fees by recruiters. Foreign workers are often more susceptible to workplace abuse, as they sometimes face confiscation of passports and unsafe working conditions against which they are unable to complain due to fears of work permit cancellation and removal from Canada.
Economic uncertainty brought on by the pandemic saw a rise in the use of THAs in Canada, as the country relied heavily on new immigrants to alleviate labour shortages during the COVID-19 pandemic. However, the current rising labour shortage is not solely caused by the pandemic. A report released by the Royal Bank of Canada this past September predicts a 10,000-worker deficit in 56 nationally recognized Red Seal trades over the next five years. That number increases to 100,000 when 250 provincially regulated trades are included. Furthermore, 700,000 skilled tradespeople are expected to retire by 2028, adding even more pressure to the market. This rapid labour shortage saw a rise in desperation as employers scrambled to fill vacancies in industries from food services and hospitality, to healthcare, social assistance, trades, and construction.
Not surprisingly then, there were over 2,200 temporary help agencies in Ontario as of July 2020 (according to the Workplace Safety and Insurance Board). These agencies, which hire seasonal and short-term workers in Ontario, saw an increase in revenue of 34% between 2015 and 2019. Additionally, in 2019, temporary help agencies employed 128,000 full-time workers in 2019, representing 2.6% of the workforce in the province. Multiple THAs in Ontario are illegally paying people below the minimum wage and denying other basic employment rights, in an effort to gain a competitive advantage by undercutting rates.
Participation in these programs can be precarious for businesses. Just because a company is not considered an “employer of record”, for employment purposes, it does not necessarily mean they are not subject to other laws when it comes to foreign workers. Companies must still ensure all temporary workers placed by a recruiting company or third-party agency are legally able to work in Canada and understand if their work permit restricts who they can work for, the type of work they can do and the number of hours they can work.
In accordance with the Immigration and Refugee Protection Act (IRPA), it is an offence for a company to employ anyone that is not legally authorized to work in Canada and employers that do not take reasonable steps to determine whether employment is authorized, are deemed to know that it is unauthorized. Despite the potential for criminal sanctions and administrative monetary penalties under immigration legislation, there are still abuses of foreign workers. Consequently, it is not surprising that provincial governments have stepped in to address the issue. Ontario is somewhat behind other provinces such as Alberta, Quebec, British Columbia, Saskatchewan, Manitoba, and Nova Scotia, all of which have already adopted mandatory licensing programs, required security deposits, registries for employers who hire migrant workers, and fines for lack of compliance.
Critics, however, see the measures as insufficient to provide the necessary protections. For example, they argue that the monetary fees are too small for business to take them seriously. Among other problems cited, they argue that the onus still remains on the worker to report transgressions and provide proof. In addition to obvious problems related to vulnerabilities inherent in the precarious status of migrant workers, the reality is also that recruiters have become too skilled and savvy about hiding their paper trail. Instead, critics suggest that employers should be automatically fined a minimum of $15,000 when they fail to use a licensed agency. They also call for higher security bonds against licensed recruiters.
The “Working for Workers Act” was passed on November 30th. Ontario becomes the second province to make employers jointly and severally liable for the entire supply chain in migrant worker recruitment. The province is promising a robust registry system with the highest fines, including jail time. Only time will tell whether the legislation will be sufficiently strict to reduce transgressions and help mitigate abuse, and it is certain that no one single measure will bring an effective remedy to the overall problem. It is, however, a welcome step in the larger effort to combat transgressions and protect the rights of the most vulnerable workers.
