Bill 27 passes, but not before an important amendment to the ban on non-competes

On November 30, 2021, the Ontario Government  passed Bill 27, the Working for Workers Act; a last-minute amendment to Bill 27 exempts executive-level employees from Ontario’s proposed ban on the use of non-compete agreements.

Last month, we wrote about the Ontario Government’s introduction of Bill 27, the Working for Workers Act. Bill 27 proposes sweeping changes to the Ontario employment landscape, most notably through its proposed ban on the use of non-compete agreements and the requirement for employers to implement “right to disconnect” policies.

Bill 27 has now passed, but not before a few important changes have been made. 

Executive non-compete agreements

As our readers will recall, the blanket ban that the Ontario Government had initially proposed on the use of non-compete agreements had only a limited exception in the context of the sale of a business where the seller became an employee of the purchaser.

However, the final version of the legislation included a further exception for the use of non-competes, this time for executives. 

Under this exemption, any employee holding the position of chief executive officer, president, chief administrative officer, chief operating officer, chief financial officer, chief information officer, chief legal officer, chief human resources officer, chief corporate development officer, or any other chief executive position can still be bound to a non-compete agreement with their employer. 

While no official explanation was provided for the executive-exemption, it appears to recognize the unique vulnerabilities that employers face as a result of the departure of executive level employees.

Moving forward

Bill 27 was passed only one month after it was first introduced. As a result, many important questions that employers had about Bill 27’s impact and application remain unanswered.

For more information regarding the Working for Workers Act, 2021, do not hesitate to contact Matthew Demeo, or any lawyer in our Ontario Employment and Labour Law Group.

This article provides only general information about legal issues and developments, and is not intended to provide specific legal advice. Please see our disclaimer for more details.