THE STANDING SENATE COMMITTEE ON SOCIAL AFFAIRS, SCIENCE AND TECHNOLOGY
EVIDENCE
OTTAWA, Wednesday, September 23, 2026
The Standing Senate Committee on Social Affairs, Science and Technology met with videoconference this day at 4:15 p.m. [ET] to examine the subject matter of those elements contained in Divisions 9 and 12 of Part 4 of Bill C-31, A second Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025; and, in camera, for consideration of a draft agenda (future business).
Senator Sharon Burey (Deputy Chair) in the chair.
[English]
The Deputy Chair: Honourable senators, welcome to this meeting of the Standing Senate Committee on Social Affairs, Science and Technology. My name is Sharon Burey. I’m a senator from Ontario and the deputy chair of this committee.
Before we begin, I would like to ask all senators to consult the cards on the table for guidelines to prevent audio feedback incidents. Please make sure to always keep your earpiece away from all microphones. Do not touch the microphone. Activation and deactivation will be managed by the console operator.
Finally, please avoid handling your earpiece while your microphone is on. Earpieces should either remain on the ear or be placed on the designated sticker at each seat. Thank you all for your cooperation.
Now I would like to do a round table and have senators introduce themselves.
Senator Martin: Hello and welcome. Senator Martin from B.C.
[Translation]
Senator Boudreau: Good afternoon. Victor Boudreau from New Brunswick.
Senator Arnold: Good afternoon. Dawn Arnold, also from New Brunswick.
Senator Petitclerc: Good afternoon. Chantal Petitclerc from Quebec.
[English]
Senator Osler: Welcome. Flordeliz (Gigi) Osler, senator for Manitoba.
Senator Muggli: Welcome. Tracy Muggli, Saskatchewan, Treaty 6 territory.
The Deputy Chair: Thank you, colleagues. Today, we are studying the subject matter of certain elements contained in Divisions 9 and 12 of Part 4 of Bill C-31, A second Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025. As our study examines the subject matter of these elements, the report of this committee will be made to the Standing Senate Committee on National Finance. The final report on Bill C-31 will be made by the Standing Senate Committee on National Finance to the Senate of Canada.
For our first panel, we will focus on Division 9, which brings amendments to the Canada Labour Code, and Division 12 which amends the Tobacco and Vaping Products Act.
Joining us today, from Employment and Social Development Canada, we welcome Soojin Yu, Senior Director, Strategic Policy and Legislative Reform, Labour Program; and Sébastien St-Arnaud, Manager, Strategic Policy and Legislative Reform, Labour Program. And from Health Canada, we welcome Kendal Weber, Assistant Deputy Minister, Controlled Substances and Cannabis Branch; Tim Appleby, Director, Office of Policy and Strategic Planning, Tobacco Control Directorate, Controlled Substances and Cannabis Branch; and Denise MacGillivray, Director General, Cannabis, Tobacco and Controlled Substances Directorate, Regulatory Operations and Enforcement Branch.
Thank you for joining us today.
We were also scheduled to hear from Maryse Tremblay, Chairperson of the Canada Industrial Relations Board, or CIRB, during the first panel. Unfortunately, she was unable to join us today and sends her regrets. Ms. Tremblay is following the proceedings and has indicated that she will be pleased to respond to any questions that senators may have for the CIRB by providing follow-up responses after the meeting.
For your opening statements, you will have five minutes, followed by questions from committee members.
Ms. Yu, the floor is yours.
[Translation]
Soojin Yu, Senior Director, Strategic Policy and Legislative Reform, Labour Program, Employment and Social Development Canada: Good afternoon, everyone. My name is Soojin Yu, and I am a senior director at the Labour Program at Employment and Social Development Canada. I am accompanied by my colleague Sébastien St-Arnaud, Manager at the Labour Program.
We are responsible for Part III of the Canada Labour Code, which establishes minimum working conditions for employees in the federally regulated private sector.
This proposal would affect federally regulated private sector employees, who represent about 6% of Canadian employees. They work in select industries, such as banking, telecommunications and inter-provincial and international transportation, such as air and rail.
Division 9 proposes to amend the Canada Labour Code to prohibit non-compete clauses under limited circumstances.
[English]
Division 9 proposes to amend the Canada Labour Code to prohibit non-compete clauses, except under certain circumstances. Non-compete clauses are clauses in employment contracts that people hold now, which forbid employees from working for a competing employer or from starting their own competing business after their employment ends.
Why would we do that? It is expected to strengthen competition, promote labour mobility and protect and empower workers to move to better-paying jobs more freely.
According to recent findings from the Organisation for Economic Co-operation and Development, or OECD, about 30% to 40% of private sector workers in Canada are subject to non‑compete clauses, and their use seems to be increasing, not only for high-paying jobs but also for lower-skilled jobs and even for contract workers.
Our proposal follows a growing number of international jurisdictions, such as the United Kingdom, Australia and certain U.S. states, which have already restricted the use of non-compete clauses or are taking steps to do so.
Closer to home, our proposal draws from Ontario, which has prohibited non-compete agreements since 2021, but we have made some adjustments to their model following our consultations with employers and employees in January 2026.
I can get into the details a little bit. The main challenge, actually, in drafting this legislation was to determine instances where the use of non-compete clauses is actually justified, so the bill prohibits it, except for the following two cases: one, a narrow list of senior executives, such as CEOs, CFOs and COOs; and, two, employees who sell their business and become the employee of the buyer. Those exemptions are supposed to protect legitimate business interests and are aligned closely with the Ontario model.
Other than those exemptions, the bill contains a number of what I would consider usual provisions. There are regulation-making authorities to adjust the exemptions going forward. Whenever we make an amendment to the Canada Labour Code, we make sure that an employee is protected from reprisals at their place of employment.
For example, if you refuse to sign a non-compete clause — if this bill receives Royal Assent — and the employer wants to demote you or penalize you in some way, then they would be entitled to our existing compliance and enforcement regime, where they could put in a complaint and we would follow up and be able to use our range of enforcement tools, such as penalties and public naming, et cetera.
Finally, the coming into force would be on a day to be fixed by order of the Governor-in-Council. Upon the coming into force, new non-compete clauses would be prohibited. The existing ones would become void and unenforceable after a transition period of one year.
To be clear, employers with existing employment contracts with this clause would not have to do anything. They don’t have to amend it or anything. Those non-compete clauses would just become void and unenforceable.
Those are all the details I have.
[Translation]
We would be happy to answer any questions you may have.
[English]
The Deputy Chair: Thank you so much, Ms. Yu.
Ms. Weber, you have the floor.
[Translation]
Kendal Weber, Assistant Deputy Minister, Controlled Substances and Cannabis Branch, Health Canada: Thank you, Madam Deputy Chair.
Good afternoon, honourable members. I appreciate the opportunity to be here before the committee today.
My name is Kendal Weber, and I am the Assistant Deputy Minister of the Controlled Substances and Cannabis Branch at Health Canada.
I am pleased to provide an overview of the government’s proposed amendments to the Tobacco and Vaping Products Act, the TVPA, in Bill C-31.
