Non-compete clause

A non-compete clause stops a worker from competing after they leave. Ontario has banned most since 25 October 2021; elsewhere courts are strict.

Also called: non-competition clause, non-compete agreement, restrictive covenant

What non-compete clause means

A non-compete clause is a term in an employment contract that says the employee may not work for a competitor, or start a competing business, for a period after the job ends. It is one kind of restrictive covenant, alongside non-solicitation and confidentiality clauses.

In Ontario, the Employment Standards Act, 2000 bans employers from entering into non-compete agreements with employees, with narrow exceptions. Agreements made on or after 25 October 2021 are void. In other provinces, non-competes are not banned by employment standards law, but they must be reasonable to be enforced, and courts look at them closely.

For most small businesses, a non-compete is the wrong tool. A well-written non-solicitation clause and a confidentiality clause usually protect what you actually care about, your clients and your information, and are much more likely to hold up.

How it works

Ontario: the ban covers agreements, or parts of agreements, that stop an employee from engaging in a business, work, occupation, profession, project or other activity that competes with the employer's business after employment ends. It applies before, during and after employment, and whether or not the clause has a time or geographic limit. A clause is judged by what it does, not by its heading.

Ontario has two exceptions. The first is for executives, identified by job title: chief executive officer, president, chief operating officer, chief financial officer, chief legal officer, or another chief executive position. The second is the sale of a business where the seller becomes an employee of the buyer right after the sale; the ministry reads this as applying only when the business sold was a sole proprietorship or partnership. Agreements signed before 25 October 2021 are not voided by the Act, though courts may still decide whether they are enforceable.

Quebec: under article 2089 of the Civil Code of Québec, a non-compete must be in writing and in express terms, and limited in time, place and type of work to what is necessary to protect the employer's legitimate interests. The employer has to prove it is valid.

Federally regulated employers: Bill C-31, a federal budget bill before Parliament in 2026, would add a ban on non-compete clauses to the Canada Labour Code. It would come into force on a date set by the federal cabinet. Check whether it is in force before relying on a non-compete with a federally regulated employee.

Non-compete clause by province

Only some jurisdictions have a statute on non-competes. Elsewhere, courts decide whether a clause is reasonable.

Where the work is done	The rule
Federal	Bill C-31 (2026) would ban non-compete clauses for federally regulated employers from a date set by the federal cabinet. Not confirmed in force.
Ontario	Non-compete agreements made on or after 25 October 2021 are void under the Employment Standards Act, 2000, except for listed executives and certain sales of a business.
Quebec	Civil Code art. 2089: must be written, in express terms, and limited in time, place and type of work to what protects the employer's legitimate interests. The employer must prove validity.

Manitoba has had a bill on non-compete agreements (Bill 213, 2025), but its status was not confirmed. For other provinces, enforceability is decided by courts.

Example: A salon rewrites its contract

Rosa runs a 9-person hair salon in Mississauga, Ontario. Her old contract said stylists could not work at another salon within 10 km for a year after leaving.

She learns that a clause like this, signed with a stylist on or after 25 October 2021, is void under Ontario's Employment Standards Act. She replaces it in new contracts with a confidentiality clause covering her client list and a narrow non-solicitation clause, and gets advice on the wording.

Hollis drafts the letter

Hollis, part of the Staffkin HR Suite, drafts province-specific offer letters for your approval. It never sends on its own, so you can have restrictive clauses reviewed first.

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Questions about non-compete clause

Are non-compete clauses legal in Ontario?

Mostly not. Non-compete agreements made on or after 25 October 2021 are void under the Employment Standards Act, 2000, except for listed executive titles and certain sales of a business.

Are non-solicitation clauses banned in Ontario?

No. The Employment Standards Act does not prohibit non-solicitation or non-disclosure agreements, although courts still decide whether a particular clause is enforceable.

Are non-competes enforceable in Quebec?

They can be, if they are in writing, in express terms, and limited in time, place and type of work to what protects the employer's legitimate interests. The employer must prove the clause is valid.

Should a small business use a non-compete?

Usually a confidentiality clause and a narrow non-solicitation clause protect clients and information better, and are more likely to be enforced. Get advice before using any restrictive clause.

Official sources

General information for Canadian employers, not legal advice. Rules differ by province and territory and change over time, so check with your provincial employment standards office (or the federal Labour Program if you are federally regulated) before you rely on it. See employment standards by province.

Checked against official sources on 4 November 2026.