Are non-compete agreements enforceable in Canada?
Sometimes, but the presumption is against them. Canadian courts treat employee non-competes as a restraint of trade that is void unless the employer proves it is reasonable in duration, geography and scope, and protects a legitimate proprietary interest. In Ontario, the Working for Workers Act, 2021 goes further and bans most employee non-competes signed after October 25, 2021 outright.
Does Ontario ban non-compete clauses?
Largely yes. Ontario prohibits employee non-compete agreements signed on or after October 25, 2021, with two exceptions: senior executives (C-suite officers) and non-competes agreed as part of the sale of a business. A prohibited clause is void, though non-solicitation and confidentiality clauses remain available.
What makes a non-compete reasonable in Canada?
Courts look at four things: a short duration (often 6–12 months), a narrow geographic area tied to where the business actually operates, a limited scope of restricted activities, and a genuine proprietary interest such as trade secrets or established client relationships. Fresh consideration must be given if the clause is added after hiring.
Can a court fix an overbroad non-compete?
Generally no. Canadian courts will not 'blue-pencil' or rewrite an unreasonable non-compete to make it enforceable, except in narrow cases where a trivial, severable part can be removed without changing the meaning. If the clause is overbroad, it usually fails entirely — which is why precise drafting matters.
Is a non-solicitation clause different from a non-compete?
Yes. A non-solicitation clause only stops a former employee from soliciting the employer's clients or staff, rather than banning competition altogether. Because it is less restrictive, it is far more likely to be enforced, and it is often the better tool for protecting a legitimate business interest.