The amendments proposed today would extend the mandatory legislative review timeline for the TVPA from two years to five years, supporting a more effective, in-depth review process. At the same time, they would provide an opportunity to strengthen the legislative review process itself.
Before I go into more detail about the proposed amendments and the rationale behind them, I would like to highlight the significant progress Canada has made in reducing tobacco use.
[English]
In 2018, the former Tobacco Act was amended to become the Tobacco and Vaping Products Act, or TVPA. Alongside provincial and territorial legislation, policies and programs, the TVPA helps protect Canadians from tobacco-related disease and death while also protecting youth and people who do not use tobacco from the harms of tobacco and vaping products.
Today, Canada’s smoking rates are among the lowest in the world and continue to decline. In 2024, 11% of Canadian adults reported smoking, while less than 1% of youth smoked daily. Reducing tobacco use to less than 5% by 2035 — which is our target under Canada’s Tobacco Strategy — was once considered an aspirational goal. This goal is now within reach.
While these results are encouraging, the harms of tobacco and nicotine addiction continue to impact families and communities across the country. The legislative review requirement in the act is a very helpful tool — one that is used in a number of different pieces of legislation.
The TVPA currently mandates periodic legislative reviews on a two-year cycle. Following each review, a report is tabled in both houses of Parliament. The first two reviews of the TVPA, tabled in Parliament in 2022 and 2024, concluded that progress has been made toward achieving the act’s purpose and its vaping-related and tobacco-related objectives.
The third report, most recently completed and tabled in May 2026, further identified opportunities to strengthen compliance and enforcement of the act. The government has made progress on key areas identified through the first two reviews, and we continue to build on that work. This includes advancing an initiative to recover federal costs associated with tobacco-related activities and shifting those costs to tobacco companies.
We have also introduced regulatory measures to protect youth and people who do not use tobacco and have shared updated resources to support people who want to quit tobacco and vaping products.
After undertaking three reviews of the TVPA, it has become clear that a two-year review cycle presents challenges for examining complex issues in sufficient depth and for conducting meaningful engagement, particularly with Indigenous Peoples. More time between reviews would support broader and deeper participation from individuals, communities and organizations most affected by tobacco-related harms.
A five-year review cycle would also provide more time for scientific evidence, data and studies to emerge and be evaluated, and it would strengthen the evidence base informing future reviews and support more robust policy discussions.
Importantly, a longer review period would allow for a more meaningful assessment of how previous recommendations have been implemented and what impact they’ve had. And parliamentarians would be provided with a more complete picture and more time to consider the outcomes of the review process.
The proposed amendments would also align the TVPA review with over a dozen other federal acts and support greater efficiency and lower administrative costs. This reflects the government’s commitment to spend less on government operations.
In summary, these amendments would support a more inclusive, comprehensive and evidence-informed review process that would allow for deeper engagement, particularly with Indigenous Peoples, and more time to consider emerging evidence and a stronger assessment of the impact of previous recommendations.
[Translation]
Thank you.
[English]
The Deputy Chair: Thank you, Ms. Weber.
I would like to note that our chair has arrived. Welcome, Senator Moodie. We will now proceed to questions from committee members.
Senator Martin: Thank you for your presentations. Due to my limited time, I will focus my questions to Health Canada.
I recall the legislation to regulate vaping in Canada. I heard all of the arguments as to why we needed to regulate it, as it would be one way to reduce smoking and protect youth, et cetera. My husband is an educator in an alternative secondary school. I, too, have many friends there because I came from that sector, so I know that legalizing vaping has led to a lot of issues. I hear why you’re looking at extending it to five years from two years, but I have quite a few concerns about that.
You mentioned Indigenous Peoples, focusing on some of the harms to those communities. Could you tell me the stakeholders that your department consulted specifically about extending the statutory review cycle? I’m thinking about educators who are on the front lines confronting the issues around vaping products.
Ms. Weber: Thank you for the question.
I think the most important thing to state is that the legislative review does not restrict when we can take action. We have shown numerous times that we can implement regulations and put measures in place before a legislative review is done. I can give you examples. I know you have limited time, so I won’t get into that. I’ll answer your question. If you want to come back to it, I can provide examples of four different regulatory packages we put in place before we did our first legislative review. A review is not required to make changes or to take efforts.
We haven’t specifically consulted on the changing, but what we have heard — and I have done four legislative reviews in the past five years, including the Cannabis Act — is the speed at which a two-year cycle has to move does not allow time for stakeholders to have meaningful engagement. It’s in and out with a consultation document and a few quick conversations. We look at the evidence we have in front of us, we put together the report, we table it and we’re off and running on the next cycle.
We heard feedback throughout our consultations. We posted our reports online and also whom we consulted with — we have the full list online. They have said to us, “The speed at which you go is so fast that it’s not meaningful,” and the time allowed for actual implementation is limited.
Senator Martin: I understand from your standpoint, but I also know the industry is evolving very quickly. Five years ago, disposable vapes with massive puff counts and high nicotine concentrations barely existed in Canada. If Parliament passes Division 12, the next legislative review checkpoint may not occur until 2031.
How can Health Canada guarantee to this committee that it can successfully protect Canadian youth from an entirely new generation of unregulated product formats and industry tactics over a five-year blackout window?
Ms. Weber: It’s not a blackout. A legislative review is a requirement in legislation to review the legislation. You can move legislative amendments throughout that period at any time, and we’ve done that.
Two years ago, when we were at this committee, we advanced legislation to charge the tobacco companies user fees so that we could recover the costs. We didn’t have to wait for a legislative review. A legislative review does not give us entry into Parliament to advance a legislative change. It requires us to look at the legislation, and it states how progress is being made. Should there be a need to take action on disposables or retail or whatever the issue may be, that can happen at any time through a piece of legislation introduced either in the Senate or in the House. It could be a private member’s bill or a government bill. It can come in any form. It’s not a blackout for five years. We can take action at any point.
Senator Martin: Through legislation, we could address some of those issues. Are there other safeguards that would be put in place to ensure that emerging risks involving tobacco and vaping products are identified, publicly reported and addressed promptly rather than waiting between these reviews?
Five years is a long time. I’m concerned about many potential issues that we would have to tackle. There are legislative approaches, but are there other safeguards in place now or that will be put into place as a result of adopting this division within Bill C-31?
Ms. Weber: We engage with stakeholders at all times. We will engage on the regulatory amendments that we may be moving. When we publish data around youth and adult smoking or vaping, we will share that information and hear feedback. There are opportunities annually for stakeholders to provide input into budget bills. There are a number of opportunities for them to come forward, for sure. We can also move regulations. It doesn’t have to be legislation.
Senator Osler: Thank you to all the witnesses for being here today. My questions will follow up on Senator Martin’s questions. It’s to Health Canada on Division 12 of Part 4 of Bill C-31.
What data is the government using to support reducing the frequency of the reviews of the Tobacco and Vaping Products Act from every two years to every five years? I’m asking this with a health lens, recognizing the rapidly changing usage of tobacco and nicotine in youth.
