Employee Non-Solicitation Clauses in an Ontario Business Purchase Agreement

When you buy a business, one of the last things you want is for the person who just sold it to you to turn around and hire away your best staff. That’s exactly what an employee non-solicitation clause in a business purchase agreement is designed to prevent.

These clauses are common, generally enforceable, and worth understanding in detail — both what they cover and, just as importantly, what they don’t.

This article explains how non-solicitation clauses work in an Ontario purchase agreement, how they differ from a non-compete, and what makes one more likely to hold up if it’s ever tested.

What a Non-Solicitation Clause Restricts

A non-solicitation clause in a purchase agreement typically prohibits the seller — and often its principals personally — from actively recruiting, hiring away, or encouraging employees of the business to leave and work elsewhere, for a defined period after closing.

It is narrower than a non-compete. A non-compete generally stops someone from competing in the same business or industry at all; a non-solicitation clause only stops them from targeting your employees (and, often, your customers, under a related clause). The seller can go on to work in a similar industry — they just can’t poach your team while doing it.

Why Buyers Insist on This Clause

You are often paying, in part, for the workforce that makes the business run — the technician who knows every machine, the salesperson with the client relationships, the manager who trained everyone else. Without a non-solicitation clause, nothing stops the seller from rebuilding a competing team using exactly the people you just paid to acquire.

Non-Solicitation vs. Non-Compete vs. Confidentiality

These three clauses often appear together in a purchase agreement, but they do different jobs.

This distinction matters because the ESA’s ban on general employee non-competes does not touch ordinary non-solicitation or confidentiality obligations — those remain standard, enforceable tools regardless of whether the seller also signs a non-compete.

What Makes a Non-Solicitation Clause Enforceable

Courts assess these clauses for reasonableness, generally looking at:

• Duration — how long the restriction lasts after closing.
• Scope — whose employees are covered (just current staff, or anyone employed at any point during a window?).
• Clarity — vague or overly broad language ("any employee, contractor, or affiliate, anywhere, forever") is more likely to be challenged than a clause tailored to the actual business being sold.

There’s no fixed formula for what counts as reasonable — it depends on the nature of the business, the roles involved, and the rest of the deal. This is squarely a drafting question for your lawyer, not something to copy from a template used on another deal.

Common Drafting Pitfalls

• Treating the non-solicitation clause as boilerplate instead of tailoring it to the actual business.
• Forgetting to extend the restriction to the seller’s principals personally, not just the corporate entity, where the seller is a company.
• Overlapping or contradicting a separate non-compete clause in a way that creates ambiguity about what’s actually restricted.
• Failing to coordinate the clause with any employment agreement the seller signs if they’re staying on as an employee of the buyer.

Frequently asked questions