Important Employment Law Changes in the Wind

The very conservative government of Ontario has introduced a bill called the Working for Workers Act which, among other changes, would prohibit restrictive covenant clauses in certain employment contracts and would require all employers with 25 or more employees to have a written policy designed to allow employees freedom to disconnect from the workplace for a certain number of hours per day. The particulars of the limits of the “right to disconnect” have yet to been announced.

Restrictive covenants are commonly used, particularly with managerial and sales employees, to provide some protection to employers from employees competing with the employer during their employment and after it comes to an end. The Ontario legislation would only apply to strike any agreements attempting to prohibit competition after the employment relationship comes to an end. Agreements regarding confidentiality of information and non-solicitation of customers and employees may not be affected by this legislation. The proposed legislation exempts restrictive covenants negotiated on the sale of a business. In other words, if one of the owners of a business as a term of the sale, is contracted to stay on, a clause prohibiting him or her from competing with the business after their employment comes to an end should be enforceable (if it is not unreasonable). It is not clear whether the legislation will render existing employments agreements with restrictive covenants unenforceable.

The stated intent of the legislation is to make Ontario a friendlier place to work. This seems to be a result, in part, of the hangover of COVID-19 and the shortage of workers in certain industries. It would not be surprising to see other provinces enact similar legislation.

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