The Canadian Paediatric Society, or CPS, recommends that if there are challenges with the review being every two years, then it should be done every three years. The society noted a survey of students in Grades 7 to 12. The percentage of students who reported smoking e-cigarettes in the past 30 days has quadrupled in just four years.
Again, in the face of rapidly changing rates of tobacco and nicotine use in youth, what data are you using to support reducing the frequency from every two years to every five years?
Ms. Weber: That’s a great question. Thank you for that question.
It’s first-hand interactions with stakeholders. Like I said, we’ve conducted three of these legislative reviews, and we’ve heard back from stakeholders, not the CPS. I think their point is very interesting and valid, but we did hear from Indigenous communities and Indigenous people that we were rushing, if you will, to complete our consultations to meet the two-year cycle.
The feedback and the experience that we have had from three legislative reviews of the Tobacco and Vaping Products Act and also one legislative review of the Cannabis Act — for the Cannabis Act, it is a one-time review done once after five years. Regarding once every two years, we are not aware of another legislation where it happens that frequently, but your point about the evolution is important.
I want to come back to the point I was making. In 2020, we moved regulations related to promotions and restrictions around where promotions could be done so that youth cannot see them. We moved regulations around warnings on vaping products so that there was a warning about nicotine addiction, which was a separate regulatory package. We moved another regulatory package to limit the amount of nicotine to 20 milligrams per millilitre in a vaping product. That was a third package. All of those regulatory packages moved quickly and without a legislative review. The review came after that, and it assessed how we were doing, and then another review came two years later.
The room that the five years gives us is to dig into complex policy issues, to conduct in-depth consultations and then to also take actions on previous reviews.
Senator Osler: The survey took place between 2014-15 and 2018-19 — in fact, it’s even older numbers. You mentioned first‑hand interactions with stakeholders and anecdotal, qualitative evidence.
Do you have quantitative numbers from 2019 that perhaps show usage is decreasing in youth and that some of the changes you’ve made have made an impact on those self-reported numbers?
Ms. Weber: I do, if you give me a second. After the TVPA came into force, we did see youth vaping increase significantly. It doubled. Then measures were taken, and we saw it stabilize. Just recently, in 2024, we saw youth numbers come down. We do have data. We have two surveys that we use. I will just take a second to find it unless you have it quickly, Mr. Appleby.
Tim Appleby, Director, Office of Policy and Strategic Planning, Tobacco Control Directorate, Controlled Substances and Cannabis Branch, Health Canada: Sure, I can speak to that.
Ms. Weber: I’ll turn to Mr. Appleby on the Canadian Health Survey on Children and Youth data. Thank you.
Mr. Appleby: The Canadian Health Survey on Children and Youth surveys those who are 12 to 17 years of age and living in the provinces. Findings from this survey show a decline in vaping over time among youth aged 12 to 17 years old from 13.1% in 2019 to 5.8% in 2024. There is also the Canadian Student Alcohol and Drugs Survey, which is a survey of students in Grades 7 to 12 attending public, private and Catholic schools in the 10 provinces. Findings from this survey found that vaping among students increased from 6.5% in 2014-15 to 20.2% in 2018-19, which is what you were speaking to, but it found that it then declined from 20.2% to 15.5%.
Across recent surveys of both, we have seen a decline.
Senator Moodie: I have three questions.
Did you consider the Canadian Paediatric Society recommendation for three years? Specifically, have you looked at it? What are the arguments against it, if you did look at it specifically?
Second, you spoke about and reflected that you’ve heard from Indigenous communities regarding their reactions to the very short timeline and the apparent rushed consultation. Whom did you hear this from exactly? Which communities did you speak to?
My third question has to do with the three amendments you have made to the vaping rules — the regulatory packages — where you talked about the nicotine limitations and other things. How are you looking at those? What is the starting point for their review, or are they all going to be reviewed at the next incremental five-year period, which means you have things starting at different stages with different timelines? At the next five-year opportunity, are you going to look at all of those changes that have occurred subsequent to the original legislation, or is day one the day that the changes occurred and then it’s five years later when you look at it?
We’re trying to understand the interval during which you will assess. If some of those intervals are three years, what’s the difference?
Ms. Weber: Great questions.
On the first question, I did not receive the information from the Canadian Paediatric Society until recently. However, it is something we did look at: Do we go to 3 years, 5 years, 7 years or 10 years? I think the Official Languages Act is 10 years, and I think the Pest Control Products Act is 7 years. I can name five more at five years, and we know we are the only one at two years.
We did look to see if other pieces of legislation are in the two‑year to three-year space.
Similar to our experience, when they come through for discussion at committees about legislative review, it’s been recognized that the speed at which you go through these reviews does not leave adequate time for consultation, for policy discussions of complex issues and for follow-up to implement any changes.
Therefore, we did look at 2 years, 3 years, 5 years, 7 years and 10 years, and we considered cyclical versus one-time. We went back to Hansard, and we went back to the discussion that happened in 2017-18 at this committee. At that time, it was understood that it would happen for the first two, and then it said it was not set in stone and would likely be reset later down the road.
It was an interesting discussion by this committee in 2017 as well, knowing that the first two would probably be incredibly important, but the speed at which they would come after that would be one that would be open for discussion.
Whom did we consult? We have a list for all three reviews, where we list at the back of the review all of the communities we consulted: the stakeholders, the non-governmental organizations and the Indigenous organizations.
Your question about reviews —
Senator Moodie: Can you name the Indigenous communities? We are having a difficult time getting their voices at this committee. If you can name the folks whom you have spoken to so that we can have it on record that they were consulted and this was their opinion, then that would be helpful.
Ms. Weber: Your question is good. We did not consult on the two years to five years. We took the feedback from when we were doing the legislative reviews and heard that the amount of time that was allocated for the consultation was not adequate and it was fast. So we didn’t consult on the two years to five years, but we did engage with them on the reviews.
On the third point, the first legislative review was on the vaping provisions of the act. We dug deep into that. Because vaping was newer than tobacco products, we knew we wanted to handle that first. The second legislative review two years ago was on tobacco products. We didn’t jump back into vaping because we had just conducted vaping and had just submitted that report, so then we did the tobacco products. We looked at how we’re making progress on the legislative provisions on tobacco under the TVPA.
We submitted that one, and then we were still in the early stages, so we asked ourselves, “Why don’t we dig deeper into compliance and enforcement in the third one?” Then we started digging deeper into compliance and enforcement in our third review.
For our fourth review, whether it’s in two years, three years or five years, the topic will be determined based on where we’ve seen any changes, where we’ve seen a change in data and where we’ve had any discussions about policy considerations.
[Translation]
Senator Petitclerc: My question is also for you, Ms. Weber, even though several questions have already been asked.
As you mentioned, there was a lot of discussion at the time about Bill S-5. I think it is important to note that the two-year period was not an accident. We’ve had conversations and debates about the two-year period rather than the five-year period. Committee members were aware that the five-year period was more common and that the two-year period was exceptional in its own way.
