Hiring the wrong person costs money and time. But how do staffing agencies work in Canada, and who is the real boss of the worker you get? A staffing agency finds, screens, and hires workers, then assigns them to your business. The agency is usually the employer of record. It pays wages, remits taxes, and handles payroll. You direct the daily work and pay the agency an hourly rate that covers wages and the agency’s fee. This guide covers the steps, pay, cost, and rules.
What Is a Staffing Agency in Canada?
It is a company that finds workers for other businesses. Some only introduce a candidate. Others hire the worker themselves. So how do staffing agencies work in Canada? It depends on the job. Recruitment agencies are different. Many owners also ask how recruitment agencies work in Canada. They find one person, charge a fee, and step back.
What Is Temporary Staffing?
Temporary staffing provides you with staff when you need extra hands for a short time. The agency employs the worker, who covers a sick day or a rush.
What Is Contract Staffing?
Contract staffing runs for a set time or one project, like six months of parental leave cover.
What Is Temp-to-Hire?
Temp-to-hire works like a trial. The worker starts through the agency, and you may hire the person later. How does applying through a staffing agency work for this trial? The worker applies to the agency, not to you.
What Is Permanent Placement?
The agency finds the person, and you hire them directly. This is close to how recruitment agencies work in Canada. The worker joins your payroll, and you pay a one-time fee.
How Do Staffing Agencies Work for Employers?
The staffing agency process for employers has five steps.
Step 1- You Share Your Hiring Needs
Start with a call or form. Tell the agency what the job is. List the duties, the skills a worker needs, the shift hours, and how much you pay. Say how many workers you need too.
Step 2- The Agency Finds and Screens Candidates
The agency checks its own worker list first. It may also search the Job Bank. Then it holds short interviews and checks references, and sometimes WHMIS (Workplace Hazardous Materials Information System) or forklift tickets. Workers often ask how applying through a staffing agency works. They send a resume to the agency first.
Step 3- You Get a Shortlist or Placed Workers
For office roles, you often get a short list and do the interviews. For simple jobs like packing, checked workers may go straight to your site. In the staffing agency process for employers, you keep the final say.
Step 4- The Worker Starts the Assignment
On day one, the worker meets the supervisor. You give safety training, tools, and clear tasks.
Step 5- The Agency Runs Payroll and Invoices You
The worker sends in hours, and you approve them. The agency pays the worker, then invoices you at the agreed rate. That ends the staffing agency process for employers. How does applying through a staffing agency work at the end? The agency calls the worker with the next job.
Who Is the Employer of Record With a Temp Agency?
Many owners ask, who’s the employer of record? It is the company that legally employs the worker. Searches for employers of record Canada show two different things. How do staffing agencies work in Canada on this point? The agency is usually the employer.
What the Agency Handles as Employer of Record
The agency hires the worker and runs payroll. It pays vacation pay and holiday pay. It also carries workers’ compensation, which is WSIB in Ontario, WorkSafeBC in British Columbia, and CNESST in Quebec.
What You Still Control as the Client
You direct the daily work. Choose tasks, give tools, and supervise. You also keep the workplace safe. Who’s the employer of record does not change that.
When a Client Can Be Treated as the True Employer
Courts look at who controls the work. Imagine a temp stays three years, follows your rules, and joins your team meetings. You may be seen as the real employer. So who is the employer of record with a temp agency in daily life? On paper, the agency. In practice, control can pull you in.
Is a Staffing Agency the Same as an Employer of Record Service in Canada?
No. Employers of record Canada services mostly help foreign companies with no Canadian office. A staffing agency sends workers to your site, and you manage them.
How Do Temp Agencies Pay Employees?
The agency pays them. You do not.
How the Agency Pays Wages and Deductions
Pay usually comes every week or two, by direct deposit. The agency takes off income tax, CPP, and EI. Quebec uses QPP.
Vacation Pay, Holidays, and Workers’ Compensation
These are the agency’s duty, and each province sets the rules. In Ontario, the Employment Standards Act explains agency duties. Alberta has its own Employment Standards Code. The agency adds these costs to your rate.
How Much Do Staffing Agencies Cost in Canada?
The temp agencies pay employees and still make a profit through the markup.
How the Temp and Contract Markup Works
You pay an hourly bill rate. It is the worker’s wage plus a markup. The markup is often about 25% to 50%, depending on the role. It covers CPP, EI, vacation pay, and the agency’s profit. Imagine a worker earns $20 an hour in Calgary. With a 40% markup, your bill rate is $28.
