Non-Compete — Ontario Employment Law
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About Non-Compete
A non-compete is a specific type of contract clause designed to prevent an employee from working for a competitor or starting a competing business in a designated market for a certain period after their employment ends. Historically, these clauses were a frequent source of litigation in Ontario. Employers used them to protect their market share, while employees found their career mobility severely restricted. Recognizing the imbalance of power, Ontario dramatically shifted the legal landscape regarding non-competes.
In late 2021, the Ontario government passed the Working for Workers Act, which amended the Employment Standards Act, 2000 (ESA) to explicitly ban non-compete agreements for most employees. For agreements entered into on or after October 25, 2021, employers are strictly prohibited from implementing non-competes. Any such clause introduced after this date is legally void and unenforceable, even if the employee voluntarily signs the contract.
However, the ESA provides two distinct exceptions to this ban. First, the prohibition does not apply to "executives," which the legislation narrowly defines to include roles like president, chief executive officer, chief financial officer, or chief operating officer. Second, a non-compete may be valid in the context of the sale of a business, provided the seller subsequently becomes an employee of the buyer and agrees not to compete with the newly sold enterprise.
For non-compete agreements signed prior to October 25, 2021, the ESA ban is not retroactive. Instead, these older clauses are governed by common law principles. Under Ontario common law, courts view non-competes as a "restraint of trade" and generally consider them unenforceable unless the employer can prove exceptional circumstances. The employer must demonstrate that a less restrictive measure—like a non-solicitation clause—would not adequately protect their proprietary interests, and that the non-compete is strictly limited in its geographic scope and timeframe.
Despite the legislative ban, many employers continue to include non-compete language in standard employment contracts, sometimes inadvertently using old templates or intentionally as a psychological deterrent. Because analyzing the applicability of the executive exception, examining a sale-of-business context, or reviewing a pre-2021 contract requires interpreting specific legal phrasing, having an employment law practitioner review your specific documents is highly recommended before you reject a job offer or assume a threat of litigation is credible.
Frequently Asked Questions
Are non-compete clauses legal in Ontario?
For most employees, no. Under the Employment Standards Act, any non-compete agreement entered into on or after October 25, 2021, is prohibited and legally void. The only exceptions are for C-level executives and in specific sale-of-business scenarios.
I just signed an offer letter with a non-compete. Does it invalidate my whole contract?
Normally, no. If your employer illegally includes a non-compete clause in a post-2021 contract, that specific provision is void under the ESA, but the remainder of your employment agreement—such as your salary, benefits, and termination clauses—usually remains binding.
What happens if I signed a non-compete before October 2021?
The ESA ban is not retroactive, so pre-existing non-competes are evaluated under common law. Ontario courts are highly reluctant to enforce them and will strike them down if the time duration, geographic area, or scope of blocked activities is overly broad.
Does the non-compete ban mean I can take my employer's clients to a new job?
No. The ESA specifically bans non-competes (restricting where you work), but it does not ban non-solicitation clauses (restricting you from poaching clients or staff) or confidentiality agreements. You still cannot misappropriate trade secrets or solicit clients if you have a valid non-solicit clause.
I am a manager. Am I considered an "executive" under the ESA exception?
Likely not. The ESA narrowly defines an executive as any person who holds 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, or holds any other chief executive position.
Can my former boss sue me for starting a competing business?
They might attempt to seek a court-ordered injunction to stop you, but if the non-compete falls under the ESA prohibition, a judge will dismiss the motion. If you are threatened with legal action, having a lawyer step in immediately can often shut down intimidation tactics before court proceedings start.
Common Scenarios
- A marketing specialist signs a standard employment contract in 2023 containing a 12-month non-compete. When she resigns to join a rival agency, her former boss threatens an injunction. Because the contract was signed after October 2021, the clause is void and the employer cannot enforce it.
- The Chief Financial Officer of a tech startup negotiates an exit. His contract includes a tightly restricted 6-month non-compete. Because he holds a C-suite "executive" title, the ESA ban does not apply, and a court may enforce the clause if the boundaries are deemed reasonable.
