December 6, 2021 by Israel Foulon Wong LLP
On December 2, 2021, Bill 27, Working for Workers Act, 2021 (“Bill 27”) received Royal Assent and became law. We previously wrote a detailed e-bulletin on Bill 27 on October 27, 2021. You can review the article HERE.
Most notably, Bill 27 amends the Employment Standards Act, 2000, the Occupational Health and Safety Act, and the Workplace Safety and Insurance Act, 1997.
Bill 27 redefines the remote work landscape by requiring employers with twenty-five (25) or more employees to have a written policy that encourages employees to disconnect from their jobs at the end of the workday. Guidance has not yet been released regarding what employers must include in these policies and/or if there are any associated fines for non-compliance. Employers will have six months from the date of Royal Assent to draft and implement such a policy, and it is expected that Regulations will prescribe the elements that need to be contained in the policy in the near future.
Bill 27 also bans the use of non-competition clauses within employment agreements, which typically restrict employees from working for a direct competitor or within a particular industry from a specified period of time. Bill 27 was recently further amended to create an exception for executives from the ban on non-competition clauses. In addition to permitting non-competition clauses in certain circumstances relating to a sale of business, Bill 27 specifically states that executive employment agreements can include a non-competition clause and still be in compliance with the ESA.
Executives are defined at Section 67.2 (5) as:
“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.”
Importantly, Bill 27 states that the provisions relating to non-competition clauses will be deemed to have come into force on October 25, 2021. As worded, this suggests that any non-competition clause in an employment agreement entered into on or after this date that does not fall under one of the Bill 27 exceptions will be null and void.
It remains to be seen how the Ministry of Labour and/or decision-makers interpret the Bill 27 provisions, and whether the prohibition may be applied to pre-existing non-competitions clauses/agreement pre-dating October 25, 2021. In any event, employers should be aware that most non-competition agreements are difficult to enforce given the common law view that they are generally void for being in restraint of trade other than in very limited circumstances.
Take Away for Employers
We recommend you contact us to assist with implementing your workplace disconnect policy in order to ensure the policy is reasonable and in compliance with the requirements under the ESA, as they become available. We further recommend that employers contact us to have their employment agreements reviewed and revised in order to best protect their business interests through the use of non-solicitation clauses and confidential and proprietary information agreements.
We will surely see court decisions in the near future debating which employees meet the new definition of “Executive,” and therefore can be subject to a non-competition clause. These decisions will likely analyse the substance of the position and the employee’s duties, as opposed to merely relying on the title to determine if the employee is exempt or not. Judges have previously engaged in a similar analysis when determining an employee’s entitlements upon termination.
Israel Foulon Wong’s Response to COVID-19 Israel Foulon Wong LLP is assessing the situation as it evolves, and is taking all necessary precautions within its workplace. To slow the spread of COVID-19 and for the health of our team and clients we are working remotely when possible. However, please be aware that our offices remain open and are fully functioning and we are holding in person meetings as required. In the circumstances, we encourage our clients to contact us by phone and email to the extent possible. Voicemail messages left at our office phone numbers are immediately forwarded via email. All messages will be promptly responded to. We remain steadfast in our commitment to our clients and would be more than happy to assist you with concerns regarding COVID-19 or any other employment or labour matters.