The idea behind Bill S-5 was to take a precautionary principle, because there were a lot of concerns about vaping. We knew very little — or at least much less — about it at the time. There were many concerns that, when you look at the numbers, have turned out to be true, unfortunately.
This precautionary principle was truly the basis for Senator Seidman’s amendment. When we listen to Senator Martin and Senator Osler, the survey results . . . . Earlier, it was mentioned that the figure rose from 5.7% to 20.2%, followed by a possible decrease. So we don’t need this data as quickly as possible to be able to respond. The initial goal was to have a very flexible bill that would allow us to react as quickly as possible when concerns arise, particularly regarding young people.
Shouldn’t we keep the precautionary principle so that we can respond very quickly? For example, wouldn’t a period of two or three years be better than a period of five years?
[English]
Ms. Weber: Thank you for the question.
It’s important for me just to repeat that we can take action in legislation or regulations at any time.
Also, the data we collect is released every two years, so we do not stop collecting data; it is not linked just to the legislative review. We fund surveys that are geared toward understanding adult smoking, youth smoking, youth vaping and adult vaping. It’s important for us to keep funding those surveys and that data collection every two years so that we can monitor changes.
The legislative review does allow us to review it every two years. It also takes resources from other areas of the organization where you can advance changes. It is a balancing act, to be honest with you. It is a very important balancing act. You want to be able to act and be nimble and take action when an issue comes about and, at the same time, have a regular legislative review. We are not proposing to stop doing these.
Some pieces of legislation don’t have them. Some pieces of legislation do it once every five years and then never again. This one is proposed to be kept in place once every five years and ensure data collection every two years and have the space in between to take the action that is needed.
[Translation]
Senator Petitclerc: Is there a way for this committee to obtain information as to which organizations consider the two‑year period to be too short? Is it representative of the community as a whole and all stakeholders? What are those organizations? Knowing the organizations involved could also help the committee in its study.
[English]
Ms. Weber: It is important for me to repeat that it is not that anyone put up their hand and said, “You should move this from two years to five years.” The concerns we heard in our consultations had to do with the speed at which we had to consult. For a two-year cycle, you’re essentially putting out the policy document for consultation, you’re gathering the feedback and you’re then having small sessions. You’re moving very quickly.
The Deputy Chair: Wonderful job.
Senator Muggli: Ms. Weber, you get a break. I am going to switch gears and ask a question to Ms. Yu.
I’m wondering if you can tell us: Why now? Why now with this change? Did something happen? Was there a court challenge? What initiated this change now?
Ms. Yu: That’s a good question. It’s been an existing one, but a low, kind of burbling one, I guess, as far as the policy gap is concerned. But, as I mentioned, there seems to be a bit of international momentum toward the attention paid to the non‑compete agreements. And, as I mentioned, the OECD conducted a study in July of this year of many countries, so it is a topic of interest in international circles. That’s the thing: Many countries were starting to focus on this, and Ontario already took a step in 2021.
Senator Muggli: So we didn’t really have anything happen? We just want to follow along with everybody else and do what they’re doing, whether it’s right or wrong?
Ms. Yu: That is the policy answer. The real answer is that it was committed in Budget 2025.
Senator Muggli: Okay. That is a perfectly fine answer.
For the exemptions, are the exemptions considered best practices around the world? I’m just thinking that maybe senior executives might be the ones most affected by this. I don’t know. They may be the very people who are really restricted in moving around and finding related work.
Ms. Yu: That’s a really good question: Why would we penalize those senior executives? The balance was to find which interests, right? Are you protecting the freedom of the employee, including the CEO, or the competitiveness of the business interest?
In the case of senior officers, like the C-suite positions, they tend to be the ones in possession of the competitive business knowledge, and that’s why they possess more information, more strategic plans and things like that, which could actually negatively affect the business if they went to another firm and used that knowledge against the existing firm. So that’s one.
The other consideration we had is that those senior executives tend to have more power in terms of bargaining — they can negotiate their benefits. They have the power to — many of them have shares or benefits like that, which they can negotiate. The Canada Labour Code is really to set the floor for everybody, and it’s to protect the rest of the population.
Senator Muggli: For senior executives, is that a best practice in other jurisdictions, typically?
Ms. Yu: Similar to any other —
Senator Muggli: I would argue there are a lot of people just a few levels below who would have a very similar awareness.
Ms. Yu: That was the balance we had to strike. Do we go wide with exemptions, or do we really narrow it? And it was a bit of a balancing act.
When we held —
Senator Muggli: I think it is good for lower-level people to not be impacted by that, for sure. I mean, that’s not even particularly fair to somebody trying to get out there and find a new job.
Ms. Yu: Correct. Yes. So that’s good.
In terms of limiting it, Ontario’s exemptions are slightly wider than ours. They actually list nine position titles, including chief administrative officer and titles that don’t really exist in our sector, and that is why we didn’t include them. They have nine positions, plus other executives. It can be very big.
For example, they would cover people with inflated titles. You could be called “chief whatever,” and you could be covered by it, and that would certainly not be the intention of our proposal. So we have used a way to say CEO and people reporting to the CEO, which are really the top C-suite positions.
Senator Muggli: What will be the review mechanism for this?
Ms. Yu: We would continue to monitor the implementation, obviously.
Senator Muggli: How do you monitor?
Ms. Yu: Usually, we get complaints. That’s what we do. We hear complaints, and as I mentioned, we have regulation-making authorities to make adjustments should they be needed.
Senator Senior: Ms. Weber, I’m going back to you. Thank you for standing your ground a bit in terms of explaining everything to us. But I do need to poke away a little bit more. I still remain somewhat unclear as to the following: If two years is working to actually reduce the rates, why touch it? And so I have a similar question to the one from Senator Muggli. What’s the impetus for making the change now?
Then I’m also interested in the five years and how that will look very different from the two years. It’s more than double the amount of time for the review. Will there be a comprehensive review, or will you have a thematic focus in the five-year period?
Ms. Weber: Thank you for the question. I’ll start with the second part of it. With a five-year review, we will have — from my experience, my team also led the five-year review of the Cannabis Act a few years ago. Because we had five years leading up to it — and it was Morris Rosenberg and an independent group who did the review — they were able to go across the country and talk to licence holders, Indigenous partners and persons with lived experience about the impact of the Cannabis Act as well as suggestions and recommendations that could be made to that piece of legislation.
I think over about 18, 20 to 24 months, they were out there consulting and listening. Then they took the time to develop the report, taking the data and making the recommendations. It was a one-time report, but the amount of time that the five years gave them for across-the-country, in-depth consultation was so important.
Right now, we are on a two-year cycle, and it’s not to say it is broken. It is not broken. What can be done, though, is improve it. We can improve it by giving the space to have consultation and engagement across the country and with the stakeholders who are in the rushed, cyclical two-year review right now, which we have not seen in any other federal piece of legislation. But it is so not to say that we have won the battle on vaping or tobacco.
Senator Senior: I’m curious about how deep and wide it will be in comparison to what is done now.
Ms. Weber: Ideally, yes, it would give us the space. Yes, it would be deep and wide and give us the space for complexity, for breadth and for the extent of the consultation. That’s from our experience where we have done it for the Cannabis Act as an example.
