Earlier this year, Canada passed a new law that makes important amendments to the Competition Act. The Competition Act applies to all companies doing business across Canada, regardless of whether they are provincially regulated or federally regulated.
Some of the most changes to the Competition Act that all employers should note and be aware of include:
- a criminal prohibition on companies entering into wage-fixing agreements
- a criminal prohibition on companies entering into “no-poaching” agreements (or “non-solicitation agreements”)
As the new law makes clear, a wage-fixing agreement occurs when two or companies to agree to fix, maintain, decrease or control wages, salaries, terms or other conditions of employment. This prohibition applies to any agreements between employers, even where they are not themselves actual or potential competitors.
A no-poaching agreement occurs when two or more companies agree not to solicit or try to solicit each other’s employees. With these new prohibitions enshrined in criminal law, as of June 2023, the penalty for violating any of these provisions includes imprisonment for up to 14 years, or a fine to be set at the discretion of the court, or both.
The purpose of these important new changes to the Competition Act is “to protect workers from agreements between employers that fix wages and restrict job mobility.”
As a result of these changes, it is critical for employers to ensure they avoid entering into any such agreements or engage in such practices that run afoul of the Competition Act, especially to avoid the risk of criminal prosecution, fines and imprisonment.
Interestingly, the new changes include a statutory (civil) right of action allowing any person who has suffered loss or damages as a result of any of these new criminal prohibitions. Specifically, section 36(1) of the Competition Act allows a party who can prove that a defendant committed a criminal offence under the Competition Act (including the no wage-fixing and no-poaching agreements), and that he or she suffered damage as a result of the criminal offences, to recover monetary compensation. The standard of proof is on a balance of probabilities.
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