Are Non-Compete Agreements Enforceable in Ontario?
Ontario banned most employee non-competes in 2021. If you have been told a non-compete stops you from taking a new job, it very likely does not. Here is the law.
Key takeaways
- As of October 25, 2021, Ontario banned employers from making employees sign non-compete agreements. Most are now void.
- There are two narrow exceptions: the sale of a business, and certain C-suite executive roles.
- Even non-competes signed before the ban are presumptively unenforceable unless they are narrowly reasonable.
- Non-solicitation clauses are different and can still be enforceable.
- If you have been told a non-compete blocks you from working, get it checked. It very likely does not hold up.
In this article
Non-compete clauses scare people out of taking better jobs every day, usually for no reason. Ontario changed the law in 2021, and most employee non-competes are now unenforceable. If a former employer is waving a non-compete at you, the odds are strongly in your favour.
✅Quick answer. Ontario banned employee non-compete agreements as of October 25, 2021, through the Working for Workers Act. With two narrow exceptions (the sale of a business and senior executives), an employer cannot enforce a non-compete against an employee. And even older, pre-ban non-competes are presumptively void at common law unless they are tightly reasonable. Non-solicitation clauses, which are different, can still apply.
Are non-compete agreements enforceable in Ontario?
For most employees, no. The starting point is now that employee non-competes are prohibited and unenforceable in Ontario. That is a major shift from the old days, when employers routinely inserted them and used the threat to keep people from leaving. Today, a non-compete in your employment contract is much more likely to be void than valid.
The 2021 ban on employee non-competes
Through the Working for Workers Act, 2021, Ontario amended the Employment Standards Act to prohibit employers from entering into non-compete agreements with employees. A non-compete caught by the ban is unenforceable. This made Ontario one of the first jurisdictions in Canada to ban them outright for employees.
The two exceptions
- Sale of a business. Where you sell your business and then become an employee of the buyer, a non-compete tied to that sale can still be valid.
- Executive roles. A narrow exception applies to senior executives (think C-suite, such as a CEO or CFO), not to ordinary employees or middle managers.
What about a non-compete signed before October 2021?
Non-competes pre-dating the ban are not automatically valid. They are judged under the common law rule against restraint of trade, which treats them as presumptively unenforceable. To stand up, the clause has to be reasonable in scope, geography, and time, and clear, and go no further than necessary to protect a legitimate interest. Courts strike them down regularly, often because they are too broad or too vague.
Non-compete vs. non-solicitation: an important difference
The ban targets non-competes, which stop you from working in the field. It does not ban non-solicitation clauses, which stop you from soliciting your former employer's clients or staff for a period. A reasonable non-solicitation clause can still be enforceable, so read your contract carefully: the two are often confused, but they are treated very differently.
What should you do if your employer tries to enforce a non-compete?
- 1.Do not turn down a job offer based on the non-compete before getting advice.
- 2.Keep a copy of your contract and any letter the former employer sends.
- 3.Note when you signed it, since the 2021 ban is a dividing line.
- 4.Get it reviewed. Most employee non-competes do not hold up, and knowing that early frees you to take the better job.
If a non-compete is part of a bigger dispute about how your job ended, see wrongful dismissal and severance pay in Ontario, or get a free review of your situation.
Frequently asked questions
Are non-compete agreements legal in Ontario?
For employees, generally no. Ontario banned employee non-competes as of October 25, 2021, except for the sale of a business and certain senior executives. Most employee non-competes are now unenforceable.
Is my non-compete from before 2021 still valid?
Not automatically. Pre-ban non-competes are presumptively unenforceable under the common law and only stand up if they are reasonable and narrowly drafted. Many are struck down for being too broad.
Can my employer stop me from joining a competitor?
Usually not through a non-compete, given the 2021 ban. They may, however, rely on a reasonable non-solicitation clause that limits soliciting their clients or staff. Have your contract reviewed to see which applies.
What is the difference between a non-compete and a non-solicitation clause?
A non-compete tries to stop you from working in the field; those are largely banned for employees in Ontario. A non-solicitation clause stops you from soliciting the employer's clients or staff and can still be enforceable if reasonable.
Carmen Reyes
Legal Writer, Mirza Law
Carmen Reyes is a legal writer at Mirza Law in Toronto. She writes about constructive dismissal, workplace changes, and how Ontario employees can protect themselves when their job changes under them.
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