Is Your Non-Compete Doing What You Think It Is?
Your non-compete clause could be worthless. Why is it still in your employment contracts?
Think that non-compete clause is protecting your business? Think again.
For years, employers have relied on non-compete agreements to protect business interests, prevent employees from joining competitors and safeguard valuable relationships.
But here's the problem: Just because an employee signed a non-compete agreement doesn't mean you can enforce it.
And with Canada's Competition Bureau now calling for tougher restrictions, employers have another reason to revisit their employment contracts.
The Numbers May Surprise You
29% - 39% of Canadian private-sector employees may be covered by non-compete agreements.
That's according to research highlighted by Canada's Competition Bureau in October 2026.
Source: Competition Bureau Canada, October 29, 2026 .
What's Happening Now?
On October 29, 2026, Canada's Competition Bureau urged provincial and territorial governments to limit the widespread use of non-compete agreements.
Why?
Because these agreements can restrict employee mobility, limit career opportunities and make it harder for businesses to attract talent.
The Bureau argues that restrictions on employee mobility can also undermine competition and economic growth.
But here's what Ontario employers need to know: Ontario already changed the rules five years ago.
Ontario Banned Most New Non-Competes in 2021
Since October 25, 2021, Ontario's Employment Standards Act, 2000 has prohibited most new employment-related non-compete agreements.
There are limited exceptions, including certain executive positions and specific business-sale arrangements.
Agreements entered into before October 25, 2021, are not automatically invalidated by the legislation, although their enforceability remains subject to other legal requirements.
What Employers Need To Know
A signed agreement does not necessarily mean an enforceable agreement.
The date, wording, scope and circumstances of a non-compete can all affect whether it is legally enforceable.
And simply including a restrictive clause in an employment contract does not guarantee that your organization is protected.
Not All Restrictive Clauses Are Created Equal
Non-compete, non-solicitation, and confidentiality agreements are often discussed together.
But they are not the same, and the legal rules governing them differ.
Type of agreement | What it does | What employers should know |
Non-Compete | Restricts employees from working for competitors or starting competing businesses after leaving. | Most new employment non-competes are prohibited in Ontario, subject to limited exceptions. |
Non-Solicitation | Restricts former employees from soliciting clients, customers or employees. | May be enforceable when appropriately drafted and reasonable in scope. |
Confidentiality | Protects sensitive business information, including trade secrets and proprietary information. | Generally permitted, but wording, scope and applicable legal obligations matter. |
The takeaway?
Employers can still take steps to protect legitimate business interests. The key is understanding which protections are appropriate and legally permissible.
The Hidden Risk: Employment Contracts That Haven't Kept Up
When was the last time your organization reviewed its employment agreements?
Not when they were first drafted.
Not when someone updated the company logo.
When were they actually reviewed for compliance?
Many organizations continue using employment contracts that have been copied, amended, and circulated for years.
And sometimes, outdated provisions remain buried in otherwise standard agreements.
The consequences can include:
✖ Relying on contractual protections that may be unenforceable.
✖ Creating unnecessary disputes with departing employees.
✖ Including provisions that conflict with current employment standards.
✖ Giving management a false sense of security about the organization's legal protections.
An outdated contract isn't just an administrative oversight. It can become a business risk.
Quick Employer Checklist
Before You Issue Your Next Employment Contract...
Take a few minutes to consider:
☐ Non-compete clauses: Do our agreements contain restrictions that may be prohibited or unenforceable?
☐ Non-solicitation provisions: Are these appropriately tailored to our legitimate business interests?
☐ Confidentiality obligations: Do they adequately protect sensitive information without creating unnecessary restrictions?
☐ Contract templates: When were our standard employment agreements last reviewed?
☐ Legal review: Have we had qualified employment counsel assess our restrictive covenants?
If you're unsure about several of these questions, your employment agreements may be due for a review.
The Bottom Line
Non-compete agreements are facing renewed scrutiny across Canada.
But for Ontario employers, this isn't entirely new territory.
The October 2026 Competition Bureau announcement is a call for broader reform, not a new nationwide prohibition.
Ontario has already restricted most new employment non-competes for five years.
The question isn't whether your employment contracts contain protective clauses. It's whether those clauses actually provide the protection you think they do.
And that's a question worth answering before you need to rely on them.
Is Your HR Documentation Keeping Up?
Employment contracts are just one piece of the compliance puzzle.
The Orion Group helps organizations review their HR policies, employment documentation and workplace practices to identify potential gaps, strengthen processes, and reduce organizational risk.
Whether your documents need a refresh or your HR practices require a more comprehensive review, we can help you identify the next steps, including when legal review is appropriate.
Disclaimer: This article is intended for general information only and does not constitute legal advice. Employers should consult qualified employment counsel regarding the drafting, interpretation, and enforceability of employment agreements.
