The staffing agency payroll process, step by step (and where the hours go)

What makes staffing agency payroll different?

In most industries, payroll comes from a single source: a timesheet system or a roster you control. In temp staffing, payroll comes from your clients. Every client exports their hours differently: some combine first and last names in a single cell, some split regular and overtime onto separate rows under different earning titles, some add subtotal rows that need to be dropped. You are the employer of record, so the CRA looks to you to remit, and your payroll provider calculates the deductions and benefits. The process is correct only when every client's hours are matched to the right worker, no duplicates are counted, overtime is flagged for the province's rules, and the total is certified before it goes into the system.

What are the steps of the payroll cycle?

1. Collect hour sheets from every client. Every client may format theirs differently.
2. De-duplicate and de-format. Drop subtotal rows. Combine split regular and overtime lines per worker. Resolve name mismatches (a variant surname, a marriage, a typo).
3. Match names to your worker roster. Use a stable ID like Employee ID or SIN last 4, never rely on name matching alone.
4. Classify hours by type: regular, overtime, stat holidays, and unpaid absences. Provincial rules vary: Ontario is 44 hours per week, BC is 8 hours per day, and Alberta is 8 hours per day with a 44-hour weekly threshold for OT premium.
5. Enter the totals into your payroll provider (Wagepoint, Payworks, QuickBooks, or ADP). The provider is your source of truth for deductions, benefits, and statutory holidays.
6. Review the payroll for reasonableness. Compare the total hours to the prior week. Flag any worker with unusual spikes.
7. Approve and finalize the payroll in your provider. The provider will compute tax deductions, CPP, EI, and any employee deductions (benefits, wage garnishment, etc.).
8. Remit the employer portion to the CRA. Most providers can do this electronically.

Where does the evening go? Common failure modes.

The total? A typical pay cycle can take 2 to 5 hours depending on the number of clients, how clean their exports are, and how many name mismatches or overtime edge cases land in the week. A 2019 Intuit and Kelton Global survey of over 1,000 U.S. small business owners found that owners spend about 111 minutes calculating payroll taxes, 96 minutes filing, and 86 minutes allocating funding, for a total of about 5 hours per pay period. That was in 2019; the burden on a temp staffing agency is higher because the source data is messier.

Who is responsible for what?

You are the employer of record. Your agency hires the worker, assigns them to clients, collects their hours, and pays them on your payroll system. The client provides the hours, but you own the accuracy of the pay. If a client's hours are wrong and you pay incorrectly, you are liable to the worker for any shortfall, and liable to the CRA for any unpaid tax or benefits.

Your payroll provider (Wagepoint, Payworks, QuickBooks, or ADP) handles tax calculations, deductions, benefits, and remittance to the CRA. You feed it the hours and the worker's personal/tax information. The provider calculates the rest.

What can go wrong?

• A client's name format changes week to week, and you match the wrong worker or miss a worker entirely.
• Subtotal rows in a client's export are counted as worker hours, doubling the pay for that period.
• A worker has two surnames (maiden name at one client, married name at another), and you create a duplicate record.
• A client reports hours in a format your payroll provider cannot read, and you manually re-enter them and introduce typos.
• A provincial overtime rule is applied incorrectly (Ontario is 44 hours per week, not 40), and the worker is underpaid or the overpayment goes unnoticed until year-end.
• A client is late with their hours, and you delay the entire pay cycle or file hours retroactively.