Calling all federal employers in Canada – yes, that includes employers such as banks, postal services, telecommunication companies, and First Nations band councils, to name a few! Many will recall that the government made some game-changing amendments to the Competition Act back in 2022. Some of the key changes, which are aimed at protecting fair labour competition and cracking down on wage-fixing and no-poaching agreements, came into force recently, specifically on June 23, 2023. Long story short, it could be a criminal offence for employers to fix employee wages and enter into agreements not to solicit one another’s employees. We’ve rounded up some of the key aspects of the changes to help all you federally-regulated employers stay compliant and ahead of the game.
Getting down to business: The basics
Wage-fixing and no-poaching agreements are now criminal offences, meaning employers cannot conspire or agree with other unaffiliated employers (including HR professionals) to maintain, decrease, or control salaries, wages, or terms and conditions of employment, such as benefits or hours of work. Additionally, unaffiliated employers agreeing to refrain from hiring or soliciting each other’s employees is strictly prohibited.
Bye, bye, restraining agreements before June 23, 2023
If you’ve made any wage-fixing or no-poaching agreements before June 23, 2023, put them on ice. Implementing or reaffirming them in any way is a big no-no. This means that any policies or practices that provide for this should be updated.
When sharing sensitive information with other employers or trade associations, be cautious! Stay sharp to avoid situations where an inference could be made that a wage-fixing or no-poaching agreement was created.
Ancillary restraints defence
Here’s a secret weapon for federal employers: the ancillary restraints defence. If you can prove that a wage-fixing or no-poaching agreement is directly related to and reasonably necessary for achieving the objective of a larger independent agreement, you might just dodge the bullet. Nonetheless, it’s an excellent time to review all your commercial agreements and update any non-compliant language that may violate the Competition Act prohibitions.
Canadian employers, these changes are not to be taken lightly! The Competition Act applies to all federally-regulated workplaces, no matter the location in Canada or industry. Remember, penalties for contravening the prohibition on these agreements can be severe, including imprisonment of up to 14 years and/or hefty fines. So, don’t take any chances! By complying with these laws and embracing fair competition, employers not only avoid the heavy penalties of non-compliance but they also help create a thriving economy and industry and offer better opportunities to employees.
Written by Emily Siu
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