How Permanent Placement Fees Work
For permanent hires, agencies usually charge one fee, often about 15% to 25% of the first-year salary. Imagine a $50,000 job and a 20% fee. You would pay $10,000 once.
Why Do Canadian Employers Use Staffing Agencies?
Owners who ask how staffing agencies work in Canada usually want speed first. Here is temporary staffing explained from the buyer’s side.
Faster Hiring
How do staffing agencies work so fast? They keep a ready list of people.
Less Payroll and Paperwork
The agency handles payroll, tax forms, and claims. A small Winnipeg shop with no HR person avoids many forms.
Flexible Staffing and Try-Before-You-Hire
You can add workers when orders grow and cut back when they slow. Snow clearing and harvest work rise and fall.
Staffing Agency vs Direct Hire: Which Hiring Process Fits You?
Many owners ask how staffing agencies work in Canada compared with hiring alone. The staffing agency vs direct hire process differs in who hires, who pays, and how fast it moves.
| Point | Staffing agency | Direct hire |
| Speed | Often a few days | Often several weeks |
| Cost | Wage plus markup | Wage plus your hiring costs |
| Employer | The agency, for temps | You |
| Flexibility | Easy to add or cut | Harder to cut |
When Staffing Works Best
Choose staffing when work comes in waves, like a bakery before Christmas or a trade show crew in Vancouver.
When Direct Hire Works Best
Choose direct hire for roles that shape your company, like a manager. In the staffing agency vs direct hire process, direct hire wins for people you need for years.
What Rules Do Staffing Agencies Follow in Canada?
Many employers search: How do staffing agencies work in Canada under the law? Temporary staffing explained under the law is mostly a provincial story, with a federal side.
Licence Rules in Ontario
Since July 1, 2024, temporary help agencies in Ontario must hold a licence. They must also show financial security. Ontario bars clients from using an unlicensed agency. Penalties start at $15,000 for a first offence.
Who Is Responsible for What
The agency, as employer, must follow rules on minimum wage and overtime. You handle safety and daily control.
Equal Pay Rules for Temp Workers
The Canada Labour Code says a federally regulated agency cannot pay a temp less than the client pays its own staff for the same work. The federal guide explains the rules for temporary help agencies and their employees under the Canada Labour Code. Provinces set their own pay rules.
Rules on Fees
An agency cannot charge workers a fee for finding or keeping a job. Under federal rules, it also cannot stop you from hiring a temp. It may charge you a hiring fee only within six months of the first assignment. These federal limits started on October 20, 2026.
Foreign Worker Rules
Under key federal streams, staffing agencies can no longer apply for an LMIA to bring in foreign workers for clients. This change came in 2026.
How Do You Choose the Right Staffing Agency in Canada?
Once you know how staffing agencies work in Canada, picking one is easier.
Check the Licence and Track Record
Ask for the licence in Ontario. Quebec runs its own permit system through CNESST. Call two client references.
Ask for Clear Fees in Writing
Get the bill rate, overtime rate, holiday rate, and any hiring fee on paper. A fair staffing agency vs direct hire process comparison needs every number.
Look for Local and Industry Knowledge
An agency that knows your city fills roles faster. It knows local pay rates and travel limits, like a night shift far from a bus line in Brampton. Theta Smart Staffing Solutions and other Canadian agencies should answer these questions clearly.
Conclusion
How do staffing agencies work in Canada? They follow five steps, charge a markup or a fee, and follow provincial rules. Anyone asking what a staffing agency is can think of it as a hiring partner. Know who the employer of record is, and keep your safety duties in mind. The same steps answer how recruitment agencies work in Canada. Employer of record Canada questions get easier once you know who pays and who directs the work. Theta Smart Staffing Solutions can help you take the next step.
Who is responsible if a temp worker gets hurt at my workplace?
Both sides have duties. The agency usually holds workers’ compensation coverage. You must still give safety training and a safe workplace.
What if the worker is not a good fit?
Tell the agency quickly and say what went wrong. Many send a replacement, so ask before you sign.
How long can a temp worker stay on an assignment?
Canada has no single time limit. Rules differ by province and by contract. A very long stay can make you look like a real employer.
What should be in my service agreement with the agency?
Include the bill rate, overtime and holiday rates, payment dates, and the hiring fee with its time limit. Add safety duties and proof of licence. State who is the employer of record with a temp agency.
Can I use more than one staffing agency at the same time?
Yes. Many employers use one agency for office roles and another for labour roles. Check that each is licensed.
