On December 2, 2021, Bill 27, Working for Workers Act, 2021 (“Bill 27“) received Royal Assent. Employers must make changes to both employment agreements as well as company-wide policies. We previously outlined several changes that employers could anticipate once legislature passed Bill 27 on November 30th. Below you will find more details on specific steps employers are required to take regarding an employee’s right to disconnect as well as changes to non-compete rules.
Employee’s right to disconnect from work
Likely the most well-publicized of the anticipated changes, Schedule 2 of Bill 27 amends the Employment Standards Act, 2000 to give employees of larger businesses the right to disconnect after hours.
Employers with 25 or more employees will be 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.”
Next Steps: According to the transition provision of Bill 27, employers with 25 or more employees have six months after the day Bill 27 receives Royal Assent to comply with the written policy requirement. During this 6-month period, it is important for employers to update policies and communicate with employees. This will avoid workflow interruptions due to the implementation of new Disconnecting Policies.
General prohibition on non-compete agreements
Reflecting the common law position on the enforceability of non-compete restrictive covenants, Schedule 2 of Bill 27 prohibits non-compete agreements between employers and employees, with two noted exceptions. The first exception regards the sale (or a lease) of a business. Non-compete agreements between the seller and purchaser may be allowed as a part of the sale where the seller becomes an employee of the purchaser immediately thereafter. The second exception is that a non-compete agreement is not prohibited between an employer and its executives. “Executive” is defined in the Bill 27 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.”
Whether a person fits within the definition of executive is likely to become the focal point of future disputes over whether a non-compete agreement is enforceable.
Next Steps: Employers should consider the following actions:
- Review existing employment agreements and update post-employment covenants to protect their business interests if non-compete agreements are no longer valid due to Bill 27.
- Update job titles and job descriptions to ensure their executive positions undoubtedly meet the definition of “executive” under Bill 27.
- Enhance internal protection for proprietary information, such as client lists, know-how, etc.
- Prepare for any fallout related to former employees working for competitors now that they are not under the constraint of a non-compete agreement.
- Adjust employment agreement templates accordingly for future use with special consideration for enhancing post-employment covenants for sales and other positions where a non-compete agreement is no longer allowed.
- If an employer is paying a former employee to adhere to an existing non-compete agreement, consider negotiations with the former employee to wrap up this deal.
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