Senator Senior: And how about the first question of why now?
Ms. Weber: Why now? Well, for this: experience. We went back to the transcripts from when the TVPA came in. It did note that getting the first two done in a two-year cycle was important, but it was not something “set in stone,” which I think was the quote at the time, and it was something we could revisit.
Given the timing at this point, where we have done three in a row, delivered them on time and with the feedback we have received, it made sense at this particular time to move to this new cycle. It reflects in part what was discussed in 2017-18.
[Translation]
Senator Boudreau: My questions are also for the official from the Department of Health.
I want to talk about a specific initiative that is related to all of this. As you are no doubt aware, a number of organizations have been working for years to ban certain vaping products in Canada, particularly flavoured products. They are sold in brightly coloured packaging and contain e-liquid flavoured like candy, desserts and fruit in an attempt to attract young people.
It has been more than five years since restrictions on flavoured vaping products were published in the Canada Gazette, but they have still not been finalized.
First, can you tell us whether the proposed changes to Bill C-31 will have an impact on the implementation of these restrictions? I think they are very important.
Second, can you tell us when the government plans to finalize and implement these restrictions? That was over five years ago.
Ms. Weber: Thank you for your questions.
[English]
The first thing I would say is that, no, the change will not impact it. The regulations were first published in the Canada Gazette, Part I, in 2021. Since that time, we have done three legislative reviews. In some of the consultations, we heard from stakeholders who have advocated — as you have yourself — that a ban in this space is important, and others have said that they have different views. The change in this act would not impact whether regulations go forward.
What I can say is that the regulatory package remains in our Forward Regulatory Plan that we publish on our website. It indicates there that we don’t have the timing for it. I don’t have the timing to share with you today, but what we continue to do is look at what is happening across the country.
Provinces and territories have taken steps because there are different views across this country. For example, Quebec has prohibited the sale of flavoured products; they allow tobacco and unflavoured. We see in Ontario that flavoured products are limited to specialty stores, but they allow tobacco and unflavoured in gas stations and retail outlets.
We have seen in Alberta that there have been no measures and that they have the ability to purchase flavoured products broadly. I could go across the country, but it does vary depending on the constituency and the province.
We continue to monitor what is happening in those jurisdictions to see the impact that the ban is having on youth access, adult access and then also compliance and enforcement related to the illicit market.
Senator Boudreau: If I may, just on the one hand, we are saying we have done three reviews. We can push the next one further down the road. We have done lots of initiatives. Yet this is one initiative that has been there for over five years. The tobacco industry is saying that this should be put in place.
How much consultation and how much review do you have to do in the country and elsewhere to realize that this is the right thing to do and to simply get it done? If this goes, you’re going to have a little more free time on your hands, apparently, since you’re only going to have to review it in five years, so maybe it gives you enough time to actually get this across the finish line because it will make a big difference.
Ms. Weber: That regulatory package is not held up because of time or resources. What we have seen is that provinces and territories have taken different approaches across this country. We continue to monitor the data to see the impact that those different measures are taking. But your point is well taken that there is a lot of interest in moving that forward. It doesn’t mean that we don’t do other things in this space, but I won’t get into those.
Senator Arnold: Thank you all for being here today. I would just like to follow up a bit on Senator Boudreau’s point. What triggers? If you have the data coming in every two years and you see something that is really concerning, what is the process to action a regulatory change?
Ms. Weber: Thank you for the question. We do advance regulations quite frequently. What happens is we will do a pre‑consultation. We will talk to a variety of stakeholders to hear their views on a particular issue. Then we draft the regulations, and they go to the Treasury Board. Then they are published in the Canada Gazette, Part I, for a consultation period that can range from 30 days to 180 days or 90 days. We take that feedback and we integrate it into the regulations, and then we update them and publish them in the Canada Gazette, Part II, and implement them.
In the regulatory process, if the change that is needed is under the enabling authorities of legislation, we can move regulations at any point through the process of the Canada Gazette, Part I and Part II.
Senator Arnold: Thank you for that.
Ms. Yu — I want to spread it around — is this legislation the same as Ontario’s legislation? Did you learn anything from Ontario? To Senator Muggli’s point, I got that one, but is it all the same, or were any lessons learned from their implementation since 2021?
Ms. Yu: I’m happy to answer that question. It is similar, but not the same. We delved a little bit into the exact positions that are exempt. Ontario’s exemptions are a little wider with specific titles that don’t necessarily mean the same thing everywhere, so we adjusted it so that it’s really contained to the higher ranking. But for where it is the same, both Ontario and this proposal exempt the sale of business, so that is the same.
What is slightly different is the coming into force that I mentioned earlier. Ontario grandfathered all the existing contracts. Their ban that came in 2021 is narrowly effective, if you will, only for the new ones that have come into place since 2021. Ours is more encompassing in the sense that there’s nothing new, and for anything existing, they become unenforceable after one year. These are the key similarities and differences.
Senator Arnold: Excellent. Thank you.
Senator Moodie: I’m afraid I’m stuck on you, Ms. Weber. As I think about the new AI world we’re in, not only do we have digital tools that allow us to more quickly and more rapidly and more effectively consult where people have access, but we can also collate, analyze, gather and understand the data much more quickly. I’m worried that the consultation process that we’re talking about hasn’t changed with time, as we are moving into an era in which we can and have the capability to move faster with consultation, where cultural mores allow us to. I understand there will be people who don’t want that. But there is certainly a capability to move consultation in a much more efficient way.
We are hearing from you that it’s not a resource issue. I’m just wondering how you’re tying the two things together and why we’re stuck in a five-year cycle just because we have always done it this way. You keep coming back to that same kind of understanding: We’re the only people doing it at two years. Everybody else is doing it at five years. That’s been our practice. Life is changing. I’m wondering how the Government of Canada is changing to understand their new capabilities. Why not use those tools in this foray to move consultation more quickly? Have you thought about that? Is that something your group has discussed?
Ms. Weber: That is a great question. We do. It’s not only for legislative reviews, but also for when I was talking about regulations a few minutes ago. We can use AI tools to help us with the analysis of the data that we receive, especially through written submissions. You must feel it here at this committee. A long written submission will come in, and we’re able to use AI tools to extract the key parts of it. But what we get is meaningful distinctions-based engagement, where we have received feedback from some partners whom we have talked about: First Nations, Inuit and Métis. It doesn’t mean that we can’t do that through AI. AI is a fabulous tool, and analysis can be done very quickly.
We do suggest, though, based on our experience in other reviews and the speed at which these reviews do happen that meaningful engagement does take more time. It also gives us the ability to implement change and to monitor change. There are a couple of factors, as I have mentioned.
Lastly, I want to reinforce that it does not require having a legislative review for us to take action through legislation, regulations or policy.
Senator Osler: My question is for Health Canada. Thank you for mentioning that regulatory changes don’t require parliamentary review. As you know, tobacco and nicotine products are evolving rapidly. Can you reassure this committee and articulate where the government gets its quantitative data points on nicotine and tobacco usage in Canadian youth, such that if you’re collecting data points continually in between the five-year reviews and if you see an area that needs a regulatory change, you can rapidly make those changes to the regulations? Where are you getting the data points from?
