A non-compete clause in Ontario is a section (or “provision”) in an employment contract that tries to prevent an employee from working for a competing employer, or starting their own competing business after their employment ends.
These clauses can appear in contracts for:
- Job applicants
- Current employees
- Former employees
Even if the clause doesn’t set a time limit or location, it still counts as a non-compete agreement.
Since 2021, most non-compete clauses are illegal in Ontario under the Working for Workers Act (Bill 27) and the Employment Standards Act, 2000, s.67.1.
Are Non-Compete Clauses Enforceable in Ontario?
Generally, courts in Canada are reluctant to enforce non-compete agreements. They are considered presumptively unenforceable unless the employer proves the clause is:
- Narrow in geography (e.g., one city, not all of Canada)
- Reasonable in duration (e.g., months, not years)
- Specific in scope (limited activities, not a blanket restriction)
The leading case is the Supreme Court of Canada case, E. v. J.G. Collins Insurance Agencies Ltd. which confirmed that courts prefer non-solicitation clauses over non-competes because they balance fairness with business protection.
Ontario’s Ban on Non-Compete Clauses
As of October 25, 2021, Ontario law prohibits most non-compete clauses. Under Bill 27:
- Employers cannot include non-competes in new employment contracts.
- This applies at hiring, during employment, and after termination.
- The law is retroactive to October 25, 2021.
Exceptions
Non-compete clauses may still be enforceable if:
- You are an executive (e.g., CEO, CFO, COO, President).
- You sold your business and became an employee of the buyer.
Tip: Non-competes signed before October 25, 2021, are not automatically void. However, they are rarely enforced unless they meet strict legal criteria.
What If You’re Fired?
If your employer wrongfully dismisses you, they generally cannot rely on a non-compete clause. Courts in Ontario and across Canada will not allow an employer to benefit from their own breach of contract.
The Ontario Court of Appeal has repeatedly confirmed that non-compete clauses are strictly scrutinized:
- In M. v. Chem-Trend Limited Partnership (2011 ONCA 344), the Court stressed that restrictive covenants must be very specific to be enforceable.
- In L. v. Multari (2000 ONCA), the Court held that non-compete clauses are rarely justified when a non-solicitation clause could adequately protect the employer’s interests.
These Ontario authorities build on the long-standing Supreme Court of Canada decision in E. v. J.G. Collins Insurance Agencies Ltd., which established that non-competes are exceptional and must be carefully justified.
| Clause Type | What It Does | Enforceable? |
|---|---|---|
| Non-Compete | Stops you from working for a competitor | ❌ Banned in Ontario (except executives / sale of business) |
| Non-Solicit | Stops you from taking clients, customers, or staff | ✅ Often enforceable if reasonable |
| Confidentiality / NDA | Stops you from sharing trade secrets or sensitive info | ✅ Fully enforceable |
Tip: A clause labelled “Non-Competition” may really function as a non-solicitation clause. Courts look at what the clause actually means, not just what it’s called. See more in our guide: Non-Competition and Non-Solicitation Clauses 101.
What Happens If You Violate a Non-Compete?
Consequences depend on enforceability:
- If enforceable → You could face damages, a lawsuit for lost profits, or an injunction stopping you from working.
- If unenforceable → It won’t hold up in court, but you could still be sued and forced to defend yourself.
If you’ve received a termination package that includes a non-compete, review it carefully before signing. Start with our Severance Pay Calculator
How to Get Out of a Non-Compete Clause
Options for employees include:
- Requesting a waiver from your employer.
- Challenging enforceability in court — most clauses are too broad to survive.
Tip: If you were asked to sign a non-compete after October 25, 2021, you can file a complaint with the Ontario Ministry of Labour. Employers cannot retaliate against you (reprisal).
FAQs About Non-Compete Clauses
1. Can my employer stop me from working for a competitor?
Not anymore — unless you are an executive or part of a sale of business.
2. What if I signed a contract before 2021?
It may still apply, but courts rarely enforce broad non-competes.
3. Are non-solicitation clauses still valid?
Yes, if they are reasonable in time and scope.
4. Can I refuse to sign a non-compete today?
Yes. Non-competes are banned, and you are protected from reprisal under the ESA.
5. Should I get legal advice before signing any restrictive clause?
Yes. Our employment contract review lawyers can help you understand your rights.
Speak to an Employment Lawyer About Your Non-Compete Clause
If you’re concerned about a non-compete clause in your contract, Monkhouse Law can help. We regularly:
- Review and negotiate employment contracts
- Challenge unenforceable restrictive covenants
- Represent employees in wrongful dismissal and severance disputes
📞 Call us at 416-907-9249 or request a free 30-minute phone consultation.