Canada’s new wage-fixing rules kick in. How does the law work?

New rules prohibiting wage-fixing and no-poaching agreements kick in Friday in an effort to crack down on companies undermining competition at employees' expense.

New rules prohibiting wage-fixing and no-poaching agreements kick in Friday in an effort to crack down on companies undermining competition at employees’ expense.

Here is what employers and employees need to know about the new rules:

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.

It comes after the federal government made amendments to the Competition Act’s conspiracy provision in June 2022 as part of its Budget Implementation Act.

“Like price-fixing agreements between competitors, wage-fixing and no-poaching agreements undermine competition,” states the Competition Bureau, which is responsible for the administration and enforcement of the Competition Act.

“Maintaining and encouraging competition among employers results in higher wages and salaries, as well as better benefits and employment opportunities for 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.