The Working for Workers Act 2021 – Introduction
On December 2, 2021, Ontario Bill 27: Working for Workers Act, 2021, received Royal Assent and was passed into law. Bill 27 introduces new measures to improve employment standards for workers across the province. Most significantly, Bill 27 prohibits non-compete agreements between employers and employees, except in certain limited circumstances, and requires employer’s with 25 or more workers to have a “Disconnecting from Work” policy. This blog will discuss these key changes with a particular focus on the entertainment industry.
The Prohibition of Non-Compete Agreements
Bill 27 defines a non-compete agreement as “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.” Non-compete agreements have traditionally been used to stop former employees from starting their own business in competition with, or working for competitors of, their former employers.
The prohibition on non-compete agreements is straightforward and the sole exceptions are non-competition in the context of the sale of a business or in the case of “executives”. Bill 27 defines an executive 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.” It remains to be seen how courts will interpret who qualifies as an “executive”, but it is likely that an employee’s duties within an organization will be more important than whether that employee’s job title contains the word “Chief”.
Notably, other employee-related restrictive covenants remain enforceable in Ontario, including agreements of non-solicitation (a prohibition on soliciting a former employee’s clients or employees), non-disclosure or confidentiality, and assignments of intellectual property.
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The Right to Disconnect
Employers with 25 or more employees are now required to have a “Disconnecting from Work” policy. Bill 27 defines “disconnecting from work” 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 with 25 or more employees as of January 1st of any given year are now required to have a written policy setting out their disconnecting from work policy by March 1 of that year.
The importance of an employee’s right to “disconnect” from work at the end of the workday has gained acceptance, in significant measure due to the impact of COVID-19 on the workplace – in particular the increase in working from home, which has been widely recognized as having blurred the division between work life and home life.
Application to the Entertainment Industry
The prohibition of non-compete agreements and the right to disconnect from work are changes that will undoubtedly affect the entertainment industry. Production companies, animation and game development studios, artistic venues, management companies and labels, to name a few, will need to adjust their employment practices accordingly. On the other hand, truly independent contractors, who have and continue to play a large role in the entertainment industry, and who have always been outside the provisions of the Employment Standards Act, will not be affected by the new rules.
Working for Workers Act 2021 – Conclusion
As with all new legislation, the full impact of Bill 27 will take some time to reveal itself. If you are in the entertainment industry and have questions about how to apply these concepts to your specific circumstances as a worker or as an employer, or how to implement the new rules in your workplace we encourage you to speak with Edwards Creative Law or another entertainment or employment lawyer.
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Updated to January 12, 2022
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* This blog is for general informational purposes only and is not to be construed as legal advice. Please contact Edwards Creative Law or another lawyer, if you wish to apply these concepts to your specific circumstances.
