Poaching Employees from Your Competition in Ontario – What Employers Need to Know

Employment contracts are created to guide and govern employer/employee agreements. While the terms of contracts may vary, they must be compliant with the law to be considered enforceable.

When it comes to poaching employees from your competition, there are a few factors you need to consider, especially if your business operates in Ontario.

Are no-poaching agreements enforceable?

In June of 2023, the Competition Bureau made changes to the Competition Act that prohibits no-poaching agreements between employers. This amendment came into effect to prevent no-poaching agreements that undermine competition in the Canadian workforce. Under this law, employer agreements that stop their workers from getting hired somewhere else (including their competitors) are not only prohibited, but they are also considered a criminal offence. This includes agreements that restrict an employee from sharing information about job openings or that implement a hiring method to stop workers from being poached or hired by another party to an agreement. Penalties for no-poaching provisions include up to fourteen years of imprisonment and/or a fine determined by the court’s discretion.

With this law now in force you may wonder what about employees that currently have non-compete agreements with their employers? This is where Bill 27 comes into play.

What is the Ontario Working for Workers Act, 2021 (Bill 27)?

Currently, Ontario is the only province where non-compete clauses are prohibited in employment contracts. Under Bill 27, Working for Workers Act, 2021, non-compete agreements are illegal for most employees, with a few exceptions. This exception applies to:

• Executives (CEOs, presidents, VPs, etc.)
• If there is a sale or lease of part of the business that is operated as a partnership or sole proprietorship
• If immediately after the sale of a business, the seller becomes an employee to the buyer
• If the business sale agreement prohibits the seller from participating in any work, business, occupation, profession, project, or other activity that is in competition with the purchaser’s business after the sale

How do I poach someone from another company?

While there are little restrictions associated with poaching employees, it is still important to use proper business etiquette when doing so. Here are a few tips you can follow before you make the first move:

1.      Review your recruitment and HR policy internally to ensure that you are following ethical practices and remaining compliant with the Employment Standards Act (ESA). This includes ensuring any non-compete clauses are enforceable and not prohibited.

2.      Reach out to your potential candidates and test the waters to see if they are interested. This could include a pre-screening interview or even reaching out through LinkedIn. It is also a good time to ensure they would be a good fit for your company.

3.      Maintain professionalism throughout the process. Consider the fact that their employer could find out, which could make a much more difficult situation.

4.      Double check with the employee agreement your candidate has, to ensure their current or previous agreement(s) doesn’t include an enforceable non-compete clause.

5.      If all checks out and they are a good fit for your business, make them an offer. Once they accept the offer, ensure they have a smooth onboarding to start them off on the right foot.

As an employer it is important to note that just as you may be thinking of poaching employees, other employers may be doing the same with your employees. Having an offboarding policy is also helpful for a smooth transition.

Need help with HR outsourcing, health and safety, or employee wellbeing services? 

Our expert HR team can help you hire and onboard new employees for a smooth start. And our professional legal team can help you develop contracts in line with the ESA and avoid thousands of dollars in fines. We also offer smart HR software to make your daily HR tasks quick and convenient. To learn more about how our services can benefit your business, call us today at 1 (833) 247-3652.