On October 25, 2021, Ontario introduced Bill 27, Working for Workers Act, 2021, and on November 3, 2021 it received its second reading. If passed, the proposed Bill will amend Ontario's Employment Standards Act, 2000 (ESA) to prohibit non-compete clauses in employment agreements and require organizations with over 25 employees to implement "disconnecting from work" policies. Bill 27 is borne out of recommendations from the Ontario Workforce Recovery Advisory Committee, which is an expert committee tasked with developing recommendations to attract global talent, support workers and encourage economic recovery.
"Disconnecting from work" Policy
Employers in Ontario with over 25 employees will be required to develop an official workplace policy on disconnecting from work and distribute it to employees within a certain timeframe. The Bill defines "disconnecting from work" as "not engaging in work-related communications, including emails, telephone calls, video calls or the sending or reviewing of other messages, so as to be free from the performance of work." We expect further details on these requirements to be published in regulations to the legislation.
Prohibition on Non-Competes
Bill 27 also introduces a strict prohibition on non-compete agreements. The proposed provision states that "no employer shall enter into an employment contract or other agreement with an employee that is, or that includes a non-compete agreement" and any contravention to this provision would deem the non-compete void. There is one narrow exception to this rule that the Act contemplates, and that is with respect to the sale of a business. If as part of a sale, the Purchaser and Seller enter into an agreement prohibiting the Seller from engaging in competition with the Purchaser after the sale, and immediately following the sale the Seller becomes the employee of the purchaser, then the agreement will not be void.
Many US States have recently introduction legislation prohibiting non-competition clauses. It is possible that this trend could spread to other Canadian provinces and territories.
We will continue to monitor and provide you with updates on the Ontario legislation and similar developments in other Canadian jurisdictions.
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