On December 2, 2021, the Ontario government implemented Bill 27, Working for Workers Act, 2021. The Bill amends a number of statutes, including the Employment Standards Act, 2000 (ESA), the Occupational Health and Safety Act and the Workplace Safety and Insurance Act, 1997. Bill 27 requires employers to implement a right-to-disconnect policy, prohibits certain non-compete agreements, establishes a licensing regime for temporary help agencies and recruiters, and implements certain employment protections for foreign nationals, among other changes.

Employment Standards Act, 2000

The Act makes the following key amendments to the Employment Standards Act, 2000 (ESA).

Disconnecting-from-Work Policy

The Act amends the ESA to require employers that have more than 25 employees on January 1 of any year to implement a written policy with respect to the employee's right to "disconnect from work before March 1 of that year." "Disconnecting from work" is defined in the Act as, "not engaging in work-related communications, including emails, telephones, video calls or the sending or reviewing of other messages, so as to be free from the performance of work." For purposes of initial compliance, however, an employer will have until June 2, 2022—six months after the Act received Royal Assent—to comply with the Policy requirement. The employer will use January 1, 2022 as the date for determining whether it employs 25 employees or more for purposes of initial compliance.

Further policy requirements may be set out in a future regulation under the ESA, however at this time, it appears the existing exemptions from ESA hours-of-work provisions may continue to apply so this policy should not pertain to certain employee classifications (e.g., lawyers and articling students, public accountants, professional engineers, certain health practitioners, managers and supervisors, etc.).

The update to the legislation does not regulate the specific contents of such a policy. However, it must include the date it was prepared and the date any changes were made to it. As well, the Act's definition of "disconnecting from work" may provide some insight as to what might be included in a policy such as indicating an expected response time to e-mails by employers or encouraging employees to turn on out-of-office notifications when they are outside of their working hours. While there are no specific requirements for this policy yet, the introduction of this requirement could represent the first step towards further regulation and protection of employee private time.

Requirement to Provide Copies

An employer must provide a copy of the Policy to:

  • Each of its employees within 30 days of preparing it or, if an existing written policy is changed, within 30 days of the changes being made; and
  • A new employee within 30 days of the day the employee becomes an employee of the employer.

Application

The Act provides that a Policy must be put in place for "all employees." Pursuant to s. 1(1) of the ESA, an "employee" is defined as a person (including corporate officers) paid to perform work for an employer, a person paid to supply services to an employer, a person being trained by an employer to perform a skill used by the employer's employees, and homeworkers.

Prohibition Against Certain Non-compete Agreements

Another major feature of this update to the legislation is a prohibition on non-compete agreements. Non-compete agreements are clauses that employers implement in employee agreements with the purpose of preventing an employee from taking up employment with a competitor for a fixed amount of time following the end of their employment. The intention of this legislation is to increase the competitiveness of employees in Ontario.

The Act defined non-compete agreements as "an agreement, or any part of an agreement, between an employer and an employee 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 wording of the legislation with respect to non-compete clauses will be important as many employers have non-compete clauses in their current contracts. As we know from Waksdale v. Swegon North America Inc., 2020 ONCA 391, if an employment contract contains a clause that violates the Employment Standards Act, the entire provision is void, and cannot be saved in any way by a severability clause. Similarly, if an employer contravenes this prohibition set out in Bill 27, the non-compete provision is likely to be rendered void.

There are two narrow exemptions to this prohibition:

Employee Who is an Executive

This exemption provides that the ESA will not prohibit employers from entering into a non-compete agreement if the employee is an "executive," which is defined as, "any person who holds the office of chief executive officer, president, chief administrative officer, chief operating officer, chief financial officer, chief information officer, chief legal officer, chief human resources officer or chief corporate development officer, or holds any other chief executive position."

Sale of a Business

If there is a sale of a business or a part of a business and, as a part of the sale, the purchaser and seller enter into an agreement that prohibits the seller from engaging in any business, work, occupation, profession, project or other activity that is in competition with the purchaser's business after the sale and, immediately following the sale, the seller becomes an employee of the purchaser, the prohibition does not apply with respect to that agreement. After the Act was introduced, an amendment clarified that the term "sale" is defined as including a lease.

This legislation is a significant move forward for employees and serves the government's goals of obtaining full employment by removing a barrier that could prevent employees from re-entering the workforce. Notably this legislation is not retroactive and will only affect employment agreements entered into after the bill is passed into law.

Date in Force

The prohibition against non-compete agreements is deemed to be in force effective October 25, 2021.

Changes Related to Foreign Nationals and Licensing Requirements for Recruiters

The Employment Protection for Foreign Nationals Act, 2009 (Act) has been amended to include a prohibition against a recruiter or employer, in connection with the recruitment or employment of a foreign national, knowingly using the services of a recruiter who has charged a fee to a foreign national in contravention of subsection 7(1) of the Act  (which prohibits recruiters from charging fees to foreign nationals).

The ESA has also been amended to include changes to the recruiter licensing requirements, which now require certain statements to be provided regarding foreign nationals and related obligations under the Act. These include a statement that the recruiter is aware of the prohibition against charging fees to foreign nationals under the Act, as well as a statement that the applicant is aware the Director of Employment Standards shall refuse to issue a licence or revoke or suspend a licence if the applicant has charged fees to a foreign national in contravention of the Act. The applicant must also confirm that it has not charged such fees in contravention of the Act.

If the applicant for the licence engages or uses the service of any other person who is not its employee to recruit foreign nationals, it must also confirm certain information in its application, which includes information about the individual and business engaged and statements regarding the applicant's awareness of the person's business practices with respect to obligations under the Act.

Key Takeaways for Employers:

  • Many employers have historically included non-competition provisions in their standard employment agreements in an effort to protect their business, understanding that given case law there was a risk a court might not enforce the non-compete. No employer should now enter into a non-compete with an employee unless the employer is entering into the non-compete as part of a sale of a business or with an executive.

  • Employers with 25 or more employees may wish to start considering what a "Disconnect from Work" policy will look like for their organization, but should likely wait to draft such a policy until further guidance is issued in early 2022 about particular requirements of that policy. Until further guidance is issued, we cannot be certain of what will need to be covered in the policy. Currently, we do not believe that such guidance will require "Disconnect from Work" policies to prohibit work outside of regular work hours, but instead outline what the employer's expectations are regarding working outside of regular working hours.

  • Employers who use recruiting and temporary help agencies will need to ensure their compliance with licensing requirements. Employers should consider how it will track this information to ensure compliance.

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.