Non-Compete Clauses in Ontario — What You Need to Know
Since October 2021, Ontario's Working for Workers Act bans non-compete agreements for most employees. If your employer is trying to enforce one against you, it may have no legal effect.
The Working for Workers Act — Ontario's Non-Compete Ban
On October 25, 2021, Ontario's Working for Workers Act, 2021 came into effect and made Ontario the first province in Canada to broadly ban non-compete agreements in employment. The Act amended the Employment Standards Act, 2000 to void any employment contract or agreement — whether in writing or oral, express or implied — that is entered into or varied on or after October 25, 2021, and that is, or that includes, a non-compete agreement. A non-compete agreement is defined in the Act as "an agreement, or any part of an agreement, between an employer and an employee that prohibits the employee from engaging in any business, work, occupation, profession, project or other activity that is in competition with the employer's business after the employment relationship ends." This is a substantial protection — it means that for most Ontario employees, any non-compete in their employment contract is now void and unenforceable by law, regardless of what the contract says.
The Executive Exception — Who Is Still Bound?
The Working for Workers Act contains a narrow exception for executives. An "executive" is defined in the ESA as an "individual who is employed as president, chief executive officer, chief administrative officer, chief operating officer, chief financial officer, chief information officer, chief legal officer, chief human resources officer or chief corporate development officer, or in a similar role or with a similar title." If you do not hold one of these C-suite-equivalent positions, you are almost certainly protected by the ban. Even for executives, the non-compete clause must be entered into or varied on or after October 25, 2021 to be subject to the new rules — the timing of when the contract was signed or changed matters. Additionally, even if a non-compete is technically enforceable as an executive exception, it must still meet common law reasonableness requirements to be upheld by a court (reasonable in geographic scope, duration, and protected activity).
Non-Solicitation vs. Non-Compete — A Critical Distinction
The Working for Workers Act ban applies specifically to non-compete agreements — it does not automatically void non-solicitation clauses. A non-solicitation clause prohibits you from actively soliciting your former employer's clients, customers, or employees after you leave. Unlike non-competes, non-solicitation clauses remain valid and enforceable in Ontario if they are reasonable in scope, duration, and geographic area. Courts assess whether the clause is no broader than necessary to protect the employer's legitimate business interest. A non-solicitation clause that prevents you from working in your entire industry, that applies indefinitely, or that covers the entire world is unlikely to be enforced as written. The key practical distinction is this: you are free to work for a competitor or start a competing business — but you may not be free to proactively contact your former employer's clients to bring them with you, depending on what your contract says.
- Check when you signed or last modified your employment contract — if October 25, 2021 or later, any non-compete is void for non-executives
- Identify whether you qualify as an "executive" under the ESA definition
- Read the clause carefully — is it a non-compete (prohibits competing) or non-solicitation (prohibits poaching clients/employees)?
- Document any threats or enforcement actions your employer has taken
- Get a general assessment before agreeing to any restrictions or signing any termination document that includes a non-compete reaffirmation