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Are non-compete clauses legal? Do you have a Right to Disconnect from work?

Can your employer make you agree sign a non-compete agreement? Can your boss demand that you respond to emails on the weekend? A new Ontario law bans non-competition agreements and creates a Right to Disconnect from work. At least for some workers.

What is the Working for Workers Act?

Bill 27, Working for Workers Act, 2021 (the “Act”) became law in Ontario this month (December 2021). The Act amends other workplace laws, including the Employment Standards Act, 2000, the Occupational Health and Safety Act and the Workplace Safety and Insurance Act.

These changes include:

  • a ban on most non-competition or non-compete clauses in employment agreements,
  • a requirement that employers with 25 or more employees have a written policy regarding the right to disconnect from work.

Ban on Non-Compete Clauses

Ontario law now prohibits employers from entering into employment contracts that include a non-compete agreement. Non-competition agreements or non-compete clauses in employment contracts restrict employees from working for a competitor or from starting a competing business after they quit or are fired. Courts have put fairly strict limitations on non-compete clauses in Canada, ruling on how long they can last and what geographic area is covered . Generally speaking, non-compete clauses could only apply to a certain physical area (such as a city or province). And, they could only be for a reasonable amount of time (often 6 months to 2 years). Courts did this because they did not want non-compete agreements to prevent employees from accessing gainful employment within their chosen field after a job loss. Courts judged the geographic scope or time limit based on the employee’s position and industry.

Now with the changes to the Employment Standards Act, 2000 brought in with Bill 27, employers can’t make non- “executive” employees sign a non-compete agreement. The Act defines executives who can be required to sign a non-compete clause 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.

The rule against non-compete clauses is retroactive as of October 25, 2021.

The Right to Disconnect

The Act also amends the Employment Standards Act, 2000 by requiring all employer with 25 or more employees to have a written policy in place regarding the right to disconnect from work. “Disconnecting from work” is defined in the Act 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 have six months to implement their Right to Disconnect policy.

There are no specific requirements as to what terms an employer’s Right to Disconnect policy must include. It doesn’t say how many hours employees will be permitted to disconnect by each employer. The stated aim of the new law is to encourage employees to disconnect from work-related communications outside of their designated working hours and improve work-life balance.

Despite fanfare, this Right to Disconnect rule is more like a Right to a Policy about Disconnecting. It doesn’t create an actual right to ignore your phone or computer after 5pm. However, work-life creep is huge in 2021 and we hope that the Right to Disconnect discussion prompted by this bill will encourage change.

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