The Competition Act (Canada) was amended to criminalize wage-fixing as well as non-solicitation
and no-hire agreements (“no-poaching agreements) between employers. This means that it is a
criminal offence for employers to enter into agreements to fix salaries, wages or terms and
conditions of employment, or to refrain from soliciting or hiring another company’s employees.
It is important to note that this amendment applies to communications between employers,
whether competitors or in unrelated businesses. Employers are advised to consider how they
participate in industry benchmarking discussions relating to wages and terms of employment.
Companies are also advised to consider the extent to which they may have any commercial
agreements that contain any wage-fixing or no-poach provisions.
There are some limited exceptions to the application of this amendment including sharing of
information between affiliated entities or situations where the companies can establish that the
agreement is ancillary to a broader or separate legitimate agreement between the parties and the
wage-fixing or no-poach provision is related to and reasonably necessary to give effect to the
legitimate agreement. The Competition Bureau has provided guidance that no-poach provisions
in merger and acquisition (M&A) agreements reasonably necessary to the purchase and sale
agreement may not be covered by the amendment, but there has been no definitive decision in
this regard. As a result, M&A agreements should be reviewed carefully to consider this risk.
This amendment does not apply to non-solicitation or non-competition clauses between an
employer and an employee (or former employee). That said, in Ontario, the Employment
Standards Act (Ontario) has prohibited non-compete restrictions and some non-solicitation
restrictions that have the effect of restricting worker mobility (with some narrow exceptions for
sale of business arrangements and C-Suite employees).
Our employment lawyers are available to discuss this amendment with you and determine any
risks to your business as a result.
After 25 years advising large companies as in-house legal counsel, Carmelle Hunka has joined
Walsh to bring her business and employment law experience and practical approach to our
clients. Carmelle has extensive experience in all areas of employment law including policies and
plan documents, employment agreements, executive compensation including public disclosure,
incentive plans, terminations, human rights matters, ethics and business conduct matters
including investigations and anti-corruption and anti-bribery matters and advising companies
regarding employment law matters in merger and acquisition activity.
