Ontario, Canada: Bill 27, Working for Workers Act, 2021 Receives Royal Assent

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On November 30, 2021, Ontario announced that it had passed Bill 27, Working for Workers Act, 2021 (Act). The Act received Royal Assent on December 2, 2021, and came into force on that day. 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.  

We first discussed the Act as it relates to employment-related legislation when it was introduced on October 25, 2021 (First Bill 27 Publication). Certain amendments have been made to the Act since its introduction and before it was passed and received Royal Assent. Below we provide a summary of the key portions of the Act as enacted, and highlight amendments made after the Act was introduced.

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 an employer with 25 or more employees on January 1 of any year to ensure it has a written policy in place with respect to disconnecting from work (Policy) for all employees before March 1 of that year. 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, 2021 as the date for determining whether it employs 25 employees or more for purposes of initial compliance.

In terms of the Policy’s content, all that we know currently is that it must include the date it was prepared and the date any changes were made to it. As well, we can glean some insight into content expectations from the Act’s definition of “disconnecting from work”—i.e., “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.” Nothing more is said in the Act regarding the Policy’s expected content other than it must contain such content as may be prescribed by regulation. Ontario’s announcement that the Act was passed included the following statement, however: “We have introduced measures to make it easier to spend time with family and loved ones, requiring most workplaces have a right to disconnect policy,” which provides insight into the Policy’s purpose.

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.

Ontario Regulation 285/01 (Exemptions, Special Rules and Establishment of Minimum Wage), (Regulation) indicates which individuals are exempt from Parts VII to XI of Act. As the requirement to put the Policy in place is in new Part VII.0.1 of the Act, presumably the individuals listed in the Regulation as exempt from Parts VII to XI of Act are exempt from the Policy’s application. They are specified professionals and students training to be such professionals, commercial fishermen, salespersons or brokers as defined in the Real Estate and Business Brokers Act, 2002, specified commissioned salespersons, and specified farm employees.  The Act is silent as to whether any other employees will be exempt from the Policy’s application. Such exemptions, if any, may be prescribed by regulation. 

Prohibition Against Certain Non-compete Agreements

The Act amends the ESA to prohibit employers and prospective employers from entering into an employment contract or other agreement with an employee or an applicant for employment that is, or that includes, a non-compete agreement. A “non-compete agreement” is defined 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.” If an employer contravenes this prohibition, the non-compete agreement is void.

Exceptions to the Prohibition

The Act provides for two exceptions to the prohibition against non-compete agreements:

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.

Employee Who is an Executive

The second exception was added after the Act was introduced. It 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.”

Date in Force

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

Impact of the Act on Existing Non-competition Agreements

The Act does not indicate whether the prohibition against non-compete agreements applies to existing non-competes as well as those created on or after the prohibition’s effective date of October 15, 2021, or only to the latter.  This question may be clarified in a regulation. 

Licensing Requirements for Temporary Help Agencies and Recruiters

As discussed in our First Bill 27 Publication, the Act amends the ESA to establish a licensing regime for temporary help agencies (THAs) and recruiters, which includes the following prohibitions:

  • No person is permitted to act as a recruiter unless the person holds a licence for that purpose; and
  • No recruiter, employer or prospective employer is permitted to knowingly engage or use the services of a recruiter unless the recruiter holds a licence for that purpose.

After the Act was introduced, it was amended so that pursuant to the ESA, applicants for a licence to act as recruiter are now required to provide to the Director statements that:

  • They are aware that s. 7 (1) of the Employment Protection for Foreign Nationals Act, 2009 (EPFNA) prohibits a person who acts as a recruiter in connection with the employment of a foreign national from directly or indirectly charging the foreign national a fee for any service, good or benefit provided to the foreign national;
  • They are aware that s. 24 (2) of the EPFNA provides that if an employment standards officer finds that a recruiter has contravened section 7 of that Act, the officer may order the recruiter to pay the amount of the fees to the foreign national or to the Director of Employment Standards in trust;
  • They are aware that s. 27 (1) of the EPFNA provides that if an employment standards officer believes that a person has contravened a provision of that Act, the officer may issue a notice to the person setting out the officer’s belief and specifying the amount of the penalty for the contravention,
  • They are aware that the Director must 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 EPFNA, and
  • They confirm that they have not charged fees to a foreign national in contravention of the EPFNA.

