Ontario Government Proposes Right to Disconnect and Prohibition of Employee Non-Competes

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The Ontario government has introduced new legislation that, if passed, will have significant implications for many Ontario employers. The first reading of Bill 27, Working for Workers’ Act, 2021 (the Bill), was released on October 25, 2021.

The following are some of the key proposed changes to Ontario’s employment laws.

BANNING NON-COMPETE AGREEMENTS

If passed, the Bill will amend the Ontario Employment Standards Act, 2000 to prohibit the use of non-competition covenants in an agreement between employees and employers. These are covenants that would otherwise prohibit an employee from engaging in any business, work, occupation, profession, project or other activity that is in competition with the employer’s business after the cessation of the employment relationship between the employer and employee.  According to the government’s news release, if the Bill is passed, Ontario would be the first jurisdiction in Canada to ban non-compete agreements in employment.

Non-solicitation covenants (i.e., provisions that generally seek to prevent employees from actively soliciting or pursuing customers/clients and/or other employees during employment and for a defined period post-employment) are not impacted by the Bill and would therefore still be permissible. Covenants protecting an employer’s confidential information and intellectual property would also continue to be permitted.

An exception to the non-compete prohibition would be in the context of a sale or lease of a business. If, as part of a sale/lease of a business or part of a business, (a) the purchaser and seller enter into an agreement that prohibits the seller from engaging in activity that is in competition with the purchaser’s business after the sale, and (b) the seller becomes an employee of the purchaser immediately following the sale/lease, then the prohibition against non-competition clauses will not apply.

THE RIGHT TO DISCONNECT

The Bill also introduces a requirement for employers with 25 or more employees to institute a written policy for all employees with respect to disconnecting from work.

The Bill defines “disconnecting from work” 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.”

The current draft of the Bill does not prescribe the content of the mandatory policy. The Bill indicates that there will be regulations that prescribe the elements that need to be contained in the policy. The government’s news release suggests that the workplace policy language could include, for example, expectations about response time for emails and encouraging employees to turn on out-of-office notifications when they are not working. Employers will have until six months after the day the Bill receives Royal Assent to comply with this new requirement. 

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 Bill outlines the anticipated process for obtaining the licenses.

WASHROOMS FOR DELIVERY PERSONS

The Bill also contemplates amendments to Ontario’s Occupational Health and Safety Act, which will now require the owner of a workplace to provide washroom access to persons making deliveries to or from their workplace, with a few limited exceptions.

CONCLUSION

These proposed amendments will, if passed, require Ontario employers to carefully review and update their HR and/or on-boarding practices where needed, including the review of any restrictive covenants in their employment agreements, and the issuance of a “disconnecting from work” policy to incoming and current employees. It remains to be seen whether the Bill will undergo further amendments as it proceeds through subsequent readings. We will continue to provide any material updates regarding the status of the Bill in future bulletins. 

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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