Non-Compete Agreements in Ontario: Are They Enforceable?

If your employer has asked you to sign a non-compete agreement — or if you are worried about a non-compete clause in your existing employment contract — you are not alone. Non-compete clauses have become increasingly common in Ontario, but a major change in the law in 2021 means that most of them are now unenforceable.

The 2021 Ban on Non-Competes

Effective October 25, 2021, Ontario's Working for Workers Act amended the Employment Standards Act, 2000 to prohibit non-compete agreements for most employees. Employers cannot enter into a non-compete agreement with an employee, and any such agreement is void. There are only two narrow exceptions: non-competes agreed upon in the context of a sale of a business, and non-competes for C-suite executives (those holding the title of chief executive officer, president, chief administrative officer, chief operating officer, chief financial officer, chief information officer, chief legal officer, chief human resources officer, or chief corporate development officer).

Non-Solicitation Clauses Are Different

The ban on non-competes does not extend to non-solicitation clauses. A non-solicitation clause prevents you from soliciting your former employer's clients or employees for a period of time after leaving. These clauses are still permitted in Ontario, but they must be reasonable in scope, duration, and geographic area to be enforceable. Courts will strike down non-solicitation clauses that are overly broad.

What About Non-Competes Signed Before 2021?

The legislation applies to non-compete agreements entered into on or after October 25, 2021. Non-competes signed before that date are governed by the prior common law, which generally disfavoured non-competes but did not outright ban them. Even under the old law, non-compete clauses were only enforceable if they were reasonable and necessary to protect a legitimate business interest — and many were struck down by courts as overly broad.

What Should You Do?

If you have been asked to sign a non-compete or have one in your existing contract, get legal advice before assuming it is enforceable. Many employees limit their career options unnecessarily because they believe they are bound by a clause that may be void. Similarly, if you are an employer considering using non-compete or non-solicitation clauses, it is important to ensure your restrictive covenants comply with the current law.

Contact Ken Wise & Associates

Ken Wise & Associates advises both employees and employers on non-compete and non-solicitation issues. Whether you need to know if your non-compete is enforceable, want to challenge a restrictive covenant, or need to draft compliant employment agreements, contact us for a consultation.