Before you sign with a staffing agency, you need to know what the number on the quote actually contains. A bill rate of $28 an hour for a $20 an hour warehouse worker is not $8 of profit. Most of that gap is payroll tax, insurance and vacation pay the agency carries so you do not.
The rest is recruiting, screening and the margin that keeps the agency in business. Once you can read the quote, you can compare agencies on something other than the headline. The headline is the least useful number on it.
In this guide we take you through the two ways Canadian agencies charge and what sits inside each fee.
The Two Ways Staffing Agencies Charge Employers
Almost every agency in Canada prices on one of two models, and the choice follows the kind of hire. Temporary and contract workers are billed by the hour. Permanent hires are billed once, as a percentage of salary.
Hourly Bill Rates for Temporary and Contract Staff
For a temporary worker, the agency remains the employer. You pay a bill rate for each hour worked, and the agency pays the worker’s wage, the statutory costs on that wage, and its own overhead out of it. The bill rate is usually expressed as the wage plus a markup. A $20 wage with a 40 percent markup is a $28 bill rate.
You pay only for hours worked. There is no salary, no benefits enrolment and no severance, because the worker is not on your payroll. The agency handles payroll, remittances and records of employment.
Placement Fees for Permanent Hires
For a permanent hire, the agency recruits and screens, and the candidate joins your payroll on day one. You pay a one-time fee, usually a percentage of the first-year salary. In Canada that fee generally runs from 15 to 25 percent, and higher for senior or hard-to-fill roles. A $60,000 hire at 20 percent is a $12,000 fee.
Most placement fees come with a guarantee period, commonly 60 to 90 days. If the hire leaves inside that window, the agency replaces them at no charge or refunds part of the fee. The length of the guarantee is one of the terms worth negotiating.
Temp-to-Hire as a Third Path
Many employers use a temporary assignment as a working interview and hire the worker permanently afterward. In Ontario, the Employment Standards Act lets an agency charge a conversion fee only if you hire within six months of the worker’s first day with you. The agency cannot restrict you from hiring directly.
Conversion fees commonly run from 10 to 25 percent of first-year salary and decline with hours worked. Many agencies waive the fee after a set number of hours. Ask for the schedule before the assignment starts.
If you are weighing temporary against permanent for a role right now, Next Employment will quote both models on the same call. You can book a free hiring consultation and compare the two prices side by side. The decision is easier with both numbers in front of you.
What Sits Inside a Staffing Agency Markup
The markup is where employers assume the profit lives. Most of it is cost the agency carries as the employer of record. The breakdown below is for a $20 an hour worker in Ontario in 2026.
Statutory Payroll Costs
The agency matches the worker’s Canada Pension Plan contribution at 5.95 percent of pensionable earnings up to $74,600. Employment Insurance premiums are paid at 1.4 times the worker’s rate, which is 2.282 percent of insurable earnings up to $68,900. Vacation pay under Ontario’s Employment Standards Act is at least 4 percent of wages. The worker is also entitled to public holiday pay for nine holidays a year.
Workers’ compensation premiums through the WSIB vary by industry. A warehouse or manufacturing classification costs more than an office one. Agencies with large Ontario payrolls also pay Employer Health Tax.
Recruiting, Screening and Administration
The agency advertises, interviews, checks references, runs any required safety training and keeps the worker’s file. The agency processes payroll every week, remits deductions to the CRA, and issues T4s and records of employment. Those costs are spread across the hours it bills.
The Agency’s Margin
What remains after statutory costs and overhead is the agency’s gross margin. Across the staffing industry, gross margins on temporary staffing average roughly 20 percent of the bill rate, and net profit after all expenses is far lower. The markup that looks like $8 an hour is closer to $3 or $4 of gross margin once the worker’s statutory costs are paid.
Item on a $20 an hour worker | Cost per hour | Who pays it |
Wage | $20.00 | Agency, from the bill rate |
CPP employer match at 5.95 percent | $1.19 | Agency |
EI employer premium at 2.282 percent | $0.46 | Agency |
Vacation pay at 4 percent | $0.80 | Agency |
Public holiday pay, averaged | About $0.70 | Agency |
WSIB premium, industrial classification | About $0.50 to $0.80 | Agency |
Recruiting, screening, payroll administration | About $1.50 | Agency |
Agency gross margin | About $2.50 to $3.00 | Agency |
Bill rate at roughly 40 percent markup | $28.00 | You |
What Employers Actually Pay by Role in Canada
Ranges vary by province, industry and how hard the role is to fill. The figures below are the ranges Canadian employers see most often in 2026. A quote outside them deserves a question.
