Ontario’s Bill 27, Working for Workers Act, 2021 (Act), became law on December 2, 2021. Among other things, the Act amends the Employment Standards Act, 2000 to prohibit employers and prospective employers from entering into an employment contract or other agreement with an employee or an applicant for employment that is, or that includes, a non-compete agreement. This prohibition does not apply upon the sale of a business or if the employee is an “executive.”
The Act provides that the prohibition against non-compete agreements is deemed to be in force effective October 25, 2021. The Act does not indicate whether the prohibition applies to non-compete clauses entered into prior to the prohibition’s effective date of October 25, 2021. This question was recently answered, however, by the Ontario Superior Court of Justice in Parekh et al v. Schecter et al, 2022 ONSC 302.
Background
In 2020, the plaintiffs purchased a dentistry practice from one of the defendants. That defendant’s father, another defendant in this matter, originally owned this practice and sold his shares in the practice to his son long before it was sold to the plaintiffs. In the years following the sale of the father’s shares, the father continued to treat his patients at the practice as an associate. A condition of the sale of the practice (Practice) to the plaintiffs was that all associate dentists, including the father, would enter into Associate Agreements on closing. Another condition was that the...
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