By now, most employers know that Bill 27, the Working for Workers' Act (the "Act"), prohibits employers and most employees from entering into non-competition agreements ("non-competes"). At this point, we have limited information about how this will be implemented and treated by the Courts.
- We know that the prohibition does not apply to non-competes entered into before October 25, 2021, based on the Ministry of Labour's statement on its website. However, we also know that it was difficult to enforce non-competes before passage of the Act - this will not make it any easier.
- We know that there are some exclusions to the application of this provision, including where the seller of a business agrees to a non-compete as part of the sale transaction, and for so-called "C-suite" executives (CEO, CFO, etc.).
- We trust that the non-enforceability of non-competes will not adversely affect the enforceability of non-solicitation provisions which are often included in a comprehensive provision or agreement dealing with restrictive covenants. However, we may eventually see this argument from creative employee-side counsel.
As with any new legislation, it will take time to see how it affects employers' day-to-day relationships with employees. In the meantime, we recommend that employers review their template employment contracts and revise them as required to comply with Bill 27. Employers will also want to consider the new "right to disconnect" requirement, discussed by my colleague, Liam Ledgerwood here. As always, any member of Siskinds' Labour & Employment Group would be pleased to assist.
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