New legislation in Ontario introduces a first-in-Canada requirement for employers to prepare “disconnect from work” policies for their employees. It also creates a novel prohibition on non-competition provisions in employment agreements.
On December 2, 2021 Bill 27, Working for Workers Act, 2021, (“Bill 27”) received royal assent, passing into law several amendments to employment-related legislation in Ontario. The legislative amendments included in Bill 27 were reviewed in our October 29, 2021 blog entitled Ontario Proposes Right to Disconnect and Ban on Non-Competes.
In this publication, we review Bill 27 as passed into law and discuss how the changes will affect employers in Ontario.
Bill 27 contains several significant changes to employment-related legislation in Ontario, including:
- Right to Disconnect: written “disconnecting from work” policies meant to limit work-related communications outside of normal business hours are mandated for employers with 25 or more employees.
- Prohibition on Non-Competes: companies are prohibited from including non-competition provisions in any agreement with their employees, subject to certain exceptions.
- Licensing Requirements for Temporary Help Agencies and Recruiters: Temporary help agencies and recruiters will require licences to legally operate in Ontario. As a condition of licensing, temporary help agencies and recruiters must provide attestations that fees have not been charged to foreign nationals whom they have placed, among other requirements.
We discuss each of these proposed changes in further detail below.
Right to Disconnect
Amendments to the Employment Standards Act, 2000 (the “ESA” or the “Act”) require that employers with 25 or more employees (as of January 1 in any year) implement a written policy on disconnecting from work by March 1 of that same year.
“Disconnecting from work” is defined as “not engaging in work-related communications, including e-mails, telephone calls, video calls or the sending or reviewing of other messages, so as to be free from the performance of work.”
Copies of any such policy must be provided to existing employees within 30 days of being created, and to new employees within 30 days of their start date.
In terms of specific content, the ESA requires the policies to include “such information as may be prescribed”. This means that a policy must contain the requirements of any regulation passed by the government. However, no such regulations have yet been announced.
Employers need not panic, as transitional provisions allow for six months for such policies to be created, meaning a deadline of June 2, 2022.
Finally, we note that certain classes of employees (regulated professionals such as accountants, doctors and engineers) may be exempt from the new “Right to disconnect” sections of the ESA, as they are already exempted from several other sections of the Act. Exemptions have yet to be announced by legislators.
Prohibition on Non-Competition Clauses
New provisions of the ESA prohibit employers from entering into employment contracts or other agreements with employees that include non-compete provisions. The legislation defines “non-compete” as any agreement “that prohibits the 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.”
The legislation carves out two exemptions: 1) the prohibition does not apply in an M&A context where, as part of the transaction, the seller agrees not to compete with the purchaser’s business post sale and, immediately following the sale, becomes an employee of the purchaser; and 2) the prohibition does not apply to agreements with chief executive-level employees.
These prohibitions are retroactive October 25, 2021. Accordingly, any non-compete agreements entered into on or after October 25, 2021 are void by operation of the statute, subject to the exemptions identified above.
Temporary Help Agencies and Recruiters
Temporary help agencies and recruiters will soon require licences to legally operate in Ontario. As part of the licensing process, applicants will be required to provide an irrevocable letter of credit which may be used to re-pay wages owed to workers. Applicants will also be required to acknowledge, in writing, certain provisions of the Employment Protection for Foreign Nationals Act, 2009 . These include strict prohibitions against the collection of fees from foreign nationals placed by temporary help agencies and recruiters. Contravention of such provisions is established as cause to revoke or withhold an operating licence. Further, employers and/or clients may not engage the services of a recruiter or temporary help agency that is not licensed.
The Ontario government has indicated that it intends to require licenses as early as 2024.
For more information about Bill 27 and how it may impact your business, please contact Joseph Cohen-Lyons, Lauren Berdock or your regular Norton Rose Fulbright lawyer.