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December 3, 2021

New Act Bans Non-Compete Clauses, Mandates the Creation of a Disconnecting from Work Policy

Authors Hendrik Nieuwland and Jozef Hadlaw-Murray

On December 2, 2021, the Ontario Government gave Royal Assent to the Working for Workers Act, 2021. The Act will result in several major employment legislation changes that could have a significant impact on many employers in Ontario. The stated intent of Act is to:

  • Introduce measures to promote better work-life balance practices;
  • Remove barriers that restrict the advancement of careers and the earning potential for workers;
  • Protect and support vulnerable workers by establishing mandatory licensing for recruiters and temporary help agencies;
  • Evolve labour and employment legislation to keep pace with the rapid advancements in technology, automation, and remote work; and
  • Allow internationally trained individuals to find work more easily in their respective fields, and thus more quickly contribute to the economy.

The following are the most notable changes to the Employment Standards Act, 2000 (“ESA”) and other employment statues.

Disconnecting from Work Policy

All employers that employ more than 25 employees as of January 1 in any given year are required to adopt a “Disconnecting from Work” policy.  The policy must be in place on or before March 1 of that year.  The aim is to allow and/or encourage employees to disengage from work upon the conclusion of their workday. The Act does not specify the content of an employer’s policy, nor does it detail whether any classification of employees is exempt.

The Act broadly 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.”

In 2022, employers have until June 2, 2022 to do the following:

  1. Determine whether it employed more than 25 employees as of January 1, 2022; and,
  2. Implement a written Disconnecting from Work policy, indicating the date of creation and any subsequent modification(s).

In addition, employers are required to distribute a copy of the policy to every employee within 30 days of its creation and/or any subsequent modification(s). Employers must also provide a copy of the policy to new employees within 30 days of hire.

Ban on Non-Compete Agreements

Employers are now restricted from entering into an employment contract or other agreement with an employee that includes a “non-compete agreement”, which is defined as an agreement or any part of an agreement 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.”

An agreement or any part of an agreement containing a non-compete clause will be deemed void.  

Importantly, this rule retroactively applies to any agreement between an employer and employee made on or after October 25, 2021.  However, it is not obvious that the new rule, as it is drafted, invalidates non-compete agreements made prior to October 25, 2021.

The Act establishes two exceptions where non-compete agreements created on or after October 25, 2021 are valid:

  1. Where there is a “sale” (which term includes a lease) of a business or part of a business, and the seller becomes an employee of the purchaser immediately after the sale, the agreement between the employer and the seller/employee can contain a non-compete agreement.
  2. Agreements with an “executive” can include a non-compete agreement. The Act defines “executive” narrowly, as follows:

[A]ny 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.

Removing Canadian Experience Requirement

The Act amends the Fair Access to Regulated Professions and Compulsory Trades Act, 2006, to make it easier for internationally trained individuals to become licensed in certain regulated professions.

Regulated professions are prohibited from including Canadian experience requirements as qualifications for registration. Nevertheless, regulated professions are still required to comply with regulations relating to French and/or English language proficiency testing.

Licensing and Temporary Help Agencies

Recruiters and temporary help agencies (“THAs”) will now be required to become licensed to operate in Ontario.

The Director of Employment Standards (the “Director”) is responsible for considering applications and issuing licenses. Licenses expire one (1) year after being issued. The Act grants the Director authority to suspend, revoke, and refuse to renew licenses. Recruiters and/or THAs may appeal licensing decisions to the Ontario Labour Relations Board. Employers and/or recruiters that knowingly engage, or use the services of, an unlicensed THA will be in violation of the ESA, and risk being sanctioned.

The Act will also amend the Employment Protection for Foreign Nationals Act, 2009 (“EPFNA”), and sets out restrictions with respect to the recruitment and employment of foreign nationals, notably:

  • No recruiter may directly or indirectly charge a foreign national a fee for any service, good or benefit provided in connection with the recruitment and/or employment of the foreign national; and
  • No employer or recruiter may knowingly engage, or use the services of, a recruiter that charged a fee to a foreign national for any service, good or benefit provided in connection with the recruitment and/or employment.

To ensure compliance, the licensing process requires the inclusion of a statement indicating that the recruiter and/or THA:

  • Is aware of the prohibition against charging foreign national fees;
  • Is aware that contravention of the above rule may result in an order to repay the fees, and may result in the Director refusing or revoking the license; and
  • confirms they have not charged a foreign national any fees contrary to the EPFNA.

Additional statements are required where the licensing applicant engages, or uses the services of, another person for the recruitment or employment of foreign nationals. In such an instance, the applicant is required to state they reasonably inquired about the person’s business practices, and they were aware of the liability and sanctions for the person’s non-compliance.

Washroom Availability for Delivery Workers

The Occupational Health and Safety Act would be amended to allow washroom access to delivery workers who are at a workplace for a delivery or collection of items. The rule would not apply if:

  • providing access would not be reasonable or practical for reasons relating to the health or safety of any person at the workplace, including the worker who requests to use a washroom;
  • providing access would not be reasonable or practical having regard to all the circumstances, including, but not limited to, the nature of the workplace, the type of work at the workplace, the conditions of work at the workplace, the security of any person at the workplace, and the location of the washroom within the workplace; or,
  • the washroom is in, or can only be accessed through, a dwelling.

Use of WSIB Insurance Reserve

The Act amends the Workplace Safety and Insurance Act, 1997, to allow the distribution of funds from the WSIB’s insurance reserve to Schedule 1 employers if the amount of the insurance fund meets a specified sufficiency ratio. The intent of the amendment is to provide Ontario businesses coping with the impacts of COVID-19 with financial support to remain viable and competitive

The foregoing is for informational purposes only and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of SOM LLP’s lawyers by email or telephone.

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