Ontario Employment Standards Legislation Update: Disconnecting From Work, Prohibition on Non-Competition Agreements & New Gig Worker Entitlements

On December 2, 2021, Bill 27, Working for Workers Act, 2021 came into force in Ontario. Bill 27 updated the Employment Standards Act, 2000 and other employment related legislation, including the Occupational Health and Safety Act and created new obligations for employers.

Written Policy on Disconnecting from Work  

Under the Employment Standards Act, 2000, every employer in Ontario that employs 25 or more employees will be required to have a written policy in place for all employees with respect to disconnecting from work.

Disconnecting from work means “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 develop and implement this policy and provide employees with a copy.

As yet, there are no specific enforcement mechanisms or consequences for employers who breach the terms of their own disconnecting from work policies.

In developing disconnecting from work policies, employers will need to consider how to eliminate communications outside of employees’ scheduled working hours. This need not be complicated. For example, many email service providers such as Outlook provide options to delay sending messages until a certain date and time allowing employers the flexibility to write emails outside of normal working hours if they wish, but to schedule the delivery of those emails during employees’ working hours.

Regardless of the lack of enforcement mechanisms outlined in the legislation, employers in Ontario should nevertheless be cautious about their work-related communications as they may trigger potential overtime pay obligations when employees perform work outside of their regular hours. Likewise, employees are encouraged to record all the hours they work, including those that are done outside of normal working hours at the request of their employer to ensure they are properly and fairly compensated.

More detail will likely follow when regulations to the Employment Standards Act, 2000  are updated. In particular, it is likely that certain groups of employees will be exempt. These may include the same groups of employees who are already exempted from various parts of under the Act, such as information technology professionals, registered medical practitioners, and certain salespeople who receive commissions.

Prohibition on Non-Compete Agreements

Effective October 25, 2021, employers can no longer enter into a non-competition or “non-compete” agreement with an employee.

These are 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 exemptions from this absolute prohibition.

The first exemption extends to executive-level employees who hold the job title of:

That list is non-exhaustive and the exemption will apply to “any other chief executive position”.

The second exemption relates to scenarios involving the sale of a business. If as 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, the prohibition on non-competition agreements does not apply.

From a practical perspective, these legislative changes are unlikely to alter the course of the law in this area. At common law, non-competition agreements in Ontario were rarely upheld by courts in respect of most employees. These changes mean there is no longer any debate about this issue.

Employers who have non-competition agreements as part of their standard form employment contracts for non-executive employees should amend their employment contracts as soon as possible to remove them. Although the legislation provides that all non-competition agreements are void effective October 25, 2021, there are potential and serious consequences of the legislation if employers do not proactively remove non-competition agreements from existing employment contracts. For example, employees might be able to argue that the presence of a non-competition agreement in their employment contract renders their entire employment contract void and unenforceable.  This could result in heightened liabilities for employers when terminating the employment of their employees.

Licencing of Temporary Help Agencies and Recruiters

Among the more substantial changes to the Employment Standards Act, 2000 are the introduction of licencing and other requirements for temporary help agencies and recruiters.

In order for temporary help agencies to be licenced they will have to provide, among other things, statements acknowledging their obligations and the various prohibitions under the Employment Protection for Foreign Nationals Act, 2009, in addition to paying a fee and a security for potential unpaid wages. The amount of the licencing fee and security has not yet been set out in the regulations to the Employment Standards Act, 2000.

Licences will be capable of being suspended or revoked based on grounds that will be determined by the Director of Employment Standards.

Following the implementation of these changes, employers will be required to retain only licenced temporary help agencies and recruiters.

Access to Washrooms for Gig Workers

One of the additional changes introduced by Bill 27 is an update to the Occupational Health and Safety Act which will require the owner of a workplace, such as a restaurant or other business, to provide access to a washroom for any worker who is picking up or dropping off an item for delivery.

Systemic issues facing gig workers, such as their lack of entitlement to minimum wage and other basic employment standards, were not addressed in Bill 27, however, those issues are likely to become a topic of discussion and potential legislative reform in light of The Future of Work in Ontario Report. This report recommends that Ontario: “create and recognize the dependent contractor category for gig or platform workers in the app-based space and give this category of worker basic employment rights, such as termination pay, minimum wage, minimum or core benefits, regular payment of wages, pay stubs for pay accountability and notice of termination with severance entitlement”.[1]

Please contact Louis Sokolov at lsokolov@sotos.ca to discuss Bill 27 or issues concerning gig workers.

[1] The Future of Work in Ontario Report, p. 68, Recommendation 15.