Non-Competition and Non-Solicitation Clauses in Ontario: What Employees Need to Know
Non-compete and non-solicitation clauses can significantly impact employees’ career prospects after leaving a job. These clauses are often included in employment contracts to protect the employer’s business interests, but in Ontario, their enforceability is limited.
Non-compete clauses prevent employees from working for competitors or starting a competing business for a specific period and within a defined geographic area. Non-solicitation clauses restrict employees from approaching the employer’s clients, customers, or staff for their own benefit or a new employer’s.
Ontario courts are cautious about enforcing these clauses, as they restrict an individual’s ability to work. Employers must prove that the clauses are reasonable and necessary to protect legitimate business interests, such as trade secrets or confidential information. Courts examine the duration, geographic scope, and activities restricted. Broad, overly restrictive clauses are unlikely to hold up in court.
The Working for Workers Act, 2021, effective October 25, 2021, prohibits non-compete clauses for most employees in Ontario. This means any non-compete agreements entered into on or after this date are void, except for senior executives like CEOs or presidents. For these roles, such clauses may still be enforceable if they are reasonable and protect legitimate business interests.
Importantly, this legislation does not affect non-solicitation or confidentiality agreements, which remain enforceable and are often used to safeguard employers’ interests without unduly restricting employees’ opportunities.
If you face a non-compete or non-solicitation clause in your employment contract, it’s essential to understand your rights. An employer pursuing legal action must demonstrate that the clause is enforceable and that any breach caused harm. Consulting an Ontario employment lawyer can help you understand your obligations and ensure your future career prospects are protected.
Contact Veromi Arsiradam Law today for personalized legal advice tailored to your situation.