Non-competes and non-solicits: what still works in Ontario

Current to October 14, 2026.

A great deal of the guidance still circulating on this predates the law that changed it.

Ontario amended the Employment Standards Act, 2000 to prohibit non-compete agreements between employers and employees, with narrow exceptions — broadly, certain executive positions and the sale of a business, where the seller becomes an employee of the buyer. A prohibited non-compete is void. It is not read down or narrowed by a court; it simply does not operate.

The prohibition took effect on October 25, 2021 and the courts have held that it does not reach back: an agreement entered into before that date is not voided by the statute.

Those earlier agreements fall to be judged at common law, which is separate from and additional to the statute. Even before the amendment, restrictive covenants in employment contracts were difficult to enforce: they had to be reasonable in scope, geography and duration, and ambiguity was resolved against the employer. Most fail on one of those grounds, but that is a conclusion a court reaches on the facts rather than an automatic result.

Federally regulated employers

The prohibition is in Ontario’s statute, so it reaches employers regulated by Ontario. Banks, airlines, telecommunications carriers, interprovincial transport and other federally regulated businesses fall under the Canada Labour Code instead, and the Ontario ban does not apply to them, even for staff working in Ontario.

That is likely to change. Bill C-31, introduced in May 2026 and now before the House of Commons finance committee, would make non-competes void in federally regulated employment, with narrow exceptions for certain senior executives and business transactions and a one-year transition for clauses already in place. It is not yet law, and its start date will be set by order once it passes.

What was not prohibited

Non-solicitation clauses — covering clients, and separately covering staff — are unaffected. So are confidentiality and intellectual property terms. So are restrictive covenants outside employment, including between shareholders and in the sale of a business, which is a different analysis governed by different considerations.

In practice this matters less than employers expect, because a well-drafted non-solicit usually protects the thing that was actually worth protecting. What most businesses want is not to prevent a former employee from working. It is to stop them taking the client list and two colleagues with them.

What to do with existing agreements

Template employment agreements written before the change frequently still contain non-competes, and the templates are often still in use for new hires. The date matters. A clause given to someone hired today is void; the same clause in a contract signed in 2019 is not void by statute, and its fate depends on the common law test.

Either way the clause is doing very little work, and its presence can undermine confidence in the rest of the document. The template is worth checking once rather than during a departure, and the termination clause is worth checking at the same time, because that is where the expensive drafting errors actually sit.

Restrictive covenants also come up on the other side of a hire — where someone joining you is bound by an agreement with their former employer, or where the arrangement is a contractor engagement rather than employment, which changes the analysis. See contractor or employee.

See employment.