An Update on Bill 27, Working for Workers Act, 2021

In our recent blog, we talked about Ontario’s Bill 27, Working for Workers Act, 2021, which proposed new changes to several pieces of legislation, most notably the Employment Standards Act, 2000. On November 30, 2021, Bill 27 passed third reading and on December 2, 2021, it received royal assent, making it now law. In this post, we will highlight some of the key changes.

Non-Compete Agreements are Prohibited

Under Bill 27, employers are prohibited from entering into employment contracts or other agreements with employees that is or includes a non-compete agreement. Employers will be pleased to know that there is an exception for executives; these employees may still enter into non-compete agreements with employers. 

Executives are defined 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”.

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A Proposed Ban On Non-Competes

A Proposed Ban on Non-Competes

On October 25, Ontario Bill 27, Working for Workers Act, 2021 (“the Bill”) passed first reading. This Bill proposes amendments to our key Ontario employment statutes, including the Employment Standards Act, 2000 (the “ESA”) and the Occupational Health and Safety Act. In today’s post, we will review highlights regarding the proposed ban on non-competes and talk about how Ontario businesses can prepare. 

A Ban On Non-Competes

One much-discussed element of the Bill is the proposed ban on non-competition agreements in employment contracts. 

A non-competition agreement restricts – or tries to – an employee’s ability, for a period of time, to work for a competitor after leaving the employer. The restriction is usually somewhere between three months to two years. 

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Another Ruling on the IDEL and the Employee’s Right to Pursue Common Law Constructive Dismissal

The Ontario Superior Court has ruled once again on the right of an employee to assert a constructive dismissal in light of the O. Reg. 228/20: Infectious Disease Emergency Leave (“the Regulation”) under the Employment Standards Act, 2000 (ESA). In the latest decision, the court ruled that the Regulation does not preclude an employee from asserting a common law constructive dismissal. 

As discussed in previous posts, under the Regulation neither a reduction in the employees hours of work or wages constitute a constructive dismissal under the ESA if they occur during the COVID-19 Period. The COVID-19 Period keeps changing on us, but it currently runs from March 1, 2020 to September 25, 2021.  There have been conflicting decisions about whether the Regulation also removes an employee’s right to assert a constructive dismissal under the common law. 

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Heads up Multinational Employers! A Change to the $2.5 Million Payroll Threshold Calculation.

A new ruling from Ontario’s Divisional Court has changed which employees will be entitled to severance pay. While the law has been mixed, it was generally the case that the $2.5 million payroll threshold for the purposes of calculating severance pay applied to Ontario payroll only. The Divisional Court has now ruled that global payroll should be considered. 

What’s Severance Pay?

In Ontario, employers with a payroll of more than $2.5 million must, upon termination or severance of employment, pay severance pay to employees with five or more years of service. This aspect of the Ontario Employment Standards Act, 2000 (ESA) increases the legal minimums employers are required to pay to long service employees significantly. Under the ESA, notice of termination caps out at 8 weeks, whereas severance pay can be up to 26 weeks. 

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Overtime Part 2: The Manager Exemption

manager exemption for overtime

Photo by Jonas Leupe on Unsplash

Last week we wrote about ways employers can manage overtime liabilities with Averaging Agreements and Time in Lieu. This week we will tackle a commonly litigated overtime issue – the manager exemption. 

The Manager Exemption 

Not every worker is entitled to overtime pay. Exemptions are set out in section 8 of Ontario Regulation 285.1 under the Employment Standards Act, 2000. Included in the list of the exempt is the manager or, to be exact, “a person whose work is supervisory or managerial in character and who may perform non-supervisory or non-managerial tasks on an irregular or exceptional basis.” Who exactly falls under this exemption can be unclear. 

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Overtime Part 1: Averaging and Time Off In Lieu

Overtime: averaging and lieu time as alternatives to paid overtime

Photo by Jonas Leupe on Unsplash

Along with vacation pay, overtime is another area of the Employment Standards Act that can be confusing and can get employers in trouble. 

Entitlement to Overtime Pay

Most employees are entitled to be paid overtime – which is 1.5 times their normal pay rate – for every hour they work in excess of 44 hours in a week. 

Some employees are exempt, including most of the regulated professions, many employees in healthcare jobs, IT workers and managers among others. For a full list of job types that are not entitled to overtime see the Ministry of Labour’s Guidance.

The manager exemption can be a tricky one and we will address that in Part 2 next week. 

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