Ontario overhauls rules for temp workers, agencies

Changes could have unintended consequences: ACSESS
By Shannon Klie
|Canadian HR Reporter|Last Updated: 01/11/2009

Proposed changes to Ontario’s Employment Standards Act (ESA) are good news for the more than 700,000 people working in temporary jobs in the province, according to a workers’ advocacy group. But the association that represents staffing agencies has some reservations.

The provincial government introduced legislation in December to amend the ESA to remove barriers temp agency workers face in finding permanent employment and to prohibit agencies from charging workers fees for services.

“This is a really important first step in trying to make sure that the law is updated and expanded to reflect the realities of our workplace today,” said Sonia Singh, organizer of the Workers’ Action Centre in Toronto.

“At this time, 37 per cent of our workforce is working in temporary, part-time or contract work. This is an important step in increasing protection for one segment of precarious workers but we definitely will be wanting to see further updates and further expansion of the Employment Standards Act to look at some of those other areas of work.”

Many of the people working in temporary jobs are employed by one of Ontario’s roughly 1,000 temp agencies and the industry has seen significant changes in the past 20 years.

In the 1970s and 1980s, most temp work was short term and clerical in nature. Now jobs can be in a wide variety of occupations and a temp agency employee may work for a single client for months or years. In many cases, agency employees work side-by-side with permanent employees, doing the same job.

“The nature of work has changed when it comes to temp work and temporary help agencies. We’ve seen quite a growth over the last number of decades, especially over the last 10 years,” said Ontario Minister of Labour Peter Fonseca. “We felt that our employment standards had lagged behind and had not kept pace with the market.”

During consultations about temporary staffing agencies, both with worker advocacy groups and the Association of Canadian Search, Employment and Staffing Services (ACSESS), the government found these workers faced several barriers to permanent employment. These included significant fees charged to client businesses or employees when a client hires an agency employee on a permanent basis, as well as contracts that prevent client businesses outright from permanently hiring employees.

“We’ve heard complaints for a long time about people being denied access to permanent jobs and people facing barriers that have meant people have been stuck in temporary assignment after temporary assignment,” said Singh.

Under the proposed changes, agencies won’t be able to prevent a client from hiring an agency employee or charge the client or employee a “temporary to permanent” fee if the employee has worked for the client for more than six months.

Agencies will also no longer be able to charge a person for signing on with an agency to find a temporary position or for other services, such as classes on resumé writing or interview preparation.

“We saw that there were many barriers in front of assignment employees stopping them from finding permanent employment and fees we felt were very unfair,” said Fonseca.

The prohibition against fees is one of the changes ACSESS recommended and fully supports, said Steve Jones, president of the association and of the Toronto-based employment agency The People Bank.

“We’ve long stood for the fact that our source of revenue should come from our customers who rely upon our recruitment and referral services and that candidates should not have to pay, so we’re really pleased about that one,” he said.

The proposed changes, which will need to pass three readings in the legislature and then receive royal assent before coming into force, also clarify what information an agency must share with employees. Agencies will have to ensure employees understand the agency, not the client business, is their employer and provide details about wages, benefits, hours of work, the pay schedule and a general job description for an assignment.

“There’s an incredible amount of confusion that exists where employees, until now in some companies, did not understand or clearly understand that their employer is the staffing company,” said Jones.

One particular area of concern in the ESA are the special rules for “elect to work” employees, those who can refuse work when asked. These workers are exempt from the ESA requirements regarding public holidays, notice of termination and severance pay. Many temp agency workers are considered to be elect to work since they can accept or refuse an assignment. However, once they start work with a client, they are required to report to work as directed by the client and can work for months or years for the same organization without ever getting public holiday pay or being entitled to severance.

The government has already passed a regulation that ensures elect-to-work employees will have the same rights to public holiday entitlements as other workers, which means these workers have access to nearly two weeks of paid public holidays as of Jan. 2.

While ACSESS supports this change, a small proportion of temp agencies that specialize in just-in-time, short-term temporary work could be hurt by it, said Jones.

These agencies have such a transient workforce that determining who is entitled to vacation pay will be difficult and will add about four to six per cent to a client’s bill, which in a poor economic climate might be enough reason for a client business to hire fewer temporary workers, he said.

The new legislation would also ensure these employees have the same rights to notice of termination and severance pay as other workers. This change concerns Jones the most.

“The way it is written, the words that are used, is so ambiguous that it absolutely will have an extremely harmful impact on the people it intends to help,” he said. “It will push the people who we want to build experience and to develop their resumés, who are having difficulty getting continuous employment, into perpetual short-term work.”

Under the changes, a temp agency employee who works three months in a six-month period will be entitled to notice of termination or severance. For example, if an employee works 15 one-week assignments with different clients in a six-month period and then a new client cancels the employee’s next one-week assignment, the agency will have to pay the employee one week’s notice, said Jones.

This added risk will make agencies and clients steer clear of workers who start to approach the 13-week mark and not hire them again to avoid this cost, he said. And it’s not the high-skilled workers, such as engineers, nurses or IT workers, who go on long-term assignments who will be hurt by this, he added.

“We’re talking about the most vulnerable workers who rely upon these short-term assignments,” said Jones. “I’m not saying that kind of behaviour is the right behaviour, but it is the behaviour that will happen.”

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