Ontario's Working for Workers Act: A “Right to Disconnect” and Prohibition of Non-Compete Agreements
December 2021 - 4 min read
With almost two years of a pandemic behind us, employers have proven nimble at adjusting to the demands of ‘the new normal workplace’ including remote working and flexible working options all while maintaining their organizational culture.
In what may be a precursor for other provinces, the Ontario provincial government has recently passed Bill 27, the Working for Workers Act, 2021 (the “Act”) to promote work-life balance for employees and enable competitiveness. In force as of December 2, 2021, the Act amends Ontario’s Employment Standards Act and Occupational Health and Safety Act.
The most relevant and notable changes from the Act include:
- Requiring a policy with respect to disconnecting from work
- Prohibiting non-compete agreements between employees and employers in an employment contract or standalone agreement
Disconnecting from Work
The Act amends the Ontario Employment Standards Act, 2000 (“ESA”) to require employers with 25+ employees to have a written policy in place with respect to disconnecting from work. Specifically, “disconnecting from work” is defined 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”.
Employers who meet the minimum employee threshold have until June 2, 2022 to prepare a written disconnecting from work policy for all employees. While there are currently no specific policy requirements, regulations are expected to be released in 2022.
The policy requirements will likely focus on off-duty time and require employers to put parameters on what employees can expect when engaging in work-related communications outside of regular work hours. For example, policies may need to address if employees will be required to engage in work-related communications outside of regular work hours, as well as processes regarding emergencies or unforeseen circumstances requiring longer work hours. The guidance or regulations may also allow employers to exclude or provide different standards for different types of professions, industries and roles (i.e., supervisory or management roles).
The Prohibition of Non-Compete Agreements
Non-compete agreements restrict employees (during and following a termination of employment) from competing with their employer, which includes accepting jobs with new employers or starting their own business. The various levels of courts have acknowledged this type of restriction as a restraint on trade, one that is to be tightly circumscribed. Employers will often include a non-compete clause in an employment agreement, or letter of offer or else provide it as a standalone document when they commence employment. Non-compete clauses must be drafted carefully to exclude future employment in the same industry or line of business, in a specified area, for a period of time.
The Act addresses non-competes head-on by adding it as a new part to Ontario’s ESA to counter the effects of “unfair” restrictions on work opportunities by prohibiting (and sometimes voiding) non-compete agreements.
Retroactively to October 25, 2021, the ESA will prohibit employers from entering into an employment agreement with an employee that is, or includes, a non-compete agreement, which is defined as one that “prohibits the employee from engaging in any business, work, occupation, profession, project and/or other activity that is in competition with the employer’s business after the employment relationship between the employee and the employer ends.”
However, non-compete agreements will be permitted in the context of a sale or lease of a business if the seller becomes an employee of the purchaser.
Importantly, non-compete agreements do apply to an employee who is an “executive,” defined as a “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.” Currently, the legislation does not provide guidance on what job duties the “executive” role should contain, which may create a debate between the position title awarded to the employee and the duties that would meet the standard of an “executive.”
These new changes do not apply to other restrictive covenants included in employment agreements such as non-solicitation clauses, confidentiality clauses and intellectual property limitations.
Ontario is the first province in Canada to legislate the requirement of statutory “right to disconnect” policies and ban non-compete agreements in employment, subject to exceptions for executives and when businesses are sold. It is arguable that given this statutory framework and pressures from workers advocating for work-life balance, there may soon be other provinces that follow suit in enacting similar legislation.
Despite being a change in Ontario legislation, some of Alberta’s workforce may be subject to Ontario jurisdiction and be covered by Ontario’s ESA. Alberta employers with workers in Ontario should be aware of these changes and those upcoming in 2022.
As remote working is increasingly being utilized more now than ever before, employers have raised some legal questions about which provincial employment legislation applies. For example, if the employer is in Alberta, but an employee lives and works remotely from Ontario, which province’s employment standards legislation governs them? Typically the employee will be governed by the employment standards laws of the province in which they live and work; however, the true answer may be more complicated as various factors might apply to properly determine appropriate jurisdiction.
Field Law has the knowledge and experience to assist employers to ensure compliance with the new significant changes in employment laws, jurisdictional evaluations, employment contract and policy reviews, as well as general employment legal advice. If you have any questions, contact any member of Field Law’s Labour + Employment Group.