On June 23, 2022, significant amendments to Canada's Competition Act ("Act") became law. An amendment that is particularly noteworthy for employers is a new so-called wage fixing/no-poaching agreement offence.
Effective June 23, 2023, the criminal conspiracy offences under the Act will include a prohibition against:
- "wage-fixing" agreements that "fix, maintain, decrease or control salaries, wages or terms and conditions of employment"; and
- "no-poaching" agreements to "not solicit or hire employees" between unaffiliated employers.
As with the existing cartel provisions, this new provision would potentially allow wage-fixing and no-poaching agreements to be inferred from circumstantial evidence.
The penalties for breaching this offence are significant. Parties convicted of this offence are subject to a fine at the discretion of the court (there is no maximum fine), imprisonment for a term of up to 14 years, or both. Further, such parties are subject to damages claims (primarily in the form of class actions) from those who allegedly suffered damage as a result of the inappropriate conduct.
The amendment is intended to align Canada's approach to these types of agreements with the highly controversial approach recently adopted by the United States Department of Justice. These amendments do not appear to require that the employers be competitors or potential competitors, which is unlike the framework that applies to the general conspiracy provisions in the Act.
So how can you get ready for June 2023?
- Review your HR practices to ensure that your organization is not involved in practices with other employers (whether or not those employers are competing businesses) that may be considered (i) wage-fixing or no-poach agreements/arrangements, or (ii) improper information sharing or other practices that could be perceived as facilitating such agreements/arrangements.
- Consider expanding your competition/antitrust compliance measures that seek to mitigate the risk of non-compliance with the conspiracy provisions to your HR professionals.
- Engage in appropriate audit measures.
- Develop best practices to avoid the criminal and class action risk.
- Have regard to the new wage-fixing/no-poaching prohibition when implementing non-solicit clauses or other employee-related provisions in transaction agreements. In that regard, provisions that go beyond what may be typical in duration and scope should be considered closely to ensure they are reasonably necessary to achieve the objective of the broader transaction agreement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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