Ontario Government Passes Working for Workers’ Act, 2021 and Issues New Amendments

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On November 30, 2021, the Ontario government passed Bill 27, Working for Workers’ Act, 2021. Currently, the Bill is still awaiting Royal Assent, which is expected shortly.

As noted in a previous Blakes Bulletin, Bill 27 introduces several changes to employment laws in Ontario, including:

  • Banning non-competition agreements, subject to certain exceptions

  • Requiring employers with 25 or more employees to institute a written “right to disconnect” policy with respect to disconnecting from work

  • Requiring temporary help agencies and recruiters to obtain a specific license to operate in Ontario

  • Requiring the owner of a workplace to provide washroom access to persons making deliveries to or from their workplace

There have been a couple of noteworthy amendments to the Bill since the previous Blakes Bulletin, specifically regarding the prohibition of non-competition agreements and the licensing requirements for temporary help agencies/recruiters. These amendments are set out below.

NON-COMPETE AGREEMENTS MAY STILL BE USED FOR “EXECUTIVES”

Bill 27 prohibits the use of non-competition covenants in agreements between employees and employers, subject to certain limited exceptions. The Bill formerly provided for only one exception to this prohibition: in the context of sale or lease of a business.

The Bill was amended at Committee to provide another important exception to the prohibition: executives. An executive is defined in the Bill 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.”

When the Bill receives Royal Assent, the non-compete prohibitions will be deemed to be in force with retroactive effect to October 25, 2021.

As noted in the previous Blakes Bulletin, non-solicitation covenants remain unaffected by the Bill, and are therefore still permissible. Covenants protecting an employer’s confidential information and intellectual property also continue to be permitted.

ADDITIONAL LICENSING REQUIREMENTS FOR TEMPORARY HELP AGENCIES AND RECRUITERS

Pursuant to the Bill, temporary help agencies and recruiters will be required to obtain a specific license in order to operate in Ontario. The amendments to the Bill at Committee brought in several new requirements for temporary help agencies and recruiters to meet when applying for a license. First, the Bill amends the Employment Protection for Foreign Nationals Act, 2009 to include a prohibition against a recruiter or employer from charging fees to foreign nationals. The Bill also amends the Employment Standards Act, 2000 to require those applying for a licence to act as a recruiter to provide statements that they: (i) have not charged fees to foreign nationals; and (ii) are aware of: (A) the new prohibitions contained in the Employment Protection for Foreign Nationals Act, 2009 regarding the charging of fees to foreign nationals; and (B) the fact that the Director of Employment Standards will refuse to issue a license or will revoke/suspend a license if the applicant has charged fees to a foreign national.

A NOTE ON THE “RIGHT TO DISCONNECT” POLICY

The Committee did not make any amendments to the “right to disconnect” policy requirement. However, now that the Bill has been passed, employers will have six months from the time it receives Royal Assent to draft and implement such a policy. Regulations are expected to come into effect in the future which will prescribe the elements that need to be contained in the policy.

CONCLUSION

Most importantly, outside of the context of a sale of a business, the amendments restrict employers from requiring employees, other than executive employees, to execute non-competition covenants. Ontario employers should carefully review and update their workplace practices and evaluate any restrictive covenants in their employment agreements for compliance.

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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