In December 2021, Bill 27, the Working for Workers Act, 2021 ("Bill 27") received Royal Assent. We provided our summary and comments on Bill 27 on this blog, focusing in particular on the legislation's prohibition of non-competes and its requirement that employers put in place disconnecting from work policies. At the time, we noted that there were open questions as to the content of disconnecting from work policies and some uncertainties as to the application of the prohibition of non-competes.
The Ontario Ministry of Labour has now filled some of these gaps by posting in its online "Guide to the Employment Standards Act" a " Written Policy on Disconnecting from Work" guideline (the "Disconnecting from Work Guideline") and a " Non-Compete Agreements" guideline (the "Non-Compete Guideline"). In addition, we now have the benefit of case law confirming that the prohibition of non-competes does not apply to non-competes entered into with employees before October 25, 2021.
An overview of these updates is provided below.
Written Policy on Disconnecting from Work
Bill 27 requires that 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. The term "disconnecting from work" is defined in the Bill to mean "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."
The following information contained in the Disconnecting from Work Guideline is of note for employers:
- No "New Right" to Disconnect: The Disconnecting from Work Guideline confirms that "the [Ontario Employment Standards Act, 2000 (the "ESA")] does not require an employer to create a new right for employees to disconnect from work and be free from the obligation to engage in work-related communications in its policies." Rather, the employee rights under the ESA with respect to the performance of work will continue to be established through the provisions of the ESA and its regulations (e.g. on hours of work and eating periods, among others).
- Content of the Policy to be Determined by
Employer: The Disconnecting from Work Guideline makes
clear that the employer determines the content of the policy
itself. The Disconnecting from Work Guidelines contain the
following examples of what a
disconnecting from work policy may
- The employer's expectations, if any, of employees to read or reply to work-related emails or answer work-related phone calls after their shift is over.
- The policy may set out employer expectations for different
situations. For example, the policy may contain different
expectations depending on:
- the time of day of the communication
- the subject matter of the communication
- who is contacting the employee (for example the client, supervisor, colleague)
- The employer's requirements for employees turning on out-of-office notifications and/or changing their voicemail messages, when they are not scheduled to work, to communicate that they will not be responding until the next scheduled work day.
- Application to All Employees: The Disconnecting from Work Guideline specifies that the written policy on disconnecting from work must apply to all of the employer's employees in Ontario including management, executives, and shareholders if they are employees under the ESA. However, the employer can have different policies for different groups of employees as long as all employees are covered by the policy (in the example provided in the Disconnecting from Work Guideline, a retail employer have one policy that applies to its office staff and a different policy that applies to its in-store sales staff).
- Employers with 25 or More Employees: To determine how many employees it has, the employer must count the number of employees it employs on January 1; this includes part time and casual employees, officers of a corporation who perform work or supply services for wages, employees on lay off or leave of absence, or employees who are on strike or locked out (among others). Where an employer has multiple locations, all employees employed at each location in Ontario must be included when determining whether the 25-employee threshold for the employer, as a whole, has been met. If two or more employers are treated as one employer (i.e. they are "related employers" for the purposes of the ESA), then all employees employed in Ontario by these related employers must be included in the count.
- Provision of the Written Policy: An employer that is required to have a written policy in place must provide a copy of the written policy to its employees within 30 calendar days of the policy being prepared or changed. The written policy must also be provided to any new employee within 30 calendar days of hire. The written policy may be provided in print, by email attachment, or via link to an online document (if the employee has a reasonable opportunity to access the document and a printer).
- Greater Right or Benefit: In the event that an employer chooses to include a provision in their written policy on disconnecting from work that gives an employee the right not to perform work when the rules in the ESA would otherwise permit work to be performed, the Disconnecting from Work Guideline states that such provision may be enforceable under the ESA as a "greater right or benefit." Such a provision may also create contractual or common law entitlements. We therefore caution that any written policy be reviewed with counsel to ensure that it does not unintentionally provide entitlements outside what is required by the ESA.
- Record Keeping Requirements: An employer must keep a copy of each written policy on disconnecting from work required by the ESA for three years after the policy is no longer in effect.
Employers have until June 2, 2022 to put in place their policy with respect to disconnecting from work. In light of the provisions of Bill 27 (which do not set out content requirements) and the Disconnecting from Work Guideline (which states that the content is to be determined by the employer), it appears that employers can craft disconnecting from work policies in a manner that is tailored to the nature of their business and characteristics of their workforce, and which addresses expectations as they relate to communications outside working hours.
We caution that Bill 27 provides that written policies on disconnecting from work shall contain such information as may be prescribed in regulations to the bill. Such regulations have not yet been passed, and it is unclear whether any will follow from the Ontario government. As such, it remains possible that the information contained in the Disconnecting from Work Guideline is subject to change and/or clarification. We are continuing to monitor developments in this regard and will be posting updates on this blog.
Prohibition of Non-Compete Agreements
Bill 27 amended the ESA to prohibit employers from entering into "an agreement or part of an agreement" that prohibits an employee from engaging in any business, work, occupation, profession, project or other activity that is in competition with the employer's business after the employment relationship between the employee and the employer ends. As detailed in our earlier blog, the prohibition of non-competes does not apply to employees in chief executive roles.
The Non-Compete Guideline confirms our understanding that Bill 27 would not render void any non-compete agreement entered into before October 25, 2021.
In addition to the above, we note that the Ontario Superior Court recently addressed the scope of Bill 27 in Parekh et al v. Schecter et al, 2022 ONSC 302 (CanLii) ("Parekh").The plaintiffs in Parekh sought to enforce a non-compete against a departing dentist. The dentist attempted to argue that the prohibition of non-competes in Bill 27 applied to the restrictive covenants at issue, even though they were entered into in January, 2020. Justice Sharma rejected this position, stating:
 Faced with this express legislative intent to make the ESA amendments applicable as of October 25, 2021, and not earlier, it cannot be said the provisions with respect to the non-compete clause applies to contracts of employment with non-compete clauses entered into before October 25, 2021. '
 At most, and in respect of this case, the new ESA provisions confirms the public policy against restraint of trade, which has already been accepted in the common law. (Emphasis added.)
As a result of the above, Justice Sharma applied common law principles to the enforcement of the non-compete, which was ultimately upheld.
Employers should continue to remove non-competes for employees in non-chief executive positions. Amending letters should be issued in respect of non-compete provisions entered after October 25, 2021 to confirm that these provisions will be unenforced and/or struck. Parekh will be helpful for employers defending against claims that any non-compete entered into prior to October 25, 2021 is not enforceable as a result of Bill 27.
Should you have any questions regarding the impact of Bill 27 on your business or require assistance with your employment and non-compete agreements in light of the new legislation, please contact a member of the Employment & Labour Group.
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.