When To Use An Agency Just For Payroll

By Author: Nova Staffing
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Payroll-only staffing: when to use an agency just for payroll

Already found the worker? Payroll-only staffing puts them on a licensed agency payroll, with WSIB, deductions and ESA compliance handled.

Not every staffing problem is a recruiting problem. Sometimes you already have the person — a returning seasonal worker, a referral from your supervisor, a contractor who should really be an employee — and what you actually need is somebody to employ and pay them properly.

That is payroll-only staffing, sometimes called payrolling. Here is how it works and when it is the right call.

For Canadian employers

What payroll-only staffing is
You identify the worker. The agency employs them, pays them, and assigns them to your site. You direct the work; the agency carries the employment obligations:

•Weekly payroll and direct deposit.
•CPP, EI and income tax source deductions and remittances.
•Employer Health Tax where it applies to your payroll size.
•WSIB coverage and claims administration at the right rate class.
•Vacation pay, public holiday pay and ...
... ESA record-keeping.
•T4s and Records of Employment.

Who uses it

•Seasonal employers who rehire the same crew every year and do not want them on the permanent payroll between seasons.

•Companies with a hiring freeze on headcount but real work to cover.

•Businesses that found someone through a referral and do not want to add a payroll system, WSIB account and ESA compliance process for one or two people.

•Operations converting long-standing "contractors" to a compliant employment arrangement.

•Project teams and short-term cover where the end date is known from the start.

•Employers covering a short gap before a permanent hire starts.

The contractor problem it solves

A lot of small operations pay people as independent contractors because it is simpler. If the person works your hours, at your site, under your direction, using your equipment, that classification is usually wrong — and the exposure sits with you: unpaid source deductions, vacation and holiday pay, WSIB premiums, and potentially ESA termination entitlements.
Payroll-only staffing fixes that cleanly. The person becomes an employee of a licensed agency, properly covered, while continuing to do the same job on your site.

What it is not

Two clarifications worth making, because the terms get mixed up:

•It is not an immigration solution. Every worker we payroll must already be legally entitled to work in Canada. We verify status before the assignment starts, and we do not process LMIA applications or act as immigration consultants.

•It is not a way around licensing. In Ontario, assigning workers to perform work for a client is temporary help agency activity, so the licensing and liability rules still apply — including your obligation not to knowingly use an unlicensed agency. Check the licence the same way you would for a recruiting order.

How it compares to the alternatives

The markup on payroll-only sits below a full-service rate because the recruiting, advertising and screening cost is not in it. What remains is real cost: statutory employer contributions, WSIB at the correct rate class, vacation and holiday pay, payroll processing, compliance and the administration of it all. Any supplier quoting a payroll-only rate that could not cover those numbers is cutting a corner somewhere, and it will be a corner you end up owning.

What to confirm before you set one up

•The agency’s licence number and current status in each province where your people work.

•Which WSIB rate class the work falls under, and who manages a claim if there is an injury.

•Pay frequency, and whether workers are paid weekly regardless of your payment terms.

•Who delivers health and safety orientation, and who provides PPE.

•What happens at the end — notice obligations, Records of Employment and whether you can hire the person onto your own payroll later.

How to move someone onto payroll without upsetting them

If you are converting a long-standing contractor, how you raise it matters. Most people hear "we are putting you on an agency payroll" as a pay cut or a demotion. Three things make it land better:

•Lead with what they gain: proper WSIB coverage if they get hurt, EI eligibility, vacation and holiday pay, a T4 instead of chasing their own remittances.

•Be clear about the net effect on their take-home, and give them time to look at it. Someone used to invoicing gross will see deductions for the first time.

•Introduce the agency before the change, not after. A five-minute call with the person who will actually run their pay removes most of the anxiety.

How to tell whether it is working

Payroll-only is easy to measure. Track four things: payroll accuracy and on-time payment, total hourly cost against what the same person would cost on your own payroll fully loaded, time your administrators spend on payroll queries, and whether your compliance exposure actually moved. If the numbers do not justify it, say so and we will tell you honestly whether to bring it back in-house.

Frequently asked questions

Do you offer payroll-only services for workers we recruited ourselves?

Yes. If you have already found the person — a returning seasonal worker, a referral, a contractor you want on payroll — we can employ and pay them for you. You get ESA-compliant payroll, WSIB coverage and one invoice without the recruiting fee.

Can you hire temporary foreign workers for us?

Every worker we place must already be legally entitled to work in Canada, and we verify status before assignment. We do not act as an immigration consultant or process LMIA applications; if your hiring plan depends on the Temporary Foreign Worker Program, we can talk through what part of the workforce we can cover in the meantime.

Which cities and provinces do you staff?

Our head office is in Brampton with a second Ontario office in Orangeville, and we staff across the GTA — Toronto, Mississauga, Brampton, Scarborough, Markham, Hamilton, Kitchener, Windsor, Brantford — and nationally, including Halifax and Atlantic Canada, Winnipeg, Regina and Calgary.

How do we know the staffing arrangement is actually working?

Track four numbers: fill rate against orders, time to fill, attendance and turnover in the first 30 days, and total labour cost per unit of output. We report on these and review them with you — if attendance or turnover is drifting, the fix is usually pay rate, shift design or the site experience, and we will say so.