- A specialized logistics salesperson signed a non-compete back in 2018. She leaves the company in 2024 to work for a direct competitor. Because her clause pre-dates the ESA ban, her employer attempts to enforce it under common law, but a judge ultimately strikes it down as an unreasonable restraint of trade because it restricted her from working anywhere in North America.
What You Should Know
- Always check the date you signed your employment agreement; October 25, 2021, is the critical cutoff for the ESA prohibition on non-competes.
- Do not assume that an intimidating letter from your former employer holds legal weight; many non-competes are left in contracts merely as scare tactics despite being legally void.
- Remember that even if a non-compete is invalid, you still owe a duty to your former employer not to steal confidential information, client lists, or company property.
- If you are navigating a business sale or transitioning into a formal C-level role, assume any non-compete you negotiate will be strictly binding, and seek legal guidance to limit its scope before signing.
Featured Cases
Cowan Insurance Group Ltd, v. B.
2026 ONSC 1413 (CanLII) · 2026-03-09Non-Compete Injunction Dismissed: ESA s. 67.2 Analysis
This interlocutory motion sought an injunction to prohibit a former employee from soliciting the plaintiff's clients, alleging breaches of restrictive covenants. The court dismissed the motion, finding that existing contractual and court-ordered restrictions were sufficient to protect confidential information, that the balance of convenience favored the defendant, and that the requested restraint was inconsistent with the prohibition on non-compete agreements under the Employment Standards Act, 2000.
P. v. S. et al.
2021 ONSC 8177 (CanLII) · 2021-12-13An interlocutory proceeding seeking an interim injunction to enforce a restrictive covenant.
Fix Auto Canada Inc. v. D.
2021 ONSC 5439 (CanLII) · 2021-08-17Employment Contract: Non-Competition Injunction
An employment law dispute concerning the enforceability of restrictive covenants and non-competition agreements within an employment contract, seeking injunctive relief.
Galea v. Wal-Mart Canada Corp.
2017 ONSC 245 (CanLII) · 2017-12-07Wrongful Dismissal: Moral and Punitive Damages for Bad Faith
This wrongful dismissal case addresses the employer's duty of good faith and fair dealing in the manner of dismissal, specifically regarding pre-termination and post-termination conduct. The court found the employer's conduct misleading and unduly insensitive, awarding moral damages for the resulting mental distress and punitive damages for highhanded behavior. Additionally, the court interpreted a Covenant Not to Compete Agreement as a binding employment contract, awarding transition payments and benefits.
Korn/Ferry Canada Inc., v R.
2016 ONSC 2135 (CanLII) · 2016-04-13An employment law dispute involving Korn/Ferry Canada Inc. and an individual named R., centering on the enforceability or interpretation of restrictive covenants within an employment or consulting agreement.
W. v. Northwest Value Partners Inc.
2016 ONCA 253 (CanLII) · 2016-04-06Enforcement of Employment Settlement Agreement Appeal
This is an appeal to the Court of Appeal from a motion judge's decision enforcing a settlement agreement between a terminated employee and his former employers. The employee had claimed amounts owed upon termination, which the parties settled at mediation. The employers appealed the enforcement order, arguing the settlement should not be enforced because of the employee's alleged post-termination breach of a non-compete clause. The Court of Appeal agreed with the motion judge that the settlement resolved only the employee's termination claims and did not cover the employers' claim regarding the non-compete breach. The employers' appeal was dismissed, leaving the settlement agreement in force.
S. v. L.
2013 ONSC 2886 (CanLII) · 2013-05-17An interlocutory proceeding seeking an interim injunction to enforce a restrictive covenant. The case centers on the legal validity and enforceability of contractual restrictions typically found in employment agreements.
ADS Publishing v. 1806062 Ontario Inc., o/a Hotel Key Design, Pat Fisher
2011 ONSC 5383 (CanLII) · 2011-09-16Restrictive Covenant Injunction: Employment Law
An employment law dispute concerning the enforcement of a restrictive covenant through an injunction application.
