Are non-compete clauses enforceable in Ontario employment contracts?

Non-compete clauses in Ontario employment contracts are enforceable only within strict limits set by courts. They are treated as restraints of trade and are prima facie void — meaning they will not be enforced unless the employer can prove they are reasonable.

Reasonableness is assessed on three dimensions: the activity restricted must not be broader than necessary to protect the employer's legitimate interest; the geographic scope must be no wider than required; and the duration must not exceed what is genuinely necessary. Courts strike out or reduce overly broad clauses rather than simply enforcing whatever the contract says.

Ontario's Employment Standards Act, 2000 was amended in 2021 to add section 67.2, which renders non-compete agreements for employees (below a certain executive level) entered into on or after October 25, 2021 void and unenforceable. This is a significant shift: most new employment non-competes in Ontario are now legally ineffective as a matter of statute.

Non-solicitation clauses (protecting customers or employees but not restricting general competitive employment) are treated more generously and can still be enforced if reasonable in scope.

Whether a specific clause entered into before the 2021 change, or involving an executive, is enforceable requires case-by-case analysis by an employment or commercial litigation lawyer.