Recent amendments will make wage-fixing and no-poaching agreements illegal
The Competition Bureau has invited interested parties to comment on new guidelines to address wage-fixing and no-poaching agreements.
The Bureau developed the guidelines following recent amendments to the Competition Act, which will come into force on June 23. When the amendment comes into force, wage-fixing and no-poaching agreements will become illegal and subject to significant criminal penalties in Canada.
Subsection 45(1.1) of the Act was added to protect competition in labour markets. The provision makes it an offence for unaffiliated employers to agree to fix, maintain, decrease, or control wages or other terms of employment or to not solicit or hire each other’s employees. Subsection 45(1.1) is directed at “naked restraints” on competition, which are restraints on wages or job mobility that are not implemented in furtherance of a legitimate collaboration, strategic alliance, or joint venture.
The provision will apply only to new agreements entered by employers on or after June 23 and to conduct that reaffirms or implements older agreements.
The Bureau has issued new guidelines describing its approach to enforcing subs. 45 (1.1). They will supplement the Bureau’s current competitor collaboration guidelines. The Commissioner of Competition and the Bureau are responsible for investigating any matter that involves an offence under the Competition Act.
The Bureau asserted that much like other agreements between competitors like price fixing, wage-fixing, and no-poaching agreements undermine competition. It argued that maintaining and encouraging competition among employers results in higher wages and salaries and better benefits and employment opportunities for workers.
Interested parties can provide comments on the Bureau’s guidelines online by March 23. According to the Bureau, it will publish each submission on its website unless the provider specifically requests that it be kept confidential. The Bureau will continue to review and update the guidelines considering experience, changing circumstances and decisions of the courts.