Williams HR Law LLP

Ontario Introduces Legislation that would Prohibit Use of Non-Competition Agreements and Mandate “Disconnecting from Work” Policies for Larger Employers

October 26, 2021

On October 25, 2021, the Ontario government announced that it would table omnibus legislation proposing a suite of new measures for workplaces.

Bill 27, Working for Workers Act, 2021 (the “Bill”), if passed, would prohibit the use of non-compete agreements, require larger employers to create “disconnecting from work” policies, as well as introduce other measures previously proposed this month.

We have summarized several key proposed measures below.

Prohibition Against Non-Compete Agreements

The Bill proposes to amend the Employment Standards Act, 2000 to prohibit the use of non-compete agreements, which are defined within the Bill 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 proposed amendments would still allow employers to protect their proprietary interests through narrower clauses. Additionally, non-compete agreements may still be enforced in the context of a sale of a business, in which immediately following the sale, the seller becomes an employee of the purchaser, and the purchaser and seller enter into a non-compete agreement that prohibits the seller from competing with the purchaser’s business after the sale.

Importantly, the Bill does not propose to limit the use of non-solicitation agreements, which prohibit former employees from pursuing other employees or clients for a period following the end of their employment relationship.

If the amendments are passed, Ontario would be the first Canadian jurisdiction to ban the use of non-compete agreements.

Mandatory “Disconnecting from Work” Policies

The Bill would require employers with 25 or more employees to develop a written policy on “disconnecting from work” at the end of a workday. The Bill defines “disconnecting from work” to mean “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”. Such policies could include, for example, expectations about response times or encourage employees to turn on out-of-office notifications when finished with their day.

Any “disconnecting from work” policy must include the date the policy was prepared and the date any changes were made to the policy, as well as any other information that may be prescribed in the future. Employers will be required to provide a written copy of the policy to all employees within 30 days of preparing the policy or revising any existing policies. Employers must also retain copies of their disconnecting from work policies for three years after such policies cease to be in effect.

This proposed requirement, if enacted, would be the first of its kind in Canada. It follows the federal government’s public consultation earlier this year, which sought stakeholders’ input on a “right to disconnect” for federally regulated workers.

Other Proposed Measures

The Bill would also implement several previously announced measures, including: 

  • helping to remove barriers for internationally trained individuals to obtain their professional licences and access to jobs. For example, the Bill would prohibit regulated professions from requiring Canadian experience as a qualification for registration, unless the Minister of Citizenship and Immigration grants an exemption for public health and safety purposes, in accordance with relevant regulations;
  • requiring recruiters and temporary help agencies to be licenced to operate in Ontario, maintain certain practices (such as record-keeping), and refrain from prohibited actions (such as reprisal against clients) to protect vulnerable employees from being exploited. The Director of Employment will have authority to issue, revoke, and suspend licenses, subject to appeal powers conferred to the Ontario Labour Relations Board. Any temporary help agency or recruiter whose license is refused, revoked, or suspended must give notice to its clients within 30 days of being served with notice of the refusal, revocation, or suspension. The Director of Employment will also be required to publish and maintain a public record of current licensees, those organizations whose licence has been revoked or suspended, and any other information as may be prescribed in the future;
  • requiring business owners to allow delivery workers use of the company’s restroom if workers are delivering or picking up items; and
  • allowing surpluses in the Workplace Safety and Insurance Board’s Insurance Fund to be distributed over certain levels to businesses (for more information, see our previous blog).

Takeaways for Employers

Non-competition clauses have, through deterrence, aided employers in protecting their business, despite the courts’ general presumption that such clauses are unenforceable. A statutory prohibition would save on the time and cost of litigation, but would require employers to rely on alternate ways to protect their business interests.

Typically, well-drafted confidentiality, intellectual property, and non-solicitation clauses that outline the employer’s rights and the employee’s obligations are sufficient to protect an employer’s proprietary interests. Employers are encouraged to review such clauses to ensure that they are aligned with their business needs.

Larger employers that must implement a “right to disconnect” policy under the Bill should continually monitor laws for any guidance or requirements applicable to such a policy. Employers should also review any existing and related policies, including policies related to technology use, to ensure compliance.

Importantly, employers should be mindful to apply their right to disconnect policy equally, as an inconsistently implemented policy could trigger human rights issues. For example, employees without additional home and family status responsibilities may be able to volunteer to continue working without “disconnecting”, and advance while their counterparts have opted to “disconnect”.

Along with recognizing the importance of family time, at the heart of the proposed “right to disconnect” policy is the prioritization of mental health. Along with a “right to disconnect” policy, employers should ensure their anti-harassment, anti-discrimination, and work-from-home policies incorporate mental health considerations, as well as outline any available support for employees.

The proposed changes discussed above have yet to be enacted through legislation. We will post updates as they become available to keep you In the Know.

This blog is provided as an information service and summary of workplace legal issues.

This information is not intended as legal advice.