Employers take note: Canada has new rules prohibiting wage-fixing and no-poaching agreements
New rules kicked in for Canadian employers last week, which prohibit wage fixing and no-poaching agreements, part of a broader set of employment and competition reforms made last year.
The rules mean that it is illegal for unaffiliated companies (that is, companies not owned by the same corporate structure) to make agreements limiting or governing wages, as well as outlawing agreements between companies not to poach one another’s employees. The rules are being enforced by the Competition Bureau and are being cast as pro-competition measures.
“Like price-fixing agreements between competitors, wage-fixing and no-poaching agreements undermine competition,” the Bureau said. “Maintaining and encouraging competition among employers results in higher wages and salaries, as well as better benefits and employment opportunities for employees.”
The rules are, essentially, extending existing criminal price-fixing rules governing products (like, say, bread…) to wages; previously, wage-fixing rules would have been treated like a civil matter. The new rules come with stiffer penalties ― up to 14 years prison time, even.
The changes also have roots in pandemic era actions of the grocery companies. When all three of the big chains ended their “hero pay” program on the same day in June 2020, it raised the eyebrows of many ― but the Competition Bureau claimed at the time that its hands were tied by the wording of the existing regulations. The new changes are meant to close that loophole.
The devil will be in the details of how it is enforced, though. The Competition Bureau doesn’t have the most robust reputation for being tough, especially on large and well-resourced companies. If the new laws are to be effective, it will still require the Competition Bureau to step up and actually enforce them, said Adam Goodman, partner with Dentons’ competition and foreign investment review group in Toronto.
“It was always an option for the Competition Bureau to challenge no-poach or wage-fixing conduct if they thought it resulted in anti-competitive effects and they never brought a case,” Goodman told The Canadian Press. “It’s not as though there was an issue with the tools having been proven to be inadequate for the job. The tools were never used.”
Content written by Kieran Delamont for Worklife, a partnership between Ahria Consulting and London Inc. To view this content in newsletter form, click here.