Placement and employment agency workers

The following guidelines apply to placement or employment agencies that hire workers:

1. An agency that hires employees (even if they are located at a client’s premises) has to deduct CPP contributions, EI premiums, and income tax from amounts they pay to these employees. The agency also has to report these amounts on a T4 slip.
2. When an agency places workers in an employment under the direction and control of a client of the agency and the agency pays the worker, the agency has to deduct CPP contributions and EI premiums, but not income tax. The agency has to prepare a T4 slip for the worker.
3. When an agency places workers in an employment under the direction and control of a client of the agency and the client of the agency pays the worker, the client has to deduct CPP contributions and income tax but not EI premiums. The client has to prepare a T4 slip for the worker.
4. An agency that hires a worker under a contract for services does not have to deduct CPP contributions, EI premiums, or income tax since the worker is self-employed. Neither the agency nor the client is required to file a T4 slip. However, the agency may be required to file a T4A slip. For more information, see Guide RC4157, Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary.

The gross earnings of workers described in paragraphs b) and c) must be reported on their T4 slip. For reporting instructions, see Guide RC4120, Employers’ Guide – Filing the T4 Slip and Summary.

See the reporting instructions on how to complete the T4, Statement of Remuneration Paid (slip).

Related topics

• Placement/employment agencies