Ms. Weber: Mr. Appleby mentioned it earlier, and I’ll just repeat the surveys we are using. We are using the Canadian Health Survey on Children and Youth, which surveys youth aged 12 to 17 years old living in the 10 provinces. We also use the Canadian Student Alcohol and Drugs Survey, which surveys students in Grades 7 to 12 attending public, private and Catholic schools in the 10 provinces. We use the data from these surveys to help us monitor impacts in that age segment.
Senator Osler: Are those surveys annual?
Ms. Weber: Every two years.
Senator Osler: Any other quantitative data points? You mentioned ongoing consultations and stakeholder feedback.
Ms. Weber: Yes, ongoing consultations. Sometimes stakeholders will send us data. There could be a researcher at Western University or at the University of Guelph. Internationally, we get data points. Sometimes Statistics Canada will share some information. There are a variety of sources. We take sources at any time. We are in regular consultations with stakeholders. Those are the two that we fund and pull from and monitor trends from. You have to put into government your sources from where you monitor your indicators, but we take quantitative data from a number of sources.
Senator Osler: Thank you.
The Deputy Chair: I have just one minute to ask a question. Based on the Canadian Paediatric Society brief that was sent — and you can answer this in writing because we won’t have enough time — are you opposed to a three-year review? I say that because we know that substance use starts in adolescence, and nicotine is often a gateway drug. Once you are in, you are in. That’s the first question.
Then I’ll go back to Senator Moodie’s question on which Indigenous communities you consulted. Could we have a list of those names? Thank you.
Senators, this brings us to the end of the first panel. I would like to thank the witnesses for their testimony.
Senator Moodie (Chair) in the chair.
The Chair: Senators, our second panel will continue with the discussion of Division 9, which amends the Canada Labour Code.
Joining us for this panel, from the Canadian Labour Congress, we welcome Lily Chang, Secretary-Treasurer; and Lisa Freeman, Senior Researcher. And from Federally Regulated Employers – Transportation and Communications, we welcome Derrick Hynes, President and Chief Executive Officer; and, by video conference, Jackie VanDerMeulen, Legal Counsel. Thank you for joining us today.
For your opening statements, you will each have five minutes, followed by questions from committee members.
Lily Chang, Secretary-Treasurer, Canadian Labour Congress: Good afternoon, everyone. Thank you for providing me the opportunity to speak with you today.
My name is Lily Chang. I am the Secretary-Treasurer of the Canadian Labour Congress, or CLC, which is Canada’s largest central labour body. I am proud to be here today representing over 50 national and international unions representing more than 3 million unionized workers.
We are here today to discuss Division 9 of Part 4 of Bill C-31, which aims to amend the Canada Labour Code by prohibiting non-compete agreements, or NCAs, and other employment-related restrictions. This ban on NCAs would impact federally regulated workers in sectors such as banking, telecommunications, broadcasting, railways and interprovincial road transportation, and air transport.
The CLC welcomes the government’s intention to ban the use of non-compete agreements in federally regulated workplaces in Bill C-31. NCAs are usually bundled with other restrictive covenants, like non-solicitation agreements and “no-poach” clauses, that function as NCAs and may constrain post-employment decisions. Therefore, we are glad to see that “other employment-related restrictions” are included in this prohibition.
The proposed prohibition on NCAs is an important first step. Canada now follows the Government of Ontario and other OECD states that have taken similar actions. Even though Canadian courts commonly find NCAs unenforceable, they are prevalent and have a chilling effect on worker mobility. A ban on non-compete agreements is appropriate. It provides clarity for employers, employees and adjudicators.
Non-compete agreements impact workers. These and other restrictive covenants in employment contracts can stifle job mobility and growth-enhancing job reallocation, and they may slow productivity growth and undermine the efficiency of the labour market. Strict enforceability of NCAs may thereby adversely affect earnings for all workers by slowing the frequency at which job seekers receive employment offers.
The CLC supports this ban on NCAs and would like to see additional measures to further strengthen this prohibition and reduce restrictions covered by Part III of the Canada Labour Code.
First, we would like the government to consider the unequal power relations in employment when prohibiting NCAs. A specific prohibition on employer penalties or reprisals is necessary to protect workers in low-pay jobs, especially when restrictive covenants impose training or benefit repayment penalties if an employee resigns.
Second, the federal government could play a leadership role in gathering Canada-specific data on restrictive covenants in employment contracts by working with provincial and territorial governments to sharply restrict NCAs in all jurisdictions and industries in Canada.
Third, we ask that this prohibition on NCAs be enforced to ensure that employers are held accountable.
Fourth, we ask the federal government to not only reject the grandfathering of existing NCAs but also to remove the section of Bill C-31 that allows NCAs to remain for one year to the day that the changes are implemented.
In closing, the CLC supports this prohibition of non-compete agreements and other restrictive employment agreements in federal workplaces in Bill C-31, especially given the prevalence of non-compete agreements in industries and occupations characterized by low pay and significant imbalances. Thank you.
Derrick Hynes, President and Chief Executive Officer, Federally Regulated Employers – Transportation and Communications: Good evening, senators. Thank you for the invitation to appear in front of you this evening. My name is Derrick Hynes and I am the President and CEO of Federally Regulated Employers – Transportation and Communications, or FETCO. Joining me this evening — in a virtual format — is legal counsel to FETCO, Jackie VanDerMeulen, who is a partner at Fasken.
This is not an example of me lawyering up. This is because I know you will ask questions that I can’t answer, and she is a legal expert, so I think it will be helpful to the conversation.
By way of a quick introduction, FETCO is an employers’ association representing most of Canada’s major airlines, courier companies, maritime employers, railways, telecom firms and others in their capacities as employers.
With respect to Division 9 of Part 4 of Bill C-31, we all know it would prohibit federally regulated employers from entering into or requiring an employee to comply with a “non-compete clause” or certain “other employment-related restrictions.” We appreciate that the proposed prohibition of non-compete clauses follows a trend already implemented in Ontario and several U.S. states toward restricting post-employment non-competes. At the same time, the bill contemplates that limited exemptions are needed because non-competes can serve important business purposes, particularly in respect of certain executives and business owners who can be indistinguishable from the business itself.
In the interests of time this evening, I will jump straight away into a series of recommendations that our members feel would improve this portion of Bill C-31. I’d be happy to then discuss further in the Q and A.
Our first recommendation is to allow some form of grandfathering or extend the transition period. This draft bill voids all existing non-compete clauses after a one-year transition period. Our suggestion is that the government consider one of two alternatives. Either apply these changes prospectively only on forward-looking agreements after coming into force, rendering all current agreements as grandfathered and still enforceable, subject to common law limits — this was the approach taken in Ontario — or extend the transition period from one year to three years to allow employers the time to renegotiate compensation and retention arrangements with affected employees given the trade-offs made and other context-specific contractual terms negotiated at the relevant time these non-competes were agreed to.
