What does it cost to hire through a staffing agency in Canada?

The short answer

Temporary staffing is billed as a single hourly bill rate per worker. That rate is the worker’s wage plus a markup. The markup covers statutory employer costs and the agency’s service. You pay only for hours that are worked and approved.

Permanent placement is priced differently: a one-time fee, usually a percentage of the person’s first-year salary, paid once they start.

What sits inside an hourly bill rate

When an agency quotes you $X per hour, that number covers all of the following:

• The worker’s hourly wage.
• CPP and EI employer contributions.
• Employer Health Tax, where your payroll size makes it payable.
• WSIB premiums, at the rate for the class of work being performed.
• Vacation pay — at least 4% of wages, rising to 6% after five years of employment.
• Public holiday pay, calculated under the ESA formula.
• Payroll processing, source deductions, T4s and Records of Employment.
• Recruiting, screening, reference checks and certification verification.
• Replacement of workers who do not work out, and the cost of carrying a bench.
• The agency’s margin.

This is why comparing a bill rate to your own internal hourly wage is misleading. You are comparing a fully loaded cost to a bare one. The fair comparison is bill rate against your wage plus your own burden — which for most Ontario employers lands somewhere between 15% and 25% before anyone has recruited anybody.

What is not usually inside the rate

Ask about these before you sign, because they vary between agencies:

• Overtime. In Ontario, overtime is owed after 44 hours in a work week and is billed at the overtime bill rate, not the regular one.
• Shift premiums for nights, weekends and statutory holidays.
• Specialised PPE beyond basic vests and gloves.
• Travel, accommodation or shuttle costs for remote sites.
• Conversion fees when you hire an assignment worker permanently — see the six-month rule in Post 3 of this set.

How permanent placement is priced

Direct hire is a one-time fee based on the starting salary, payable when the person starts. It should come with a guarantee period: if the hire leaves or is let go inside that window, the agency replaces them. Get the guarantee length and the replacement terms in writing before the search begins — that clause is worth more than a point or two on the fee.

What moves your rate up or down

Six things decide where you land:

1. Volume and duration. Ten workers for six months prices better than one worker for a week.
2. Shift and schedule. Straight days fill easily. Rotating nights, split shifts and short-notice weekend coverage cost more because they are harder to fill.
3. Skill and certification. Forklift, AZ, Red Seal, nursing registration and vulnerable sector checks all add screening cost.
4. Risk class. WSIB premium rates vary sharply by type of work, and that flows straight into the markup.
5. Location and transit access. A site with no bus route inside walking distance has a higher turnover rate, and turnover is expensive.
6. Payment terms. Agencies pay workers weekly no matter when you pay. Long payment terms get priced in.

How to compare two quotes properly

Compare the bill rate, not the markup percentage. A 35% markup on a low wage can cost you more per hour than a 45% markup on a properly set wage — and the properly paid crew usually shows up. Then check five things:

1. What is the overtime bill rate, and after how many hours does it start?
2. What are the conversion terms if we want to hire someone permanently?
3. Who pays for a worker who is sent home early, and does the three-hour rule apply?
4. What happens on a no-show — are we billed, and how fast is the replacement?
5. Is the agency licensed in Ontario, and what is the licence number?

That last one is not optional. Since 1 July 2024 it is illegal for a business to knowingly use an unlicensed temporary help agency in Ontario, and the fines land on the client, not just the agency. Post 2 in this set covers what to check and how.

What it costs to do it in-house instead

The honest comparison is not "agency rate versus wage". It is agency rate versus the full cost of doing it yourself:

• Job advertising and sponsored postings.
• Recruiter or manager hours spent screening and interviewing.
• Onboarding, orientation and safety training time.
• Payroll administration, WSIB claims administration and ESA compliance.
• The cost of the vacancy while the role sits open.
• The cost of a hire who leaves in week three.

For stable, long-term roles, in-house hiring usually wins. For work that moves week to week — seasonal peaks, a contract you have not proven yet, leave coverage, a line you may not run in six months — paying only for approved hours is almost always cheaper than carrying the fixed cost.

Getting a real number

Any agency can quote a percentage over the phone. A useful quote needs five inputs: the duties, the shift and start date, the pay rate, the physical demands and environment, and any mandatory certifications or checks. Give us those and you get a bill rate you can actually budget against.

This article is general information, not legal or financial advice.

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