Ontario’s Bill 27: One Good Law, One Vacuous Law, and One Missing Law

By David Doorey, York University

The Ontario government introduced Bill 27 this week, which it cutely named Working for Workers Act, 2021.  There’s a number of changes in this Bill, but I want to highlight two notable additions to the province’s employment standards legislation: (1) the so-called “right to disconnect” and (2) the ban on “non-competition” agreements.  I also want to point out a glaring omission from Bill 27, which is the absence of a ban on mandatory arbitration clauses that purport to block an employee from filing a statutory complaint and to access the government’s enforcement machinery.

Here’s a short summary I made of the law in the two areas noted above.

The Right to Disconnect 

Bill 27 defines “disconnecting from work” as follows: “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.”  

The curious aspect of the new law is that it does not actually protect a “right to disconnect from work” at all, notwithstanding the government’s inferences otherwise.  All the new law would do is require employers with at least 25 employees who aren’t otherwise exempt (remember, the government has left the many exemptions in place) to prepare a policy about disconnecting from work and to then give it to employees.  That’s like announcing to great fanfare that employees will be entitled to weekends off and then passing a law that requires employers to write a policy about weekend work.

Bill 27 includes a provision indicating that the policies must include such information as “may be prescribed”.  My students know that “prescribed” is a magic law word that signals that special rules may appear in Regulation to the statute.  As of today, there are no regulations dealing with the fictional “right to disconnect” so the law as it reads now is pretty much useless. The policy could read “you are expected to respond to after hours emails and phone calls” and that would satisfy the law as it stands with now.  So excuse my pessimism.

Non-Compete Prohibition

Bill 27 also bans “non-competition” clauses in employment contracts.  Unlike the new law on “disconnecting”, it actually prohibits something!  This is quite useful, even though (as discussed in Chapter 8 of The Law of Work), Canadian courts hardly ever enforce non-competition clauses anyways because they are presumed to be contrary to public policy.  The new law essentially codifies what was in practice pretty much the law anyways. However, the law is still useful because it should stop most employers from including non-comp clauses in the contract in the first place. Most employees aren’t aware that a non-competition clause won’t likely be enforced and so they behave as if the non-competition clause is valid even though it isn’t.

Bill 27 declares that any non-competition agreement is void. Take a look at how the law defines a non-competition clause:

“means 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.”

Pretty broad, eh? Fun question for students.  Does this language prohibit a non-solicitation clause as well as a non-competition clause?  Recall from Chapter 8 that there are 3 main types of “restrictive covenant” clause: non-disclosure, non-solicit, and non-competition.  Here are examples I provide in the text.

I think it is reasonable to assume that the government was focused on non-competition clauses when it sent the law to the legislative drafters.  However, the definition of a “non-competition” clause could arguably reach non-solicitation clauses as well.  Paraphrasing, the law states that “any agreement between an employer and an employee that prohibits the employees from engaging in any activity that is in competition with the employer’s business after the employment relationship is over” is unlawful.
What do you think?  Could that language be broad enough to include a term that bans an ex-employee who has set up a competing business from calling up clients of the former employer to persuade them to move their business over?  Watch for a case making that argument, coming to an Ontario court room near year in 2022.

A Glaring Omission: Ban Mandatory Arbitration Clauses

I will use this post to make a final point about what is clearly missing from Bill 27.  If the government is looking around for easy laws to pass that would bring an end to shady business practices that harm vulnerable employees–and good on them for at least thinking about these things–then there is at least one more area they should have addressed.

Bill 27 should have prohibited any clause in a contract that purports to block a non-union employee’s right to file a statutory complaint alleging a violation of employment-related statutes, including employment standards and human rights, in favour of mandatory private arbitration.  The Ontario Court of Appeal has already ruled, in Heller v. Uber, that mandatory arbitration clauses are unlawful insofar as they apply to complaints relating to the Employment Standards Act. That ruling was left untouched by the Supreme Court of Canada, which decided that the arbitration clause in the standard Uber contract was also unconscionable (see discussion by Michael Wright and Danielle Stampley here).  Ensuring that employers cannot block access to labour standards legislation by including mandatory arbitration clauses is crucial.  In particular, arbitration clauses could create an obstacle to class action lawsuits for systemic labour standards violations, which is an important tool for access to justice in employment law (as I explained in this post).

Since mandatory arbitration clauses that block access to statutory complaints are already unlawful in Ontario, why not just prohibit them like the government has done with non-competition clauses.  The fact that the government did not do this makes me concerned that this government believes that mandatory arbitration clauses are unproblematic.  Let’s keep an eye on this issue moving forward.  I’d think that both the Liberals and the NDP will promise to ban arbitration clauses that block employees’ rights to file statutory complaints with a tribunal.