Our second recommendation is to broaden senior executive exemptions in line with what practically constitutes an “executive.” The current list of senior executive exemptions based on specific and select titles is unnecessarily rigid. Executive titles are not standardized across industries, may change over time as organizational structures evolve and can be superficial or inconsistent indicators of actual seniority and strategic importance within an organization.
The policy intent of the exemption is to recognize that members of an employer’s executive leadership team occupy a qualitatively different position with access to competitively sensitive information and meaningful bargaining power that justifies the continued availability of non-compete protections. It would seem logical, then, that those directly in the CEO’s sphere might be best identified as worthy of an exemption.
In the least, the current list is incomplete. Missing are titles such as chief administrative officer, chief corporate development officer and chief marketing officer. Some of these are already enumerated in the Ontario legislation. Ontario also extends the exemption to any other executive who “holds any other chief executive position” not specifically enumerated, providing a more purpose-based exclusion.
Our third recommendation is to seek early clarity and industry consultation on the definition of “other employment-related restriction.” This category is left to future regulations, raising some uncertainty about where the government might go on next steps. That said, our suggestions are the following: that the regulations be published in draft for consultation before the proposed amendments in Bill C-31 are brought into force; that the definition be limited to restrictions that are genuinely analogous to non-competes; and that FETCO and other key stakeholders be given a formal consultation role in developing the regulations.
In the least, we recommend an express statutory or regulatory carve-out confirming that non-solicitation and non-disclosure clauses are not non-compete clauses or other employment-related restrictions, mirroring the clarification provided in the Ontario guidance. This would reduce interpretive uncertainty without undermining the policy objective.
Our fourth recommendation is to clarify the interaction with sale-of-business transactions involving federal businesses. We suggest greater clarity on how the sale-of-business exemption is intended to apply. This is particularly important because this issue has emerged as a complicated factor in the Ontario context. The hope is we can learn from their experience and not repeat mistakes. The exemption in this bill, as currently drafted, refers to “a person who sells their federally regulated business” and becomes an employee of the purchaser. This is language that could be read as requiring personal ownership — in other words, as a sole proprietor — thereby excluding a more common scenario where a group of shareholders may sell certain shares and enter into non-competes.
Finally, in the interest of time, our last recommendation is to carve out non-compete restrictions where employees continue to receive payments. We think a carve-out is justified for non‑compete restrictions that apply during a period in which the employer continues to make payments to the employee following the cessation of employment — for example, as part of a severance package.
In this situation, where an individual remains in receipt of ongoing payments from the former employer, a non-compete is not such a burden. That former employee is not being restrained from earning a livelihood but rather is being compensated in exchange for a time-limited commitment not to compete.
Thank you.
The Chair: Thank you, Mr. Hynes.
We will now proceed to questions from committee members. For this panel, senators will have five minutes for your question, and that includes the answer. Please indicate if your question is directed to a particular witness or to all witnesses.
Senator Burey: Thank you so much for being here.
I was having a little bit of what Ms. Chang said and then what Mr. Hynes said. I heard that you noted, Ms. Chang, that this was the first step in this legislation and that you had further recommendations on unequal power, reprisals, benefit repayment and those sorts of things. Moving over to Mr. Hynes, we heard the exact comeback or opposite of that, saying that we should actually allow these things.
Looking at the Ontario example, looking at best practices and also protecting the mobility of workers, how do you think the government should navigate this landscape?
Ms. Chang: This is not the first time that Mr. Hynes and the Canadian Labour Congress, or CLC, would have slightly different ways to proceed, but I’m going to defer to my colleague Lisa Freeman to answer that question.
Lisa Freeman, Senior Researcher, Canadian Labour Congress: Thank you.
Just to answer your question as to how the government can navigate between the differences and just to make sure I have it clear — sorry, can you repeat that again?
Senator Burey: How do we navigate between your statements of next steps and what Mr. Hynes said are things that should be in the regulations?
Ms. Freeman: For me, the one thing that I heard that we’re different on is the difference of the grandfathering in and what is happening in Ontario. In terms of really protecting workers, we did ask in consultations to not have anything grandfathered in, so having the one year seems to be a compromise to ensure that businesses and employers have time to change what Mr. Hynes had spoken to. We would ask the government to keep that.
Maybe we need to consult with businesses and employers to extend it a little bit, but at the same time, given how Ontario worked, it really doesn’t seem like it is enforced for any of the workers who are already there. It was grandfathered in; people still have non-compete clauses. So we would like to see in the federal sector that employees don’t have that and workers don’t have the non-compete clause.
One year would be our compromise, but we prefer nothing at all so that it can be active immediately. It won’t impact labour productivity. At this time, we are in a really heightened economic problem, and it is a hard time for workers right now, and we want people to have jobs. We want them to have well‑paying jobs. We don’t want limitations on employment or limitations on economic growth.
We think that not having any of the grandfathering in would be the best for the economy and for workers.
Senator Burey: The next question is on the enforcement and maybe your experience on both ends, especially with the Ontario experience and, of course, the OECD countries that you mentioned.
Will the Canada Industrial Relations Board, or CIRB, have enough resources? I would be expecting more claims. What should the government be doing to prepare for this from an employee’s perspective and then from an employer’s perspective?
Ms. Chang: Certainly, from our perspective, if we are going to have a piece of legislation, we want there to be consequences and enforceability. Too often, there is not enough staffing to allow for proper enforcement.
For this particular piece as well, we are looking for enforcement, and we are looking for proper resourcing of the CIRB to ensure that if we’re going to put a piece of legislation in and change it, then there is enforceability.
Ms. Freeman: Just to add one thing to what Ms. Chang said, recently I have been in conversation with some of our members of the Canadian Union of Public Employees, or CUPE, considering what is happening with the CIRB, and we all know what is happening with section 107 in Canada.
The CIRB is tight. We need more people on the labour board and we need more people on the industrial relations board in order to do everything that is happening around section 107, especially given what was tabled this week with Bill C-39.
I think hiring more people for the CIRB is the way to go in order to make sure this enforcement happens, since we know there might be more and more activity for them in the coming years.
Senator Burey: Mr. Hynes, did you want to add something?
Mr. Hynes: You have touched on an area where there is common agreement. In fact, as the person who speaks in the federal space on behalf of employers, I have co-written at least three letters with the President of the Canadian Labour Congress — current and past — suggesting to the government that the board needs to be better resourced.
We are aligned.
Senator Burey: Thank you.
Senator Boudreau: On the surface, this seems to benefit workers. I, for one, am okay with that and in favour of that.
My first question would be to Ms. Chang, and you touched on it in your introductory remarks, but I’d like you to just maybe expand on that a little more.
Now that the federal government is basically following, I guess, Ontario’s lead in this case and implementing these changes, is there an expectation that other provinces and territories will do the same?
If so, can you speak to that? Are there other provinces that are on the verge of doing this? Where does it stand in terms of other jurisdictions in the country?
