Further Guidance on Bill 27, Working for Workers Act, 2021

As we reported in a previous newsletter in 2021, the Government of Ontario has amended the Employment Standards Act, 2000 (the “ESA”) to prohibit businesses from entering into non-compete agreements, absent two very narrow exceptions, and is requiring employers to take steps in 2022 to prepare mandatory right-to-disconnect policies in an attempt to establish parameters on after-hours workplace communications.

Despite these amendments, employers have received little clarity on certain elements of the new obligations. For example, there was minimal information or guidance available to employers as to whether non-competition clauses entered into prior to October 25, 2021, were automatically void and, in regard to mandatory right-to-disconnect policies, employers were left in the dark as to what the policy should include.  

On February 18, 2022, Ontario’s guide to the ESA was amended to include two new chapters on the prohibition of non-competition clauses or agreements (the “Non-Competition Chapter”) and an employer’s obligation to develop a “written policy on disconnecting from work” (the “RTD Chapter”). The amendments provide some much-needed clarity for employers and employment law practitioners alike.

The Non-Competition Chapter

As previously advised, effective October 25, 2021, employers were prohibited from entering into either employment contracts or other agreements with employees that included a non-competition agreement, absent two narrow exceptions. The Non-Competition Chapter now clarifies that any agreement may be considered a non-competition agreement, regardless of whether or not it is time-limited or geographically restricted. Further, parties are prohibited from entering into non-competition agreements or clauses before the employment relationship begins, during the employment relationship, or after it ends.

The Non-Competition Chapter also confirms that non-solicitation agreements or non-disclosure agreements remain permitted. In the event that incorrect terminology is used in drafting, when an agreement is for all intents and purposes a non-solicitation agreement, but non-competition language has been used, the substance of the agreement is what matters, as opposed to the specific wording. 

Lastly, and also as we previously advised, the Non-Competition Chapter clarifies that non-competition agreements entered into before October 25, 2021 are not automatically void by virtue of the ESA amendments. However, they are, of course, required to be compliant with rules established for the same at common law.

The RTD Chapter

The RTD Chapter has provided some much-needed clarity for employers as to the content of a right-to-disconnect policy. It has made clear that nothing in the ESA requires an employer to provide an automatic right for an employee to disconnect from work and be free from the obligation to engage in work-related communications outside of established working hours. In fact, employers should be wary of taking this further step in their policies and inadvertently granting their employees a greater benefit than that prescribed in the ESA. In our view, the RTD Chapter confirms that the focus of such policies should be on outlining employer expectations and “best practices” in regard to employees disconnecting from work.

Determining an Employer’s Number of Employees

Employers that employ 25 or more employees in Ontario on January 1 of any year are required to have a written policy on disconnecting from work. As a reminder, employers are required to implement their policies this year – the legislation’s inaugural year – by June 2, 2022.

An employer must count the number of employees it employs on January 1 of any given year. The RTD Chapter clarifies that in order to count employees correctly, all employees employed at each of an employer’s locations within Ontario must be included. In the case of related employers, two or more employers may be treated as one under the ESA pursuant to s. 4(1), which stipulates when separate corporate entities can be treated as one employer. If this is the case, all of the employees employed in Ontario by these two or more employers are included in the count.

As to which employees are to be included in any count, an individual who meets the definition of “employee” ought to be counted. This includes homeworkers, probationary employees, select trainees, officers of a corporation who perform work or supply services for wages, employees on a definite term or specific task, employees on layoff, employees on leave of absence, employees who are on strike or who are locked out, and employees who are exempt from the application of parts of the ESA.

For clarity, if an employer’s employee number changes throughout a year after the January 1 counting date, the employer will continue to be exempt from the application of the legislation as it relates to the requirement to have a written policy in place for that year. However, we expect that the employer would likely be required to develop such a policy for the following year, assuming that it maintains a number of employees in excess of 25. 

Content

The RTD Chapter confirms that the employer is solely responsible for determining the content of a right-to-disconnect policy. However, the RTD Chapter does provide examples of what a disconnecting-from-work policy may address, including the following:

1. An employer’s expectations, if any, of employees to read and reply to work-related emails or answer work-related calls after their shift is expressly over;
2. the employer’s expectations for different situations, depending on the time of day of the communication, the subject matter of the communication, and who is contacting the employee (a client, supervisor, colleague, etc.); and
3. the employer’s requirements for employees turning on their out-of-office notifications and/or changing their voicemail messages when they are not scheduled to work or when they will not be responding until the next scheduled day.

A critical addition to the RTD Chapter is that the ESA does not specify that employers must provide a right for the employee to disconnect from work and be free from the obligation to engage in work-related communications. On this point, the RTD Chapter upholds other areas of the ESA for the proposition that employee rights to not perform work are governed by other sections of the ESA, including provisions dictating hours of work, eating periods, public holiday, vacation time, etc. Put simply, the right-to-disconnect provisions of the ESA do not amount to a new right for employees to disconnect from work and be free from the obligation to engage in work-related communications during “off-work” hours.

Accordingly, if an employer’s policy does include a provision that gives an employee the right to not perform work when the rules of the ESA would otherwise permit, such a provision could be understood as granting an employee a greater benefit than an employment standard under the ESA. Further, unless an employer’s policy amounts to the creation of a greater right or benefit under the ESA, no enforcement action can be taken by an employment standards officer relating to the requirement of an employer to have a written policy in place.

Exemptions

We expected that certain employees would be exempted from the application of such policies by virtue of amendments to Ontario Regulation 285/01. However, the RTD Chapter confirms that any written policy on disconnecting from work must apply to all of an employer’s employees in Ontario, including management, executives and shareholders of a company, if they are employees under the ESA. For greater clarity, the employer would not be in compliance with the ESA if it only applied the policy to certain employees or employee groupings.

Notably, an employer is not required to have the same policy for all employees. It may be the case that a policy be drafted for managerial staff, and a different policy is applicable to other employees, depending on organizational needs.

We acknowledge that this could be clearer. At the end of the day, careful drafting is imperative, as is understanding the nature of the business and how practices can be changed to avoid complaints, and more importantly, the time and resources required to resolve them.

Practical Tips for Employers

Given the current status of the information employers currently have, the following tips may be helpful in drafting a right-to-disconnect policy:  

• Establish what “company expectations” are for after-hours work and communications. This will likely involve looking at current employee habits and practices to determine the culture around after-hours work. Remember that company expectations will form the foundation of your policy;
• identify whether there are different expectations for different categories of employees (managerial/supervisory employees, or employees who work in specific teams/areas). If yes, consider addressing the same in your policy;
• consider including a section on “best practices” to assist with employee interpretation of the policy;
• instead of trying to address every circumstance in a policy, consider including a questions/concerns section where employees are directed to a staff member for interpretive assistance;
• ensure that your organization’s standard working hours are clearly defined in any policy;
• consider a process where employees who feel there has been a breach formally submit a document outlining the specifics of the breach, not only so it can be addressed, but to avoid any further “cumulative” overtime claim or alleged breach; and
• ensure that record keeping and retention is addressed in your policy and note where employees can access a copy of the current policy.