General Labour, Warehouse and Manufacturing
High-volume industrial roles carry the lowest markups because the candidate pool is large and assignments are long. Markups of 25 to 40 percent are typical. A $19 an hour general labour worker bills at roughly $24 to $27. Volume matters. An employer filling 20 positions negotiates a lower markup than one filling two.
Skilled Trades, Drivers and Technical Roles
Roles with licences, tickets or certifications carry markups of 35 to 55 percent, because the search takes longer and the pool is smaller. An AZ driver or a licensed millwright bills at the upper end. The same applies to roles with safety-critical screening.
Office, Administrative and Professional Roles
Administrative and professional temporary roles run from 30 to 50 percent. Permanent placement fees for these roles sit at 15 to 25 percent of salary. Executive search runs from 25 to 35 percent and is often on a retainer.
Role type | Typical temporary markup | Typical permanent fee |
General labour, warehouse, food processing | 25 to 40 percent | 15 to 20 percent of salary |
Skilled trades, drivers, technical | 35 to 55 percent | 18 to 25 percent |
Office, administrative, professional | 30 to 50 percent | 15 to 25 percent |
Executive | Rarely temporary | 25 to 35 percent, often retained |
Next Employment recruits across all four groups, from warehouse and food processing crews to skilled trades and office staff. Each role is quoted on its own market rather than a blanket rate. You can request a quote for a specific role and see where it falls in the ranges above.
The Terms That Change the Total Cost
Two quotes with the same markup can cost you different amounts by the end of the year. Four terms decide the difference. Each one belongs in the agreement before the first worker arrives.
The Guarantee Period
A 90-day guarantee on a permanent placement is worth more than a 30-day one, because most early departures happen between weeks four and twelve. Ask whether the guarantee is a free replacement or a refund. Ask whether it applies if you dismiss the hire.
Conversion Terms on Temp-to-Hire
Ask at what point the conversion fee falls to zero. An agency that waives the fee after 1,000 hours is offering something different from one that charges a flat 20 percent whenever you hire. In Ontario, remember that no fee can be charged at all once six months have passed since the worker’s first day with you.
Volume Pricing and Minimums
Agencies price volume. Ask whether the markup drops at 10, 20 or 50 positions, and whether there is a minimum weekly hours commitment. A minimum you cannot meet turns a low markup into a high one.
Licensing and Compliance
In Ontario, a temporary help agency has to hold a licence under the Employment Standards Act, and you are prohibited from knowingly using one that does not. The licence costs the agency $1,500 for two years and requires $25,000 in security held by the Director of Employment Standards. A licensed agency has met the province’s compliance checks. An unlicensed one exposes you as well as itself.
- Ask for the agency’s Ontario licence number and check it on the province’s public list
- Ask whether the markup includes WSIB and safety training or bills them separately
- Ask for the guarantee period and conversion terms in writing
- Ask what the bill rate becomes at your expected volume
Get Both Models Quoted on the Same Role Before You Choose
Take one role you need to fill this month and ask for a temporary bill rate and a permanent placement fee for it. Multiply the bill rate by the hours you expect over the next year, and set the result beside the placement fee plus the salary. The comparison tells you which model fits the role. The quote tells you whether the agency is pricing in the ranges above.
Next Employment provides that comparison as part of a free consultation, with the markup broken out the way this guide breaks it out. Speak to the team or call (226) 499-3900. You will have both numbers for your role before you commit to either.
Frequently Asked Questions
Does the markup include the worker’s vacation pay and public holidays?
For a temporary worker it has to, because the agency is the employer and the Employment Standards Act requires both. Ask the agency to confirm that vacation pay and public holiday pay are inside the bill rate rather than billed on top. A quote that excludes them is understated by roughly 7 to 8 percent.
Can a staffing agency charge the worker a fee in Canada?
No. In Ontario, an agency is prohibited from charging an assignment employee for finding them work or for placing them with you, and the same rule applies in most provinces. An agency that charges workers is breaking the rules that govern its licence.
What happens if I hire a temporary worker directly after the assignment?
In Ontario the agency can charge a conversion fee only within six months of the worker’s first day with you. The agency cannot prevent the hire or refuse a reference. After six months, you can hire the worker with no fee at all. Ask for the conversion terms before the assignment starts.
Is a low markup always the better deal?
Not on its own. A markup that excludes WSIB, training or public holiday pay is low because those costs arrive on a separate invoice. Compare the total cost per hour with everything included, and check the guarantee and conversion terms, before you compare markups.