After the Act was introduced, it was also amended so that pursuant to the ESA, if the applicant engages or uses the services of any person, other than an employee of the applicant, in connection with the recruitment or employment of foreign nationals, they must provide to the Director:

  • The name and address of each person so engaged or used;
  • A description of the person’s business;
  • A statement confirming that the applicant has made reasonable inquiries about the person’s business practices with respect to foreign nationals and is satisfied that the person did not charge fees or collect a fee charged to a foreign national in contravention of subsection 7 (1) of the EPFNA;
  • A statement that the applicant is aware that subsection 18.1 (1) of the EPFNA provides that a recruiter who uses the services of another recruiter in connection with the recruitment or employment of a foreign national is jointly and severally liable with the other recruiter to repay fees charged to the foreign national by the other recruiter in contravention of subsection 7 (1) of the EPFNA; and
  • A statement that the applicant is aware that the Director must refuse to issue a licence or revoke or suspend a licence if the applicant engages or uses the services of a recruiter that charges fees to a foreign national in contravention of subsection 7 (1) of the EPFNA.

Refusal to Issue or Renew a Licence

As discussed in our First Bill 27 Publication, on receipt of an application for a licence or a renewal of a licence, the Director must, in accordance with the prescribed processes, if any, refuse to issue or renew a licence in a number of circumstances. After the Act was introduced it was amended to include as one such circumstance, if the applicant has ever charged a fee to a foreign national in contravention of subsection 7 (1) of the EPFNA or the applicant engages or uses the services of any person, other than an employee of the applicant, that has ever charged a fee or collected a fee charged to a foreign national in contravention of subsection 7 (1) of that Act. 

Prohibition of Reprisal by Recruiter

The Act amends the ESA to add a section prohibiting a recruiter or person acting on behalf of a recruiter from intimidating or penalizing, or attempting or threatening to intimidate or penalize, a prospective employee who engages or uses the services of the recruiter because the prospective employee:

  • Asks the recruiter to comply with this Act and the regulations;
  • Gives information to an employment standards officer;
  • Testifies or is required to testify or otherwise participates or is going to participate in a proceeding under this Act; or
  • Makes inquiries about whether a person holds a licence to operate as a THA or a licence to act as a recruiter as required.

If an employment standards officer finds that the prohibition against reprisal outlined above has been contravened, the officer may order that the prospective employee be compensated for any loss incurred as a result of the contravention.

Employment Protection for Foreign Nationals Act, 2009

After the Act was introduced, it was amended to require the EPFNA 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 EPFNA.  Section 7(1) of the EPFNA prohibits a recruiter from directly or indirectly charging a foreign national for any service, good or benefit provided to the foreign national.

The Act also amends the EPFNA to provide that:

  • If a recruiter that is a corporation uses the services of another recruiter in connection with the recruitment or employment of a foreign national, the directors of the recruiter, are jointly and severally liable to repay fees charged to the foreign national by the other recruiter;
  • Despite this liability, the recruiter that charged the fee is primarily responsible to repay it; however, proceedings against the recruiter that charged the fee do not have to be exhausted before proceedings may be commenced to collect the fees from the other recruiter and the directors, if any.
  • A director who has satisfied a claim to repay fees is entitled to contribution in relation to the repaid fees from other directors who are liable for the claim. 
  • A limitation period established under section 28 of the EPFNA prevails over a limitation period in any other legislation, unless the other legislation states that it is to prevail over the Statute; and
  • For the purposes of enforcement, an employment standards officer may make an order in respect of both recruiters and the directors, if any.

These amendments to the EPFNA came into force on December 2, 2021, the day the Act received Royal Assent.

* * *

Finally, as discussed in our First Bill 27 Publication, the Act amends:

  • The Fair Access to Regulated Professions and Compulsory Trades Act, 2006 to make it easier for internationally trained immigrants to get licensed to practice in certain regulated professions and trades;
  • The Occupational Health and Safety Act by requiring the owner of a workplace to provide access to a washroom to persons making deliveries to or from the workplace;
  • The Workplace Safety and Insurance Act, 1997 (WSIA) to allow a significant portion of the Workplace Safety and Insurance Board’s current reserve (valued at $6.1 billion) to be distributed to Schedule 1 employers as defined in the WSIA, provided the amount of the insurance fund meets a sufficiency ratio.

Bottom Line for Employers

Employers have six months to comply with the requirement to put a “Disconnecting-from-Work Policy” in place. In that time, Ontario may pass regulations indicating whether any additional employees (beyond those exempted by the Regulation) will be exempt from the policy’s application, and the nature of the information that should be included in the policy. In any event, employers should immediately begin to think about how such a policy should be designed to suit their unique circumstances. They should also review their existing policies and agreements that pertain to employee “work time” to determine if they might need to be amended to be consistent with the policy.

Employers will be reassured that the prohibition against non-compete agreements does not apply to employees who are high-ranking C-level executives. However, they are left wondering whether the prohibition applies to existing non-compete agreements as well as those created on or after the prohibition’s effective date of October 25, 2021, or only to the latter. It is possible that a regulation may soon be published providing the answer to this question.

Finally, employers to which the new recruiting and THA rules apply are encouraged to become familiar with them.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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