Bill 27 Passes into Law – Major Employment Law Changes in Ontario

December 9, 2021

On November 30, 2021, the Ontario Government passed into law Bill 27, Working for Workers Act, 2021, which makes some broad-sweeping changes to Ontario workplace law.  The Bill received Royal Assent on December 2, 2021.  The two most significant changes are as follows:

Disconnecting from the Workplace

Employers with 25-plus employees are now required to have a written policy regarding ‘disconnecting from work’, which is defined 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”.   

Employers will have until June 2, 2022 to prepare and distribute their right to disconnect policy.  The policy must be distributed to applicable employees and new hires. 

The legislation provides no direction on how many hours employees should be disconnecting  from the workplace, giving employers wide latitude on how to set those parameters in accordance with operational needs.  

Ban on Non-Competes

Employers are now prohibited from entering into employment contracts or other agreements that contain post-employment non-compete restrictions.  

Specifically, an employer cannot 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 employment relationship ends.   If such an agreement exists, the non-compete agreement is automatically void.   

There are two notable exceptions to the ban on non-competes.  

1. Executive Employees 

Individuals who hold the following C-suite level positions are exempted from the ban:

  • chief executive officer, 
  • president, 
  • chief administrative officer, 
  • chief operating officer, 
  • chief financial officer, 
  • chief information officer, 
  • chief legal officer, 
  • chief human resources officer 
  • chief corporate development officer, or 
  • any other chief executive position;

Given the high-level knowledge and decision-making of the chief executive team, unfair competition from this group of employees can significantly harm the employer’s interests and operations.  

2. Sale of a business  

The ban does not apply to non-compete agreements entered into as part of a sale of business.  Specifically,  in a sale of business transaction, if the purchaser and seller agree that the seller is prohibited from competing with the purchaser’s business and the vendor becomes an employee of the purchaser’s business, the employee can be asked to sign a non-compete agreement preventing him or her from competing for a period of time after the sale.

Even if non-compete restrictions may be allowed in these two contexts, this does not automatically mean that a court will enforce such agreements.  In determining whether to enforce non-compete restrictions, the Court will examine the specific circumstances of the employment relationship, the economic interest at stake, and the  reasonableness of the restrictions, including the temporal and geographic scope of the non-compete.

Outside a sale of business scenario, the courts are generally reluctant to enforce non-compete restrictions because they are often very onerous and sideline individuals from their profession or industry for extended periods of time. This can have crippling financial consequences and longer-term career implications.    

Key Takeaways

In view of the legislative amendments, employers should obtain legal advice in preparing their disconnecting from the workplace policies by the June 2, 2022 deadline.  Employers should also obtain legal advice in connection with their standard employment contracts and remove or amend any offending provisions that are contrary to the ban.  

By |2021-12-13T15:43:25-04:00December 13th, 2021|Article, Article-All|0 Comments

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