The Doug Ford government recently amended Ontario’s Employment Standards Act. This article discusses two of these changes.
Prohibition against Non-Compete Agreements
As of October 25, 2021 employers are prohibited from entering into employment contracts or other agreements with an employee that are, or that include, a “non-compete agreement”. This is defined 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.
There are two exceptions; namely: (i) if there is a sale of a business or a part of a business and, as a part of the sale, the purchaser and seller enter into an agreement that prohibits the seller from engaging in any business, work, occupation, profession, project or other activity that is in competition with the purchaser’s business after the sale and, immediately following the sale, the seller becomes an employee of the purchaser, and (ii) if the employee is an executive which is defined 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.
Ontario courts have not been enforcing non-compete agreements for years so I don’t know why the government felt the need to bring in this law. Although the new law allows non-compete agreements for executives I am not sure whether or not the courts will enforce a non-compete agreement for some executives despite this new law.
The issue to be decided is whether this change to the Employment Standards Act changes the existing common law.
In my experience, employers are most concerned about employees leaving and taking customers and/or employees with them to a competitor. An employer can still protect its proprietary interests in its customers and its employees in an employment contract by including a non-solicitation clause in the employment contract. Please consult with your employment lawyer to determine whether this new law prohibiting non-compete agreements has any practical impact on these proprietary interests.
Mandatory Written Disconnecting from Work Policy
As of June 2, 2022 employers that employ 25 or more employees as of January 1, 2022 are required to have a written policy with respect to disconnecting from work. The term “disconnecting from work” 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. The policy must be provided to an employee within 30 days of the day the employee becomes an employee.
The government has introduced the concept of a disconnecting from work requirement but has provided little guidance on how to accomplish this objective. For now, you need to implement a written policy setting out some boundaries. Please consult with your employment lawyer to discuss what boundaries make sense for your particular workplace.
About the author: Doug MacLeod is the founder of the MacLeod Law Firm (www.macleodlawfirm.ca), a Canadian Labour and Employment Law Firm. For 30 years, Doug has focused exclusively on workplace law and provides advice and representation in all areas including employment contracts, employment standards, workplace health & safety, human rights, workplace harassment, negotiating collective agreements, advising on employee grievances and complaints, and employee terminations. Doug was the 2018 recipient of the Ontario Bar Association’s Award of Excellence (Labour & Employment Law Section). He can be reached at (416) 317-9894 or email@example.com