Non-Compete Clause Ontario: Are They Enforceable in 2025?

A non-compete clause in Ontario is a section in an employment contract that tries to stop you from working for a competitor or starting your own business after leaving your job. These clauses are often called non-compete agreements or non-competition clauses — but in most cases, they’re illegal.

What Is a Non-Compete Agreement?

A non-compete agreement (or non-competition agreement) is a promise that limits where and for whom you can work after your job ends.

Employers sometimes include it in contracts for:

• New hires
• Current employees offered promotions
• Departing employees as part of severance packages

Even if it’s short or vague, it still counts as a non-compete clause.

Ontario’s Ban on Non-Compete Clauses

Since October 25, 2021, the Working for Workers Act (Bill 27) made most non-compete clauses in Ontario employment contracts illegal.

Under section 67.1 of the Employment Standards Act, employers:

• Can’t include non-compete clauses in new or existing contracts.
• Can’t ask you to sign one during or after employment.
• Can’t retaliate if you refuse to sign.

Exceptions

Non-compete clauses may still apply if:

• You are a C-suite executive (such as a CEO, CFO, or President), or
• You sold your business and became an employee of the buyer.
• Otherwise, a non-compete in Ontario is void — it has no legal effect.

Listen: As employment lawyer Lior Samfiru told 640 Toronto radio when Ontario first proposed the ban, “Courts don’t like terms that limit someone’s ability to earn a living. This change finally puts an end to that.”

Are Non-Competes Enforceable in Ontario?

In short: almost never.

Even before Bill 27, Ontario courts treated non-compete agreements as presumptively unenforceable. Employers must prove that the restriction is:

• Reasonable in time and geography (e.g., one city, not all of Canada), and
• Necessary to protect legitimate business interests, and
• Not overly broad in scope or duration.

Leading Case Law

• RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc. (2008 SCC) – confirmed courts prefer non-solicitation clauses over blanket non-competes.
• Elsley v. J.G. Collins Insurance Agencies Ltd. (1978 SCC) – non-competes are only justified in rare cases.
• Lyons v. Multari (2000 ONCA) – non-competes are invalid if a narrower non-solicit clause would suffice.

Non-Compete vs. Non-Solicit vs. Confidentiality

What If You Signed a Non-Compete Before 2021?

Older agreements signed before October 25, 2021 may still exist — but courts rarely enforce them unless they meet strict limits on time, geography, and scope.

If your contract includes one of these clauses, speak with an employment lawyer before assuming it applies. You may be free to ignore it.

Non-Compete Clauses and Wrongful Dismissal

If you’ve been wrongfully dismissed in Ontario, your employer generally can’t enforce a non-compete clause against you.

Courts have ruled that an employer can’t benefit from its own breach of contract — including trying to restrict your right to earn a living.

Non-Compete Clauses for Independent Contractors

The ban on non-competes may also apply to independent contractors in Ontario, depending on whether the contractor is really an employee in disguise.

If you provide services exclusively to one company, you may be legally treated as an employee and protected under the same rules.

What Happens If You Violate a Non-Compete?

If the clause is enforceable (rare):

• You could face a lawsuit, injunction, or damages for lost profits.

If it’s unenforceable:

• You may still be sued — but the clause won’t hold up in court.

Always get legal advice before starting a competing role or business if your contract includes one.

How to Get Out of a Non-Compete Clause

You may be able to:

1. Request a written waiver from your employer.
2. Challenge it in court — most are too broad to survive.
3. File a complaint with the Ontario Ministry of Labour if you were asked to sign one after October 25, 2021.

Employers are prohibited from taking reprisal action against you.

FAQs About Non-Compete Clauses in Ontario

1. What Is a Non-Compete Clause?

A restriction in a contract that limits where and for whom you can work after employment ends.

2. Are Non-Competes Legal in Ontario?

No — except for executives or people selling a business.

3. What If I Already Signed One?

It might still exist but is rarely enforceable.

4. What’s the Difference Between a Non-Compete and Non-Solicitation Clause?

A non-solicit stops you from taking clients; a non-compete stops you from working in the same industry.

5. Can My Employer Punish Me for Refusing to Sign a Non-Compete?

No. You’re protected from reprisal under Ontario’s Employment Standards Act.

Speak to an Employment Lawyer About Your Non-Compete Clause

If your contract includes a non-compete clause or you’re unsure whether it’s enforceable, talk to an Ontario employment lawyer before signing or starting a new job.

Samfiru Tumarkin LLP — Canada’s largest employee-side law firm — can review and negotiate your employment contract, explain whether your clause is valid, and protect your right to work freely after leaving a job.

Our team has:

• 👥 Successfully represented 50,000+ Canadians
• 💰 Secured millions in severance payouts
• ⚖️ Settled over 99% of cases out of court
• 📱 Free Termination Consultations — in some, but not all, cases
• ⭐ Earned 3,000+ 5-star Google reviews
• 🏆 Named on of Canada’s Best Law Firms

Call 1-855-821-5900 or request a consultation online.