The “Right to Disconnect” and Ban on Non-compete Agreements under Ontario Employment Law

On December 2, 2021, the Ontario government passed Bill 27, the Working for Workers Act, 2021, that presented employee friendly changes to workplace laws. In response to Bill 27, the Ministry of Labour, Training, and Skills Development has updated its Employment Standards Act, Policy and Interpretation Manual, breaking down employee’s and employers’ rights under the Employment Standards Act, 2000 (ESA). Two of the Bill’s most important amendments to the ESA include employees’ “right to disconnect” and a ban on most non-compete agreements.

Right to Disconnect

Bill 27 created a new provision in the ESA, thatrequires employers with more than 25 employees to have a written policy in place on disconnecting from work. The term “disconnecting from work” is defined in the legislation to mean; not engaging in work-related communications, including emails, telephone calls, video calls, or the sending or receiving of other messages, so as to be free from the performance of work.

i) When to Implement Policy & Distribution of Policy to Employees

All employers who had 25 or more employees in Ontario as of January 1, 2022, must implement a disconnecting from work policy by June 2, 2022. Going forward employers with more than 25 employees as of January 1 on any given year have until March 1, of that year to prepare the policy. The employer also has an obligation to provide a copy of the policy to all employees within 30 days of implementing or making changes to the policy. When providing a policy to the employees, the employer may provide a printed copy, an email attachment that the employee can print, or a link to the document online if the employee has reasonable opportunity to access the document and a printer.

ii) Counting Employees

The ESA Policy and Interpretation Manual provides further clarification on how to determine whether the employer employs 25 or more employees. When determining the number of employees, the employer must count the number of employees it employs on January 1. It is the individual number of employees that are counted, and not the number of “full-time equivalents”. This means that part-time employees and casual employees each count as one employee, regardless of the number of hours they work. If the employer has multiple locations, all employees employed at each location in Ontario must be included when determining whether the 25-employee threshold has been met.

iii) Who Does the Policy Apply to?

The written policy on disconnecting from work must apply to all of the employer’s employees in Ontario. This will include management, executives, and shareholders if they are categorized as employees under the ESA. The employer would not be complying with the requirements under the ESA if the policy only applied to some of its employees and not others. However, this does not mean that the employer is required to have the same policy for all its employees. The employer can have a single policy that applies to all employees, or its policy can contain different policies, either in a single document or multiple documents, for different groups of employees.

iv)What Should the Policy Include

The legislation does not explicitly state what must be included within the right to disconnect policy, but a policy may include:

  • The employer’s expectation, if any, of the employees to read/reply to work-related emails or answer work-related phone calls after their shift is over;
  • The policy may set out the employer’s expectations for different situations. For instance, the policy may contain different expectations depending on the time of the communication, the subject matter of the communication, or who is contacting the employee;
  • The employer’s requirements for employees turning on out-of-office notifications and/or changing their voicemail messages when they are not scheduled to work.

v) If the Right to Disconnect Policy is not Followed

If the employer’s written policy on disconnecting from work creates a greater right or benefit than the ESA, the greater right or benefit may be enforced under the ESA. However, if the employer’s policy on disconnecting from work does not create a greater right or benefit, the policy is not enforceable under the ESA. For example, an employer may have a policy in place that employees are not required to answer work-related phone calls after their shift. Yet if the employer does not honour the policy and still requires an employee to continue to answer work-related calls after the shift is over, actions can be taken by an employment standards officer.

Ban on Non-Compete Clauses

Bill 27 also introduced a prohibition on non-compete agreements between employers and employees. A “non-compete agreement” is defined under the legislation 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.

The employer is prohibited from entering into a non-compete agreement at any time which includes before the employment relationship begins, during the employment relationship, or after it ends

An agreement or part of an agreement may be considered a non-compete clause whether or not it is time-limited or geographically restricted. There are two exceptions to non-compete agreements being prohibited under the ESA:

1. The first exception applies where the following occurs

  • There is a sale or lease of a business or part of a business, that is operated as a sole proprietorship or a partnership
    • Immediately following the sale, the seller becomes an employee of the purchaser
    • 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

2. The second exception applies to executives

  • The ESA does not prohibit employers from entering into non-compete agreements with executives. An executive is any person who holds the office of
    • Chief Executive Officer
    • President
    • Chief Administrative Officer
    •  Chief Operating Officer
    • Chief Financial Officer
    • Chief Legal Officer
    • Chief Human Resource Officer
    • Chief Corporate Development Officer
    • Any other chief executive position
  • Employees may have a greater right under their employment contract or the common law, if you have questions about the enforceability of a non-compete agreement that applies to either of these exceptions please speak to a lawyer

Non-Compete Agreements Entered into Before October 25, 2021

Agreements that were entered into before October 25, 2021, are not prohibited by the ESA. However, employees may have greater rights under the common law. If you have questions about a non-compete agreement entered into before October 25, 2021, please reach out to a lawyer.

This article provides a brief overview of the changes enacted by Bill 27, but if you have further questions please reach out to a lawyer. The ESA Policy and Interpretation Manual is a helpful document outlining important information for the public however, it does not have the legal force and effect of legislation, a court, or a tribunal decision. That being said, the information provided by the Ontario government in the ESA Policy and Interpretation Manual is given significant weight by courts and tribunals when addressing employment-related issues.

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**A special thanks to Kateryna Borodenko, student at Prior Law, for her fabulous assistance in drafting this blog post!**

Disclaimer: This article is provided as an information resource. This article should not be relied upon to make decisions and is not intended to replace advice from a qualified legal professional. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. Please note that this information is current only to the date of posting. The law is constantly changing and always evolving. I encourage you to reach out with any specific questions.

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