Ontario’s new bill the Working for Workers Act has now come into effect. Our readers will recall that the Act, among other things, amends the Ontario Employment Standards Act to ban non-compete agreements in employment and to require employers to have a policy on disconnecting from work.
As of October 25, 2021, employers are prohibited from entering into employment contracts or other agreements with their employees that are or include a non-compete agreement. In addition, any non-compete entered into after October 25, 2021 is void. A non-compete agreement is defined in the Bill as any agreement that prohibits the employee from engaging in an activity that is in competition with the employer’s business after the relationship ends.
The prohibition does not apply:
- If there is a sale of a business, the seller and purchaser enter into a non-compete agreement, and the seller becomes an employee of the purchaser.
- To employees who are executives. “Executive” is defined as any person who holds the office of president or any chief executive position including CEO, CFO, COO, etc. This was added during review of the legislation in committee.
As we wrote previously, we do not believe the amendment prohibits non-solicitation of customers or employees covenants. However, it is important to review your non-solicit covenants carefully. Some such covenants, including some drafted by us, include a covenant not to sell to customers i.e. an obligation not to sell to a customer even where there was no solicitation by the employee. As the Ontario courts have characterized such “non-sell” covenants as a form of non-competition agreement, it appears likely they are also prohibited and any signed after October 25, 2021 will be void.
We recommend that you contact us to review your post-employment covenants for Ontario employees in light of the amendment.
Disconnecting from Work
Employers with 25 or more employees will have until June 3, 2022 to implement a written policy regarding disconnecting from work, which is defined as not engaging in work-related communications, including emails, telephone calls, video calls, or the sending or review of other messages so as to be free from the performance of work during time off. After 2022, employers that have 25 or more employees as of January 1 of any year must ensure they have a policy in place by March 1 of that year.
The content that the policy must include will follow in regulations. We will continue to monitor the progress of any regulations and update you accordingly.
If you have any questions about these new amendments, you can contact us at: