In December 2021, the Doug Ford government amended Ontario’s Employment Standards Act. This blog discusses two of these changes.
1. 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,“ which 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 to this prohibition; 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 a 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.
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 the 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.
2. 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 provided little guidance on what to include in this policy. For now, you need to implement a written policy setting out some boundaries on disconnecting from work.
Lessons to be Learned.
1. Non-compete agreements in most employment contracts are not legally enforceable however non-compete agreements for some executives may now be legally enforceable. If a non-solicitation clause will not protect your organization’s proprietary interest in its client and employee relationships for an executive, then speak to your employment lawyer about whether a non-compete agreement may be legally enforceable.
2. If your organization employed at least 25 people as of January 1, 2022, then you must have a written policy with respect to disconnecting from work in place by June 2, 2022. The MacLeod Law Firm will prepare a policy for your organization for a fixed fee. For more information, please contact Marium Rehan at firstname.lastname@example.org.
For over 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416-317-9894 or at email@example.com.