Canada’s Competition Act Will Soon Criminally Prohibit Wage-Fixing and No-Poaching Agreements Between Unaffiliated Employers

On June 23, 2022, Canada’s Bill C-19, Budget Implementation Act, 2022, No. 1 received Royal Assent and amended Canada’s Competition Act.  The Competition Act applies to all businesses operating in Canada, whether they are provincially or federally regulated.

These amendments include a new provision, s. 45(1.1), which is embedded in the statute’s criminal conspiracy provisions.  Section 45(1.1), which comes into force on June 23, 2023, will prohibit employers from conspiring, agreeing or arranging to enter into what is referred to in Canada’s Guide to the 2022 amendments to the Competition Act (Guide) as “wage-fixing agreements” and “no-poach agreements” with another employer that is not affiliated with them.   

In a wage-fixing agreement, employers agree “to fix, maintain, decrease or control salaries, wages or terms and conditions of employment.”  In a no-poach agreement, employers agree to “not solicit or hire each other’s employees.”  As noted in the Guide, s. 45(1.1) was added to the Competition Act “to protect workers from agreements between employers that fix wages and restrict job mobility.”    

Employers that enter into wage-fixing and no-poach agreements will be guilty of an indictable offence and liable on conviction to imprisonment for a maximum term of 14 years or to a fine in the discretion of the court, or to both.

Bottom Line for Employers

To mitigate the potential risk of criminal prosecution, lengthy periods of incarceration, and/or fines, employers in Canada are encouraged to take proactive steps to ensure that they will be able to comply with s. 45(1.1) of the Competition Act when it comes into force next summer.  Such steps may include conducting a review of whether they are engaged in any activities that will become prohibited and providing internal training about how to avoid the risk of non-compliance.  

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.