Throughout 2021, employers continued to grapple with the challenges posed by the COVID-19 pandemic. As a result, employers may not have been focused on workplace priorities unrelated to COVID-19. In the circumstances, we have prepared a list of key, non-COVID, action items for employers to focus on in early 2022. These action items are detailed below, along with an overview of the relevant issues.
Non-Competes - Review Templates and Amend Agreements Entered into After October 25, 2021 (If Necessary)
In December 2021, the Ontario Employment Standards Act, 2000 (the "ESA") was amended by Bill 27 to prohibit employers from entering into non-compete agreements with employees, effective October 25, 2021. As a result, any non-compete agreement entered into between an employer and employee after October 25, 2021, is now void and unenforceable. Non-compete agreements entered into before October 25, 2021 are not affected Bill 27, as confirmed here by the Ontario Ministry of Labour.
"Chief executives" (as defined in Bill 27) are exempt from the prohibition of non-competes.
We note that for the purposes of Bill 27, non-compete agreements could be included in any form of agreement between an employer and employee (for example, an employment agreement, standalone restrictive covenant agreement, incentive plan, or award agreement).
- Review employment agreement templates and remove any non-compete provisions that apply to employees in non-chief executive roles.
- Review non-solicitation and intellectual property provisions to ensure they are well drafted and adequately protect the employer's business.
- In the event that an employer has entered into a non-compete with an employee after October 25, 2021, issue amending letters or agreements to affected employees deleting the non-compete provisions.
Termination Provisions – Ensure ESA Compliance
Despite some more employer favourable case law, the Ontario courts continued to endorse a strict approach to the interpretation of termination provisions throughout 2021 (see for example, here, here, and here). In addition, the Court of Appeal's 2020 Waksdale v. Swegon North America Inc. ("Waksdale") was denied leave to appeal to the Supreme Court in January, 2021 and was followed in several decisions throughout 2021. Waksdale found that any language that permits termination for cause in circumstances outside those permitted by the ESA may impact the enforceability of both termination "for cause" and "without cause" provisions.
- Review template employment agreements to ensure that the termination provisions comply with the ESA (including with respect to the definition of "cause").
- Consult with counsel in respect of any employment agreements that contain out of date termination provisions as there may be an opportunity to correct such provisions in exchange for consideration.
Incentive Compensation Plans
Termination Provision – Review and Update if Necessary
In 2020, the Supreme Court of Canada in Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26 ("Matthews") made clear that in circumstances where an employee is entitled to a bonus (or other benefits/remuneration) as part of their compensation during the common law reasonable notice period, employers must use clear and unambiguous language to limit that entitlement.
In 2021, the Ontario Superior Court, in Marazzato v. Dell Canada Inc., 2021 ONSC 248 ("Dell"), expanded on Matthews by providing employers with further guidance as to the type of language that would be sufficient for the purposes of waiving an employee's common law notice entitlements in an incentive compensation plan.
- Employers should continue to ensure as part of their incentive plan review processes that both plan documents and grant agreements explicitly and adequately address termination entitlements.
- Legal counsel should be consulted in the above process to ensure that plan drafting is consistent with case law requirements. The issue of consideration in exchange for any new or updated plan and award agreements will also need to be strategized.
Evaluate Employee Award Notification and Acceptance Process
Employers must continue to draw employee attention to potentially harsh and oppressive terms in their incentive compensation plans. To this end, Battiston v Microsoft Canada Inc. ("Battiston") provides a helpful blueprint for employers using email and/or web-based platforms for administering incentive compensation plans. In Battiston, the employer required employees to electronically confirm that they read, understood, and accepted the terms of the award agreement as a condition to receiving any awards. The employee accepted awards in accordance with this process repeatedly over 16 years. The Court of Appeal found that the employee's attention was sufficiently drawn to the termination provisions in the award agreement.
For our detailed discussion of Battiston see here on our blog.
- Consider the process in which grants are made and ensure that reasonable steps are taken to draw employee attention to onerous provisions (e.g. by having the employee sign or "click and accept" such provisions as a condition to receiving awards).
- Consider additional measures to supplement the above process, including, for example, circulating incentive plans with FAQ documents and/or offering live information sessions.
Workplace Policies and Training
Disconnecting from Work Policies – Begin Planning, Diarize June 2, 2022 Deadline
As detailed in our recent blog, pursuant to Bill 27, employers that employ 25 or more employees as of January 1 of any year will be required to have a written policy with respect to disconnecting from work. We do not yet have information as to the content requirements of disconnecting from work policies and these will likely follow in the form of regulations to Bill 27.
Employers have until June 2, 2022 to put in place their policy with respect to disconnecting from work.
- While we wait for more guidance, employers should consider what a disconnecting from work policy could look like for their particular workplace, taking into account the nature of their business, work force, and work arrangements.
- Employers should remain mindful of the June 2, 2022 deadline for disconnecting from work policies.
OHS Training – Review and Update if Necessary
The Ontario Occupational Health and Safety Act ("OHSA") places duties on employers, supervisors, and employees to protect the health and safety of workers in the workplace, including that employers must provide information, instruction and supervision to protect worker health and safety. However, as a result of the COVID-19 pandemic, and with many employees now working from home, OHSA training has fallen off the radar for many employers.
- Review occupational health and safety training procedures to ensure compliance with OHSA. Consider whether to address health and safety risks that may present in home-based work settings in updating training (to the extent applicable to the workplace).
- As a part of the above process, consider reviewing the workplace COVID-19 safety plan to ensure that it is consistent with current requirements as these are continuously changing.
Ensure Compliance with Minimum Wage
Effective January 1, 2022, the general minimum wage rate in Ontario increased from $14.35 to $15.00 per hour. Special minimum wage rates also increased, as detailed here. Employers should ensure with compliance with the new minimum wage rates.
Assistance with 2022 Action Items
Legal counsel should be consulted in connection with any review of your non-competes, employment agreements, or incentive plans and award agreements, and in drafting disconnecting from work policies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.