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Date:
2021.12.03

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THE EMPLOYERS' EDGE

Working for Workers Act Passed by Ontario Government

On Tuesday, November 30, Ontario passed Bill 27, the Working for Workers Act, 2021 which was first tabled in October and received royal assent on Thursday, December 2.  In addition to providing other protections to employees, the Act is intended to create a better work-life balance for workers and give them the “right to disconnect” from the workplace. Monte McNaughton, the Minister of Labour, Training and Skills Development, announced the passing of the Bill with a statement that said “Our government is working for workers every day to help them earn bigger pay cheques, stay safe, and have better opportunities. We are determined to rebalance the scales and put workers in the driver’s seat of Ontario’s economic growth while attracting the best workers to our great province.”

The Act makes a number of notable changes to current legislation that will have implications for employers, including:

  • An amendment to the Employment Standards Act (“ESA”) which will create a requirement that employers who have 25 or more employees as of January 1st in any year to implement a policy that outlines employees’ rights to disconnect;
  • An amendment to the ESA by adding a section that prohibits employers from entering into non-compete agreements with employees or entering into employment contracts with non-compete clauses;
  • An amendment to the ESA by adding a section that prohibits persons from operating as a temporary help agency or acting as a recruiter without a license to do so. The new section also prohibits employers from knowingly engaging in or using a service of an unlicensed temporary help agency or recruiter;
  • An amendment to the Employment Protection for Foreign Nationals Act to include a prohibition against a recruiter or employer from knowingly using the services of a recruiter who has charged a fee to a foreign national;
  • An amendment to The Fair Access to Regulated Professions and Compulsory Trades Act, by requiring regulated professionals to ensure they comply with any regulations respecting English or French language proficiency testing requirement and prohibiting regulators from including Canadian experience requirements as qualifications for registration unless an exemption from the prohibition is granted;
  • The Occupational Health and Safety Act is amended to require the owner of a workplace to provide access to a washroom to persons making deliveries to or from the workplace; and
  • The Act amends the Workplace Safety and Insurance Act to require that Workplace Safety and Insurance Board (“WSIB”) distribute surplus amounts in the insurance fund to Schedule 1 employers and work with entities, such as the Canada Revenue Agency, to streamline remittances.

The Right to Disconnect

The Act amends the ESA by imposing a requirement on employers that employ 25 or more employees as January 1st in any year to have a written policy with respect to disconnecting from work.  Going forward, employers may have to include a right-to-disconnect provision in their employment offer letters when recruiting or issue a mass policy setting out expectations for all current employees. Employers who have over 25 employees now have six (6) months from December 2, 2021 to create the policy. The policy must  be given to employees within 30 days of either the creation or amendment of the policy and new employees must receive a copy of the policy within 30 days of becoming an employee.

The Legislation’s Impact on Non-Compete Clauses

The new legislation will also amend the ESA by banning non-compete clauses, making Ontario the first province to legislate a prohibition against non-compete clauses. The Act will ban any agreement between an employer and employee that prohibits the employee from engaging in any business, work occupation, profession, project, or other activity that is in competition with the employer’s business after the employment relationship ends.  There are only two exceptions provided in the bill for non-compete clauses. The first is for the sale of a business or part of a business. In these circumstances, purchasers of existing businesses may still include non-competition obligations on the seller to avoid loss of goodwill and clientele.

The second exception applies to executive employees. This means that non-compete clauses can be negotiated with any person who holds the office of chief executive officer, president, chief administrative officer, chief operating officer, chief financial officer, chief information officer, chief legal officer, chief human resources officer or chief corporate development officer, or holds any other chief executive position.

We note that even without this new legislative prohibition Courts throughout Canada have been striking down non-competition restraints under the common law except in very limited circumstances for decades.   It remains to be seen how these amendments will impact common law claims seeking to enforce or strike these clauses in future litigation.

Non-solicitation clauses are not impacted by the Act.  These clauses are intended to prevent departing employees from actively soliciting or pursuing clients, suppliers, and other employees. However, we note that the enforceability of these types of restraints continue to be tested and regularly rejected by the Courts as unreasonable restraints of trade. 

The prohibition against non-competition clauses is deemed in force effective October 25, 2021.

As 2021 draws to a close, employers should be reviewing their current employment agreements and policies to determine if existing non-compete agreements are voided by these legislative changes.  Similarly, any employer who anticipates having 25 or more employees on January 1, 2022 needs to start drafting right to disconnect policies as they will need to be in place by June 2, 2022.

If you have any questions on how this new legislation will affect your workplace, require assistance in evaluating your current employment agreements or need support in the drafting of right to disconnect policies please reach out to the lawyers for employers at CCPartners for expert legal guidance and support.

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