Why Non-Competition Agreements in Ontario Simply Don’t Cut it Anymore 

Written by: Sezar Bune, J.D. | Toronto Employment Lawyer

Date Revised: January 15, 2026

Key Takeaways

A few years ago, the Ontario government introduced amend the Employment Standards Act, 2000 (“ESA“) to specifically prohibit employers from “entering into” an employment contract (or other agreement) with an employee that is or includes a non-compete requirement. Further, the change to the ESA made it clear that any non-compete agreement in Ontario that was entered into by an employer and employee after 2021 was deemed legally invalid and unenforceable. 

So then why then, as an Ontario employment lawyer, do I still occasionally see employees asking about (or researching Google) non-competition agreements in an employment contract? Specifically, many employees concerned whether a non-competition agreement will prevent them from supporting themselves or their families once their employment ends?

Well, for the most part, these exist in previously signed employment contracts that existed before the prohibition in 2021. As a result, while unlikely, some employees may, in fact, still be bound by a non-competition agreement – assuming it still passes the old legal test applied by the courts in 2021. However, for the most part, new non-competition agreements cannot exist in Ontario, with a few exceptions (such as C-Suite employee positions, including CEO’s).

In the past few years, courts and legislators across multiple jurisdictions are narrowing their enforceability, particularly where they limit worker mobility without clear justification.

What is a Non-Competition Agreement?

A non-competition agreement is a type of restrictive covenant (legal promise) in employment contracts that attempts to prevent a departing employee from competing with an employer, regardless of the cause for departure (e.g., resignation, termination for just cause, and so on). The aim of the employer is to prevent the employee from leveraging their operational knowledge of the company, and individual goodwill developed from relationships with customers, to engage in direct competition – whether by joining a competitor or starting a competing company.

Generally, the courts in Ontario have been very reluctant to enforce a non-competition agreement. Specifically, except in rare circumstances, the courts have usually refused to spurned employers from forcing departing employees from leaving a new job to join a competitor on the basis that they are against the public interest. The reason?  Employees should not be prevented from earning a livelihood, even if that means joining a competitor. As such, most courts refused to enforce non-competition agreements if a simple non-solicitation clause would protect the employer’s interest, such as not soliciting clients or customers.

In my experience as an employment lawyer contesting non-competition agreements, I have found there are rare instances where a court permit will permit employers to rely on an employee’s non-competition agreement. Specifically, jurisprudence makes it clear that an employer must pass a high legal standard to convince a court that the terms of the non-competition agreement was reasonable and justifiable, especially in terms of the length of time, geographic scope and/or nature of activities it prohibits. Put simply, a court wants to see that an employer’s requirements in a non-compete agreement are overly restrictive on an employee’s job activities than necessary.

How to Read a Non-Competition Agreement

When presented with an employment contract containing a non-competition agreement, the absolute most important first step is to review it with an employment lawyer to understand its legal implications and options to protect your rights as an employee. From my experience as an employment lawyer, here are some common steps to keep in mind:

• Start with the basics
  Look at the length of the restriction, the geographic area it covers, and what activities are limited.

• Identify who the non-competition agreement applies to
  Some non-competes apply only to specific roles or senior positions. Others may be written more broadly than necessary (as employment lawyers, we refer to this as “over-broad” or “unreasonable scope”).

• Check when it applies
  Determine whether the restriction applies during employment, after termination, or both – and under what circumstances.

• Look for exceptions or carve-outs
  Pay close attention to any language that allows certain types of work, industries, or clients.

• Consider how it would affect your livelihood
  Ask whether the non-competition restriction would realistically prevent you from earning a living in your field, including by having to essentially not apply to a handful of companies who happen to be a competitor of the former employer (thereby reducing your ability to find a new job).

• Have it reviewed before it matters
  An experienced Ontario employment lawyer can assess whether the non-compete is enforceable and advise you on your options – ideally before you sign, or during severance package negotiations.

Conclusion and Practical Insight: Non-Competition Agreements in Ontario

For this reason, it is generally best practice to obtain clarity about any non-competition agreement – either by having an employment contract reviewed by a lawyer at the outset, or upon termination if the issue arises during severance negotiations.

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