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Temp-to-hire in Ontario: how it works and what conversion costs
How temp-to-hire works in Ontario, what a conversion fee costs, and the ESA six-month rule that stops an agency charging you after six months.
Temp-to-hire is the most-searched staffing term in this industry, and the most misunderstood. Employers want to know what it costs to convert. Workers want to know whether the permanent job is real.
Here is how it works in Ontario, including the rule that stops an agency charging you a fee after six months.
What temp-to-hire actually means
The worker starts as an assignment employee of the agency, working at your site under your direction. The agency employs and pays them. After an agreed period — or whenever you are ready — you hire them onto your own payroll as a permanent employee.
You get to see attendance, attitude, pace and fit before you commit. The worker gets to see the site, the supervisor and the shift before they resign from anything else.
How it works, step by step
- You define the role, shift, pay rate and what "successful" looks like at the end of the trial period.
- The agency recruits, screens and places the worker as an assignment employee.
- The worker works on your site; the agency handles payroll, source deductions, WSIB and ESA obligations.
- You review at an agreed checkpoint — 30, 60 or 90 days is typical.
- If it works, you convert: the worker moves onto your payroll and the agency transfers the employment paperwork.
- If it does not, the assignment ends and the agency redeploys the worker elsewhere.
The ESA six-month rule on conversion fees
This is the part almost no one publishes clearly.
Under Ontario’s Employment Standards Act, a temporary help agency may charge a client a fee for hiring an assignment employee — but only during the six months beginning on the day that employee first started working for that client. After six months, no fee may be charged at all.
The six-month window
Counted from the day the assignment employee first started working for that client. Inside it, any fee must be set out in your agreement. After it, no fee may be charged.
So if a worker has been on your site for seven months and you want to hire them permanently, the agency cannot charge you a placement fee for it. Inside the six-month window, whatever fee applies has to be set out in your agreement.
Agencies are also prohibited from charging the worker a fee for being hired by a client, and from preventing a client from hiring an assignment employee.
How conversion fees are usually structured
Inside that six-month window, you will normally see one of three structures:
- A flat conversion fee, fixed at the start of the assignment.
- A percentage of the worker’s first-year salary, the same way a direct-hire fee works.
- A declining scale — the fee drops with every month the worker stays on assignment, because the agency has already recovered its recruiting cost through the bill rate.
The declining scale is the fairest of the three for both sides, and it is the one we recommend agreeing up front. Get the number and the structure into the client services agreement before the assignment starts, not in the email where you announce you want to hire someone.
Temp-to-hire vs direct hire
| Temp-to-hire | Direct hire |
|---|---|
| Worker on agency payroll during trial | Worker on your payroll from day one |
| Cost is an hourly bill rate you can stop anytime | One-time fee, payable when they start |
| You see real performance before committing | You commit based on interviews and references |
| Best for high-volume, operational and shift roles | Best for salaried, specialist and leadership roles |
| End the assignment if it is not working | Guarantee period covers early departures |
How long should the trial period be?
Long enough to see the person on a bad week, short enough that they do not start looking elsewhere. For warehouse, production, general labour and driver roles, 30 to 60 days is usually plenty — attendance and pace show up inside three weeks. For technical, administrative and supervisory roles, 90 days is more realistic because the work takes longer to judge.
Decide in advance what you are measuring, and keep it to things a supervisor can actually observe:
- Attendance and punctuality across the full period, not just the first fortnight.
- Safety behaviour — does the person follow the site rules when nobody is watching?
- Output against the standard for the role, once training is allowed for.
- How they take direction and correction.
- Whether they get on with the crew they will be joining permanently.
Write those down at the start and share them with the worker and the agency. A trial nobody defined is a trial nobody can pass.
When temp-to-hire is the wrong model
It is not always the right answer. Skip it when:
- The role is senior or specialised — strong candidates will not take an assignment when they have permanent offers on the table.
- The work requires months of training before anyone can be judged on it.
- You already know the headcount is permanent and funded. Paying a bill rate for six months to avoid a decision you have already made costs more than a direct hire.
Five things that make conversions actually happen
- Tell the worker on day one that the role is temp-to-hire and what the checkpoint is. People perform differently when they know a permanent job is real.
- Pay the assignment rate at a level that would make sense as a permanent wage. A large gap between the two makes conversion awkward.
- Give the same onboarding, training and supervision you give your own staff.
- Set a calendar reminder for the checkpoint. Most conversions stall because nobody reviewed it, not because the worker failed.
- Tell your agency early. We would rather help you convert a strong worker than lose you as a client over a fee conversation.
What it looks like from the worker’s side
Worth knowing, because it affects who accepts your assignments: workers treat temp-to-hire as a real path when they see it happen. Agencies with a track record of converting people get better candidates for the same rate. We tell candidates plainly whether a role has a genuine permanent path or is peak-season coverage — that honesty is why our crews show up.
Thinking about a temp-to-hire arrangement in the GTA or anywhere we staff across Canada? Tell us the role and the checkpoint you want, and we will structure it — conversion terms agreed up front, in writing.
Structure a temp-to-hireThis article is general information, not legal advice.
Frequently asked questions
What is temp-to-hire, and how does the conversion work?
Temp-to-hire lets you work with someone on assignment first and hire them permanently once they have proven themselves. You see attendance, attitude and output before you commit. When you are ready to convert, we transfer the employment paperwork; conversion terms are agreed in advance in your service agreement.
Do we pay a fee if we hire one of your temporary workers permanently?
Under Ontario’s Employment Standards Act, a temporary help agency may only charge a client a hiring fee within six months of the day the assignment employee first started working for that client. After six months, no fee may be charged. Any fee inside that window is set out in your agreement before the assignment starts.
What is the difference between a temp agency, a staffing agency and a recruitment agency?
A temp agency employs the worker and assigns them to you. A recruitment agency finds a candidate whom you hire and pay directly. A full staffing agency like Nova does both, plus temp-to-hire and payroll-only arrangements, so you can move between models without changing supplier.
When does it make more sense to use temporary staff than to hire permanently?
Use temporary staffing when the work is uncertain or time-boxed: seasonal peaks, a new contract you have not proven yet, leave coverage, project work, or a line you may not run in six months. Hire permanently when the workload is stable and the role needs deep company-specific knowledge.
How quickly can you fill a temporary position?
For general labour, warehouse, production and driver helper roles we can usually have screened workers on site within 24 to 48 hours, and same-day for urgent orders when our pool already covers your shift and location. Skilled, licensed and healthcare roles take longer because of credential and reference checks.
What happens if a worker does not show up or is not the right fit?
Call your Nova account manager and we replace them. No-shows and early departures are covered by our replacement process, and you are not billed for hours that were not worked. If a worker is not a fit, tell us what went wrong — a five-minute debrief usually fixes the next placement.
Can a temporary job turn into a permanent one?
Often, yes. Many of our clients use assignments to find people they want to keep, and strong attendance and attitude are what decide it. Tell your recruiter you are looking for permanent work so we put you on assignments that have a real chance of converting.
Do you offer permanent placement, and is there a guarantee period?
Yes. For direct-hire searches we charge a one-time placement fee and back it with a guarantee period: if the person leaves or is let go within that window, we replace them under the terms in your agreement. The guarantee length is agreed before the search starts.