S. v. Komtech
2010 ONSC 4779 (CanLII) · 2010-10-12Wrongful Dismissal: Commission Dispute & Breach of Contract
This wrongful dismissal case involved a dispute over a consulting services agreement where the plaintiff alleged breach of contract and wrongful termination due to unpaid commissions on the WM account. The court found that the defendant breached the agreement by failing to pay commissions and terminating the plaintiff to avoid future payments, while also determining that the plaintiff did not breach non-compete covenants.
Consumer Impact Marketing Ltd. v. H.S.
2010 ONSC 3257 (CanLII) · 2010-06-07Injunction: Restrictive Covenant Dispute
An employment law case involving an injunction application concerning a restrictive covenant.
Siemens Water Technologies Canada Inc. v. Filtermed Inc.
2008 CanLII 45829 (ON SC) · 2008-09-12An employment law case concerning the enforceability or interpretation of restrictive covenants.
H. L. Staebler Company Limited v. A.
2007 CanLII 37692 (ON SC) · 2007-09-13Employment Contract: Restrictive Covenants Dispute
This case involves a dispute over an employment contract, specifically focusing on the enforceability and interpretation of restrictive covenants.
Boehmer Box L.P. v. Ellis Packaging Limited
2007 CanLII 14619 (ON SC) · 2007-05-01Senior Sales Executive Resigns: Fiduciary Duty and Non-Compete Dispute
A case involving a senior sales account executive who resigned and joined a competitor. The plaintiff sought to establish whether the employee owed fiduciary duties to the former employer, preventing solicitation of customers, and whether confidential information was misused. The court found no strong prima facie case for fiduciary duty or breach of confidence, and denied an interlocutory injunction.
Premore-Advantage Realty Ltd v. O.
2007 ONCA 172 (CanLII) · 2007-03-15Non-Compete Enforceability: O. v. Premore-Advantage
This appeal concerns the enforceability of a non-compete clause and the misuse of confidential customer lists by a former employee or agent. The Court of Appeal upheld the trial judge's findings that the non-compete clause was unenforceable due to overly broad terms and that the use of the customer list constituted impermissible misuse of confidential business information.
NexInnovations Inc. v. B.
2005 CanLII 46084 (ON SC) · 2005-12-13Injunction for Restrictive Covenant Enforcement
This is an interlocutory proceeding seeking an injunction to enforce a restrictive covenant. The case centers on the validity and enforceability of non-competition or non-solicitation obligations between an employer and an employee or former employee.
Radd Precision Inc. v. L.
1996 CanLII 8173 (ON SC) · 1996-01-09Employment Contract: Injunction Granted Against Former Employee for Breach of Fiduciary Duty
An interlocutory injunction was granted to prevent a former employee from competing with their former employer, based on allegations that the employee breached fiduciary duties by accessing customer information and registering a competing business while still employed. The court found that the plaintiff demonstrated a meritorious case and that the defendant's conduct posed a significant competitive threat.
Atlas Farm Services of Canada Ltd. v. M., H., B., Andrews & Associates Inc.
1993 CanLII 5573 (ON SC) · 1993-08-03Employment Contract: Restrictive Covenants Dispute
A legal dispute concerning employment contracts, specifically focusing on the enforceability or interpretation of restrictive covenants.
Crain-Drummond Inc. v. H.
1991 CanLII 14429 (ON CTGDDC) · 1991-05-17An employment law case concerning restrictive covenants.
Computer Centre Personnel Ltd. v. Zari et al. Craig Agency of Ontario Ltd. v. C. et al.
1976 CanLII 2674 (ON SC) · 1976-08-23This case involves a dispute regarding employment contracts, specifically focusing on the enforceability or interpretation of restrictive covenants.
Niagara Frontier Caterers Ltd. v. L. et al.
1975 CanLII 2583 (ON SC) · 1975-10-30An employment law dispute concerning the validity and enforcement of restrictive covenants within an employment contract.