Ontario becomes the first province to enact Employee-Friendly Legislation prohibiting non-competes and the right to disconnect

On November 30, 2021, the Ontario legislature passed Bill 27, Working for Workers Act, 2021

Known as “employer-friendly” legislation because it addressed employment regulations that were deemed too restrictive (non-compete agreements) and created legislation (right to disconnect) to address the often-blurred line between work and home life. The amendments received Royal Assent on December 2, 2021; however, different parts of the Bill will come into effect at different times.

 

  1. A) Prohibiting Non-compete agreements-effective on December 2, 2021.

 

Bill 27 amends the Employment Standards Act, 2000 (called the “ESA”), which prohibits employers from binding an employee to any form of a non-compete agreement.

 

This change was introduced by the Government to attract and retain global talent and investments in Ontario. In the past, non-competes were used to discourage former employees from working in the same industry, for a competitor, and or restricted employment within a geographical location. This often made it difficult for the former employee to find gainful employment in their profession.

 

 A “non-compete agreement” is an agreement in writing, between an employer and an employee that prohibits the employee from engaging in any business, work, occupation, profession, project, or other activity that competes with the employer’s business AFTER the employment relationship between the employee and the employer ends.

 

There are only two exceptions to the non-compete clause:

 

  1. Executives, defined as “any person who holds the office of chief executive officer, president, chief administrative officer, chief operating officer, chief financial officer, chief information officer or holds any other chief executive position.”
  2. Sellers who sell part of or the whole of their business and become employees of the buyer immediately following the sale.

 

The amendment does not restrict an employer from using other forms of constraints on what an employee can or cannot do after the employment relationship has ended, such as non-solicitation, confidentiality, and intellectual property provisions.  Aside from the exceptions above, non-compete agreements are prohibited, and in violation of the ESA; and there is no “grandfathering” or transition period.  

 

  1. Right to disconnect from work policy-6 months from December 2, 2021

 

If you are an employer with 25 or more employees, then Bill 27 requires you to develop a written policy concerning “disconnecting from work”.

 

“Disconnecting from work” means “not engaging in work-related communications, including emails, telephone calls, video calls or the sending or reviewing of other messages, to be free from the performance of work”

 

As an employer, you must provide every employee with a copy of the written policy within 30 days after it is prepared. The deadline for completion of the policy is 6 months from December 2, 2021 (i.e., June 2, 2022).

 

The legislation however doesn’t impose any specific requirements-so it may be confusing for employees given the title of the policy and what the employer’s operational needs are especially if there are still requirements to answer emails after core hours or to work on a weekend.

 

In developing your policy, consider consulting with your employees. Having them assist in policy development, engaging them in educational sessions to review the terms of the policy will help with buy-in and acceptance. If you balance the operational side of the business while considering the mental health of your employees, you can avoid any misunderstanding or resentments.

 

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