Ontario made headlines in 2021 by effectively banning non-compete clauses in most employment contracts through amendments to the Employment Standards Act, 2000. Yet many Ontario employers continue to include non-compete language in their contracts — either because their templates haven't been updated, or because they're hoping employees won't know the law has changed. If you're signing an employment contract in Ontario, understanding the current rules on non-competes is essential. This guide explains what the law actually says, the narrow exceptions that still allow non-competes, and the related restrictive covenants (like non-solicitation clauses) that remain fully enforceable.
What is a Non-Compete Clause?
A non-compete clause is a contractual provision that restricts an employee from working for a competitor or starting a competing business for a specified period after leaving their employer. In Ontario, the Working for Workers Act, 2021 (Bill 27) amended the Employment Standards Act, 2000 (ESA) to prohibit most non-compete agreements. However, the ban has specific exceptions, and other types of restrictive covenants — including non-solicitation and confidentiality agreements — remain enforceable under common law.
Red flags to watch for
Since October 25, 2021, non-compete clauses are void for most Ontario employees under ESA §67.2. The only exception is for C-suite executives. If you're not an executive, the clause is unenforceable.
The ESA exception applies to individuals who hold the office 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. Other senior roles don't qualify.
Employers sometimes bundle a void non-compete with valid non-solicitation terms, hoping you'll comply with the whole package. The non-compete portion is void but the non-solicitation may still be enforceable.
The ESA ban does not apply to non-competes agreed upon in the context of a sale of a business. If you're selling your business, a non-compete may be enforceable — but not if you're simply an employee who happens to receive shares.
The ESA amendments apply regardless of when the employment contract was signed. A pre-2021 non-compete is just as void as a post-2021 one for non-executive employees.
Your legal rights
The Employment Standards Act, 2000, as amended by the Working for Workers Act, 2021 (S.O. 2021, c. 35), §67.2 provides that no employer shall enter into a non-compete agreement with an employee. This prohibition applies regardless of when the agreement was made (i.e., it is retroactive). The sole exception is for employees who hold 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, or hold another chief executive position" (ESA §67.2(2)). Non-solicitation clauses, confidentiality agreements, and intellectual property assignment clauses remain enforceable under Ontario common law, subject to the reasonableness test established in cases like Elsley v. J.G. Collins Insurance Agencies Ltd., [1978] 2 SCR 916. The enforceability of these restraints depends on whether they protect a legitimate business interest, are reasonable in scope and duration, and are not contrary to the public interest.
Questions to ask before you sign
- 1Is the non-compete clause enforceable given the ESA §67.2 ban?
- 2Am I classified as a C-suite executive under the statutory exception?
- 3Are there separate non-solicitation or confidentiality clauses, and what do they restrict?
- 4What happens if I breach the non-compete — does the employer acknowledge it may be void?
- 5Was this contract signed in connection with a sale of business, which may be an exception?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.