The use of personnel placement agencies has become essential for many Quebec employers. However, this growing use raises a number of concerns, particularly regarding compliance with minimum employment standards
In response to these concerns, the legislator adopted the Act respecting labour standards and other legislative provisions mainly to facilitate family-work balance[1] (the “2018 Amending Act”) in 2018. This reform marks the introduction, within the Act respecting labour standards[2] (the “ALS”), of new provisions specifically governing the activities of personnel placement agencies. In the same vein, in 2020, the government adopted the Regulation respecting personnel placement agencies and recruitment agencies for temporary foreign workers[3] (the “Regulation”).
In accordance with article 92.7 (1 °) of the ALS, the government may, by regulation, define what constitutes a personnel placement agency. In this regard, article 1 of the Regulation provides the following definition:
““personnel placement agency” means a person, partnership or other entity that has at least one activity consisting in offering personnel leasing services by providing employees to a client enterprise to meet its labour needs;”
Moreover, article 10 of the Regulation sets out the conditions required to obtain an agency licence, while article 11 gives the Commission des normes, de l’équité, de la santé et de la sécurité du travail (the “CNESST”) the authority to refuse to issue a licence in certain specific situations, subject to its discretion, even when the conditions under the article 10 are met.
Judgment of the Superior Court of Quebec
Following the adoption of the Regulation, employer associations brought an action at the Quebec Superior Court, seeking the annulment of the definition at the article 1. According to them, the vagueness of the definition results in employers being subject to the Regulation as soon as they temporarily assign an employee to a client company, which they argue exceeds the government’s regulatory authority. They also contended that the government improperly delegated its licensing authority to the CNESST.
In October 2022, in a judgment partially granting the application for judicial review, the Superior Court annulled the definition of personnel placement agency set out in article 1 of the Regulation. The Court held that this article was ultra vires the government’s authority, finding that it improperly broadened the scope of the ALS by encompassing any business that incidentally engages in personnel leasing activities. According to the Court, this was contrary to the legislator’s intent, which was to target only businesses specialized in personnel placement.
Regarding the CNESST’s power to issue permits, the Court ruled that the government had not illegally delegated to the CNESST the power to define the offences related to the activities covered by the mandatory permit for employment agencies. Although the regulation provides that the issuance of a permit may be refused where the company has been convicted of an offence which, in the “opinion of the Commission”, is related to the agency’s activities, this does not give the CNESST arbitrary power. In the absence of abuse or irregularity, the Court concluded that there was no illegal sub-delegation, and that the impugned provisions of section 11 of the Regulation are not ultra vires.
It should be noted that the Superior Court invalidated section 1 of the Regulation without, however, ruling on the suspension of its application, merely declaring it null and void.
Judgment of the Quebec Court of Appeal
Validity of article 1 of the Regulation
On May 12, 2025, the Court of Appeal overturned the Superior Court’s judgment and upheld the validity of the Regulation. The Court held that although the definition in article 1 of the Regulation is broad, it does not reach a level of vagueness that would undermine its validity. On the contrary, the definition is logical and reasonable and reflects the legislature’s intent to regulate this constantly evolving sector. The Court also rejected the argument that the Regulation applies only to specialized placement agencies, emphasizing that the authority granted to the government is deliberately broad in line with the general purpose of the ALS which is to regulate practices related to personnel leasing.
Validity of articles 10 and 11 of the Regulation
The Court of Appeal also upheld the validity of articles 10 and 11 of the Regulation, concluding that they do not exceed the powers conferred upon the government. The Court emphasized that the legislator deliberately granted the government broad authority to impose conditions, restrictions, and prohibitions regarding licensing for personnel placement agencies. The exercise of this authority was deemed reasonable.
Furthermore, the Court held that article 11 of the Regulation is not imprecise and neither intends nor has the effect of transforming the regulatory power granted to the government into a discretionary power improperly delegated to the CNESST. The administrative power delegated to the CNESST remains limited and circumscribed to ensuring the enforcement of the standard imposed by the government, rather than its creation.
According to employer associations, the Regulation imposes excessively strict conditions for issuing a license to placement agencies — conditions that no other Quebec employer is subject to. They argue that the Regulation is invalid, describing it as absurd, abusive, and discriminatory. The Court rejects these arguments, finding that the requirements set out in articles 10 and 11 are logical and consistent with the social protection objectives of the law.
Comments
As of the date hereof, this judgment of the Court of Appeal has not yet been subject to an appeal to the Supreme Court of Canada.
Given the confirmed validity of the Regulation, it will be important to monitor the actions the CNESST will undertake to ensure its enforcement.
It should be recalled that the ALS and the Regulation require any personnel placement agency to hold a permit issued by the CNESST in order to operate in Quebec, under penalty of fines. This means that any company offering personnel placement services — whether or not this constitutes its primary business activity — must obtain a permit. Accordingly, as soon as a company places a worker with a client, it is, in principle, required to comply with this obligation.
This strict application of the definition may impose a significant administrative burden on employers who never intended to specialize in personnel leasing.
For any questions or further clarification on this matter, please do not hesitate to contact our professionals.
[1] SQ 2018, c. 21.
[2] CQLR, c. N‑1.1.
[3] CQLR, c. N‑1.1, r.0.1.
