Ont. Government Introduces Novel Changes to Employment Standards Act

In what appear to be firsts for Canada, the Ford Government has introduced a bill to make some significant changes to the Employment Standards Act, 2000 (the "ESA") that will impact employers' operations.

Schedule 2 to the Working for the Workers Act, 2021 ("Bill 27") introduces the "right to disconnect", prohibits the use of non-competition agreements, and creates new licensing requirements for temporary agencies and recruiters.

The Right to Disconnect

New Part VII.0.1 of the ESA defines "disconnecting from work" as:

... 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 with 25 or more employees will be required to have a policy regarding "disconnecting from work", and must provide copies of the policy to all existing and new employees. While a policy is to be posted by March 1 of each year, in the first year of the legislation's operation, employers will have 6 moths from the date the amendments receive Royal Assent. At present, no policy content is specified, though it's likely this will be addressed through Regulations to be instituted after the legislation is passed.

Prohibition of Non-Competition Agreements

Under new Part XV.1, employers would not be permitted to enter into an agreement with an employee that is or includes a "non-compete agreement", unless the covenant was attached to the sale of a business (i.e., precluding the former owner of the business from competing with the purchaser). "Non-compete agreement" is defined in Bill 27 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.?

It is not clear at this time whether there will be exemptions from this exclusion for executives, management or other employees (such as senior salespeople) who may create particular vulnerabilities for an employer if they should join a competitor after leaving their employment. While non-competition provisions and agreements are notoriously difficult to enforce (as they are, per se, unenforceable at common law), they do afford legitimate and necessary protection to employers in some situations, and do not represent a restraint on trade if crafted with reasonable limitations (in terms of time, geography, etc.). Employers will want to stay tuned to see if any Regulations are forthcoming to circumscribe the scope of this new prohibition.

Temporary Help Agency and Recruiter Licensing

Persons or organizations operating as temporary agencies or recruiters will have to be licensed by the Director of Employment Standards. After filing information about the organization with the Director, a decision will be made on the licence application considering the following factors:

• whether the applicant has complied with any orders issued under the ESA or the?Employment Protection for Foreign Nationals Act, 2009, and
• whether the applicant meets the requirements set out in the ESA and the regulations for the licence.

The Director may also refuse a licence or renewal if the Director has reasonable grounds to believe that,

• based on the past or present conduct of the applicant, or any officers, directors or representatives of the applicant, the applicant will not carry on business with honesty and integrity and in accordance with the law, or
• the applicant has made a false or misleading statement or provided false or misleading information in an application for a licence or a renewal of a licence, or

for any reasons identified in the Regulations, details of which we don't yet have.

If a licence or renewal if refused, of if a licence is revoked or suspended, the applicant/holder of the licence has a positive obligation to advise all employers, prospective employers or prospective employees with whom they were dealing that they don't have a licence to provide the services in question. Decisions of the Director regarding licences may be subjected to review by the Ontario Labour Relations Board.

Temporary help agencies and recruiters will also be required to maintain records of the employees and employers whom they do business with for a period of three (3) years. The reprisal provisions of the ESA will also be amended to apply to inquiries about whether a temporary agency or recruiter is licensed, and the enforcement provisions will also be applicable to these parties as if they were "employers" under the Act.

While the introduction of Bill 27 has more than a hint of pre-election posturing about it, employers will want to carefully review their policies and procedures to ensure that they don't run afoul of these new obligations and prohibitions. Supervisors and managers will need to be cautioned about after-hours communication with employees (subject to any exemptions or special rules that may be prescribed), the blanket use of non-competition agreements/covenants should be eliminated, and careful consideration will have to be given to which entities an employer contracts with to provide contingent staffing or recruitment services. Obviously, the substance of these changes will largely depend on the Regulations that flesh them out, so employers will need to stay tuned. In the meantime, advance planning would be a prudent move.

Need help navigating your organization's employment standards obligations? Contact [email protected] for expert guidance.

* * *

Operating as Ceaser Work Counsel since early 2014, Lance Ceaser is a 18+ year management-side labour and employment lawyer operating from London, Ontario, where he resides with his lovely spouse, a dog and 2 cats. Lance has provided timely, cost-effective advice to organizations of all sizes in virtually every sector of industry and the public sector throughout his career.