Who We Help · Staffing Agencies · Payroll
Staffing agency payroll: hundreds of employees, one deemed employer — you
In Ontario, the temporary help agency — not the client — is the employer of every assignment worker, so the full compliance stack lands on your payroll: weekly runs, source deductions, holiday pay, T4s, and an ROE stream most businesses never see. Priced correctly, that machinery is your margin; run loosely, it is joint liability, retroactive WSIB, and a licence at risk.
By the AnalytIQ Accounting team · Last reviewed: August 12, 2026
Deemed employer: the ESA already decided who runs payroll
Under the ESA's temporary help agency rules, assignment employees are your employees — between assignments as well as on them. Every statutory duty follows: withholding and remitting, vacation pay, public holiday pay, termination rules, T4s, and ROEs. The client escapes none of the exposure, though — clients are jointly and severally liable for certain unpaid wages of the workers assigned to them, including overtime and public holiday pay, which is why sophisticated clients now audit an agency's payroll compliance before signing. Treat that audit as a sales asset: an agency that can show clean remittance history and current filings wins accounts that pure price-cutters cannot.
The weekly cycle at scale
Temp workers expect Friday pay, which makes the agency's engine a seven-day loop: client-approved timesheets close early in the week, feed the pay run mid-week, and land as direct deposits by Friday — for a workforce whose composition changed since last Friday. At this cadence the wins are structural, not heroic: timesheet data imported rather than rekeyed, digital TD1 and banking collection before the first shift, and exception reports that catch a missing approval on Tuesday instead of a missed deposit on Friday.
Scale also changes your CRA schedule. Once average monthly withholding passes $25,000 you become an accelerated remitter paying twice a month; past $100,000, remittances fall due within three working days of each pay period. A growing agency hits both thresholds faster than almost any other business its size, because the payroll is the product.
The margin stack: what must fit between bill rate and pay rate
Every employer cost lives inside your spread, so quoting a client starts with knowing the stack line by line:
| Cost on top of the pay rate | What drives it |
|---|---|
| CPP and EI, employer share | The CPP match plus EI at 1.4 times the employee premium, on every insurable dollar |
| Vacation pay | 4% minimum from the first hour — paid each cheque with written agreement, so it never pools |
| Public holiday pay | The four-week earnings formula divided by twenty — assignment employees qualify |
| Employer Health Tax | 1.95% at the top rate once Ontario payroll clears the exemption, which agencies clear early |
| WSIB premiums | Rated by the class of work performed at each client — not one agency-wide rate |
| Licence and letter of credit | The THA licence carries a $25,000 irrevocable letter of credit tying up capital |
An agency that quotes off gut feel funds the difference out of margin. We build the stack into a loaded cost per placement category so the bill rate is arithmetic before it is a negotiation.
Licensing: the ticket to operate
Ontario now requires temporary help agencies and recruiters to hold a licence, backed by that $25,000 letter of credit — and prohibits clients from knowingly doing business with an unlicensed agency, which converts your licence status into a procurement checkbox on the client side. Put the licence number in proposals before clients ask, calendar the renewal, and keep the filings that support it current; losing the licence does not pause your payroll obligations, only your revenue.
ROEs and WSIB: the two volume games
Every assignment that ends without another lined up is an interruption of earnings, so a mid-sized agency issues ROEs weekly, not annually. ROE Web with bulk filing is the only sane path: five calendar days after the end of the pay period, with reason codes chosen deliberately — a shortage-of-work code and a quit code produce very different EI outcomes and very different phone calls from Service Canada.
WSIB runs on the same per-client logic as the margin stack: premiums follow the classification of the work performed at the client, so a forklift placement and a reception placement carry different rates even on the same invoice. Segregate insurable earnings by class as the year runs, because the annual reconciliation will reprice any labour you filed under the cheaper class. And when a client asks you to place a candidate into their US operation, the payroll question changes countries — TN status, who employs whom, and where withholding lands — which is the territory of our cross-border tax guide for staffing agencies. The engagement mechanics live on our payroll services page.
Common questions.
Who is the legal employer of our temp workers — us or the client?
You are. Ontario's ESA makes the agency the employer of assignment employees, so deductions, vacation and holiday pay, T4s, and ROEs are all yours — while clients remain jointly liable for certain unpaid wages, which is why they increasingly audit agency compliance.
How does WSIB classify a staffing agency?
By the work performed at each client, not by one agency rate. Clerical, industrial, and construction placements carry different premium classes, so insurable earnings must be segregated by class or the annual reconciliation reprices them for you.
Do we really need a licence to operate a temp agency in Ontario?
Yes. Temporary help agencies and recruiters must be licensed, the licence requires a $25,000 irrevocable letter of credit, and clients are prohibited from knowingly using an unlicensed agency.
Related reading
Payroll that scales with placements.
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