Ms. Chang: Certainly, we would hope and expect that other provinces would follow suit. Often, what does happen is that if there is some legislation that is working well in one jurisdiction, then another province or territory — or if it’s at a provincial level, then the federal level will follow suit. We think this is a good thing. We think this will help workers in this particular economy, as we have stated earlier.
If we’re looking to improve things for workers and improve mobility, then I think that if this is something that the federal government is doing, other provinces would be interested in following suit.
Senator Boudreau: Nobody is on the doorstep and ready to do it just yet that you’re aware of?
Ms. Chang: Not that I’m aware of, no.
Senator Boudreau: Another quick question that would be more for Mr. Hynes is when we talk about the two exemptions, the senior executive is fairly simple to understand, but the second one is a little more complex. Could you give a concrete example?
To me, if I sell my business and then I go to work for that business, there has obviously been an agreement there. Why would there need to still be a non-compete clause?
I don’t know if you could give a concrete example of a situation like that which would apply here.
Jackie VanDerMeulen, Legal Counsel, Federally Regulated Employers – Transportation and Communications: Mr. Hynes, would I be able to jump in on that? I’m sorry, senator, if that is okay.
I work at Fasken, which is a very large corporate law firm. We also regularly support corporate transactions. Almost every corporate transaction that I have seen come across my desk has had a situation where you have an employee who is also an owner, and they are working for that business, and they are highly integrated in that business. As Mr. Hynes said at the beginning, they essentially are the business. They are quite indistinguishable.
Part of what the purchaser is paying for when they are buying that business is often their employment and the continuity of their business going upwards, but they also want to ensure that this person is not going to work for them for six months and then go and start the very same business in competition with them.
I think part of the challenge that Mr. Hynes mentioned with the provisions, as they are currently drafted, is that it assumes a much more simplistic model than what we see in reality, which are really complicated transactions where you have a whole bunch of different people. And often we’re not talking about someone who is making $40,000, $50,000 or $100,000 a year; we’re talking about people who are making salaries up in the millions and who are getting even more in equity as part of that transaction.
From the business perspective, it’s really important that we have certainty around what those parameters are and that it is not an attempt to try to restrict your typical worker. It is really trying to ensure that we don’t blur the lines unnecessarily with the true business purpose that often comes with non-competes.
I hope that answered your question.
Senator Boudreau: It did. Thank you. That was very helpful.
Senator Muggli: I will start with Ms. Chang. You talked about further actions that could be pursued in this legislation. Do you know — or maybe the legal counsel folks here know — if there are any court challenges in play for some of those pieces that might result in some of those changes taking place?
Ms. Freeman: At this time, I don’t know of any at the moment. I am not legal counsel. I’m a senior researcher, but I have a background in law. From what I have read and researched, courts do find it hard to enforce these non-compete clauses. In some ways, if courts can’t enforce them, why do we have them in place if that’s the reason? I haven’t heard of any challenges recently. I have not done significant research to really dive into it, but maybe the counsel does.
Senator Muggli: Happy to send it over to the remote guest.
Ms. VanDerMeulen: Thank you very much. Yes, we do see a lot of litigation in the area of non-competes, which I think is part of the context when you are considering the issue of grandfathering. The way I explain it to a client generally is non‑competes are presumptively unenforceable in common law jurisdictions in Canada, and my understanding is the same applies in Quebec. So you really have to fit yourself into a very narrow exemption or situation for the courts to actually uphold them. There are many instances of the courts striking them down where they are overly broad in terms of geographic scope, et cetera.
From my perspective, when you are considering grandfathering in agreements that have been negotiated in very often particular circumstances, often for significant equity and other things on the other side with these senior executives, those sorts of considerations are still going to be considered by the court. Even if the person doesn’t have recourse to the CIRB, for example, because the exemption applies, they can still go to the court and say, “This isn’t enforceable for X, Y or Z reason.” So you still have the balance there.
Senator Muggli: To relate it specifically to the federal civil service, have there been court challenges specifically related to these agreements with federal civil service employees?
Ms. VanDerMeulen: That I’m afraid I can’t comment on. I don’t know the federal civil service as well. In the private sector, certainly there is a lot of activity —
Senator Muggli: Just trying to understand the magnitude of this issue in the federal civil service. Have you received complaints from employees who have been bound by these agreements?
Ms. VanDerMeulen: Sorry, was that one for me? I haven’t.
Senator Muggli: It’s for anybody. How about Mr. Hynes?
Mr. Hynes: What I would say is — and, Ms. VanDerMeulen, correct me if I’m wrong here — the practice on the employer side is that these are for very senior roles. So the intention is not to take away anybody’s ability to leave an organization and go find another job. These are for very senior roles in very specific circumstances.
Senator Muggli: But it doesn’t seem like that has been an issue in the federal civil service to this point that we’re aware of? I’m just trying to figure out how this came about. I know it was in the budget, but why? Or it was in the election platform budget; I can’t remember.
Mr. Hynes: I think the reality is — and Ms. VanDerMeulen alluded to this earlier — common law principles evolve over time. Our understanding of how some of these things get interpreted evolves over time. Our position has always been that these are exceptional circumstances reserved for, in many respects, just the most senior of the senior. They are entered into almost exclusively on a voluntary basis, and there is a transaction at play when these agreements are agreed to.
Senator Muggli: It seems like we are doing housekeeping here. Okay, that’s all.
Senator Senior: I’m sort of in that place of being perplexed, but I’ll accept housekeeping.
I think two or three of you mentioned the importance of resourcing the CIRB to the point where it needs to be more effective, especially with this incoming bill. Are you aware of any measures that the CIRB is taking to prepare for Part 4 of Bill C-31?
Ms. Chang: No.
Senator Senior: Okay, that was a nice quick answer. Now I have to back it up with something else.
I was thinking about the CLC and its role. So —
The Chair: Senator Senior, sorry to interrupt, but if you recall, there was a witness who could not be here today. If you are comfortable, we could direct that question to her because that sounds like a question she might be able to answer.
Senator Senior: Thank you, Madam Chair. Yes, I will save that question to be directed accordingly.
The Chair: Can you read it into the record for us, please?
Senator Senior: What measures, if any, is the CIRB taking to prepare for the coming into force of Division 9 of Part 4 of Bill C-31?
I don’t think I heard of any proposed amendments. Maybe, Mr. Hynes, you mentioned some, but I’m curious about Ms. Chang from the CLC. Are you proposing any amendments to this bill?
Ms. Chang: We did talk about the grandfathering piece. We know that is out. But there is still the one-year extension period, and we were saying it would be nice to remove that as well. If you are having a good thing, why should people wait? That would be one of the things that we were mentioning about possibly amending. I think that was the main piece pretty much.
Senator Senior: I don’t think I have seen a bill with such cross-sectoral agreement.
The Chair: Thank you very much, senators. This brings us, in fact, to the end of this part of our meeting. We have some time before we have completed our meeting, and I would like to take this opportunity, with your agreement, to go into a brief in camera discussion about tomorrow’s meeting.
Thank you very much to our witnesses for being here today and for helping us understand some of the more complex nuances of the bill. Thank you.
(The committee continued in camera.)