As of June 23, it is a criminal offence for two or more employers to form deals that fix, maintain, decrease or control wages. The same goes for agreements that prevent companies from hiring or soliciting each other's employees.
The penalty for violating the wage-fixing and no-poaching provisions includes imprisonment for up to 14 years, and/or a fine to be set at the discretion of the court.Section 45 of the Competition Act has until now criminally prohibited agreements between competitors to fix prices, allocate markets or restrict output.
“The wage-fixing and no-poaching amendments coming into force is an important step in the ongoing modernization of Canada's competition law,” competition commissioner Matthew Boswell said in a press release.The amendment applies only to pacts between unaffiliated employers. That means wage-fixing or no-poaching agreements between two or more corporate entities controlled by the same parent company do not violate the provisions.
It said it intends to target restraints that “are clearly broader than necessary in terms of duration or affected employees, or where the business agreement or arrangement is a sham.” The bureau said it will also generally not assess wage-fixing or no-poaching clauses that are ancillary to merger transactions under the new criminal provisions.
The issue ramped up in Canada during the pandemic when grocery giants Loblaws, Sobeys and Metro ended a bonus program for hourly workers known as “hero pay” on the same day in June 2020, prompting questions about possible co-ordination.
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