Since October 25, 2021, Ontario has prohibited most non-compete clauses in employment contracts under the Working for Workers Act (Bill 27). This means employers cannot prevent you from working for a competitor or starting your own competing business after your employment ends.
Who Is Protected?
The ban applies to nearly all employees in Ontario, including:
- New hires
- Current employees being offered new agreements
- Terminated employees
The prohibition only affects agreements entered into on or after October 25, 2021—it does not apply retroactively.
The Two Exceptions
There are only two situations where non-compete clauses remain legal:
1. Senior Executives
If you hold a C-suite position such as CEO, CFO, COO, President, or other chief executive roles, your employer can still enforce a non-compete clause.
2. Sale of Business
If you sell your business and become an employee of the buyer, the buyer can require you to sign a non-compete agreement.
What About Old Contracts?
Non-compete clauses signed before October 25, 2021 are not automatically void. However, Canadian courts have always been skeptical of these restrictions and rarely enforce them unless they are:
- Narrow in geographic scope
- Limited in duration
- Clearly written and unambiguous
- Necessary to protect legitimate business interests
If your employer wrongfully dismisses you, they generally cannot rely on a non-compete clause—courts will not allow an employer to benefit from their own breach of contract.
What Employers Can Still Use
While non-competes are banned, employers can still use non-solicitation clauses and confidentiality agreements to protect their business interests. These are less restrictive and prevent you from:
- Soliciting former clients or customers
- Taking employees with you
- Disclosing confidential business information
What If You're Asked to Sign One?
If you’ve recently been terminated and your severance package includes a non-compete condition, you may have grounds to challenge it. Even if a clause appears in your contract, it may be unenforceable under current law.
If you were asked to sign a non-compete after October 25, 2021, you can file a complaint with the Ontario Ministry of Labour, and your employer cannot retaliate against you.
Know Your Rights
The ban on non-compete clauses gives Ontario workers greater freedom to:
- Change jobs within their industry
- Start their own businesses
- Advance their careers without fear of legal action
If you’re unsure whether a clause in your employment contract is enforceable, or if you’re facing a lawsuit over a non-compete agreement, consult with an employment lawyer. They can review your specific situation and help protect your rights.
