The short answer is usually no. Since October 25, 2021, most employee non-competition clauses are void by statute. There are exceptions, in the case of executives or the seller of a business who stays on as an employee, where a non-compete is enforceable. Even the ones that escape the ban still face a court that starts from scepticism. Whether a non-compete is enforceable in Ontario now turns on a handful of questions you can work through yourself. This guide covers what happens next on both sides of the ledger.
The Starting Point: Void by Statute
Subsection 67.2(1) of the Employment Standards Act, 2000 is short and blunt:
No employer shall enter into an employment contract or other agreement with an employee that is, or that includes, a non-compete agreement.
Subsection (2) then makes any offending clause void rather than merely unenforceable. Nobody needs a court order to defeat it.
Note what the section voids, however. It kills the non-compete agreement, not the employment contract around it.
One void clause does not sink the whole contract
Employees sometimes hope an illegal covenant unravels everything they signed. The section does not go that far.
Subsection 67.2(2) voids the non-compete agreement itself, not the contract that contains it. The definition reaches any part of an agreement rather than only a standalone document, so the statute does the severing for you, and salary, notice, confidentiality and non-solicitation terms carry on untouched.
No reported Ontario decision appears to have tested that reading against a section 67.2 non-compete. Nevertheless, the wording is specific, so assume the rest of what you signed still binds you.
What Happens When an Employer Tries to Enforce
Most employees never see a courtroom. They see a demand letter asserting that a non-compete is enforceable in Ontario, and the real question becomes whether the employer will actually go to court to try to enforce it.
If it does, the employer faces a higher bar than in ordinary litigation. An injunction motion decides whether a non-compete is enforceable in Ontario, and as Wyse Meter Solutions Inc. v. Papanicolopoulos, 2024 ONSC 840 put it at paragraph 21:
The court imposes a higher threshold in the case of enforcement of restrictive covenants in employment contracts, and the plaintiff must establish a strong prima facie case before injunctive relief will be granted.
That standard matters. An ordinary injunction requires only a serious issue for trial, and a pure breach of confidence claim can still proceed on that lower footing. Ontario applies the stricter rule to restrictive covenants generally, so the question whether a non-compete is enforceable and the same question about a non-solicit both meet it.
Irreparable harm is where employers usually lose
Even a covenant that is enforceable fails if the loss is measurable in money. Ontario courts repeatedly find that lost customers and lost revenue are exactly that, which is why a non-compete so often survives on paper and dies on the motion.
Wyse is instructive because the employer lost on both branches. The court found no strong case that the covenants were enforceable at all, and it reiterated at paragraph 97 that irreparable harm must rest on evidence rather than speculation.
Employers often think a contract clause solves this. It does not, because a clause in which the employee “acknowledges” that any breach causes irreparable harm is not a substitute for proof.
Employers do win on the right facts
The picture is not one-sided. In Parekh et al v. Schecter et al, 2022 ONSC 302, buyers of a Toronto dental practice enforced a five-kilometre covenant against an associate dentist who had signed a restrictive covenant as a condition of the sale, after he opened a clinic just inside the radius.
Two features drove that result. His agreement dated from January 2020, so the ban never reached it, and the court applied the more permissive sale-of-business standard because his covenant was given as a condition of the $5.6 million purchase.
An interlocutory injunction followed, the court holding that it “would be fundamentally unjust to confine the plaintiffs to a remedy in damages.”
Read the limits, though. The covenant survived because it predated the ban, so the case says nothing about an employee non-compete signed today.
Four Myths About Whether a Non-Compete Is Enforceable in Ontario
“I signed it, so I am bound.” Restrictive covenants are presumptively unenforceable, and the employer carries the onus of proving reasonableness. In Boaden Catering Limited v. Earl Haig Community Day Care, 2024 ONSC 5349, the court struck a covenant the owner had taken from an internet template.
“The severability clause will save it.” It will not. In Kerzner v. American Iron & Metal Company Inc., 2018 ONCA 989, the employer expressly invoked a contractual severance power, and the Court of Appeal declined at paragraph 62 to “use the remedial severance tool provided by the 2014 Agreement.”
“It is only six months, so it must be fine.” Duration, geography and activity are separate tests, and failing any one is fatal. Kerzner never reached the temporal question because the geographic reach alone decided it.
“He is an executive now, so the old clause works.” Ontario courts judge whether a non-compete is enforceable as at the date of signing. A promotion cannot retroactively legalise a clause that was void when made, and a new covenant needs fresh consideration.
What Each Side Should Actually Do
Employees receiving a demand letter should start with the date. A covenant signed before October 25, 2021 escapes the ban entirely, so the older common law governs it instead.
Next, do not take anything with you. Forwarding client lists or documents to a personal email converts a weak employer case into a strong one, and it is the single most common own-goal in these disputes.
Employers should be equally realistic. No Ontario decision has yet interpreted the executive exception or the statutory sale-of-business exception, so anyone arguing that a non-compete is enforceable on either footing is arguing an open point.
A warning for the new employer
Hiring someone under a covenant carries its own exposure. Drouillard v. Cogeco Cable Inc., 2007 ONCA 322 sets out the four elements of inducing breach of contract at paragraph 26, beginning with a valid and enforceable contract and knowledge of it.
Both requirements cut in the new employer’s favour. You cannot induce breach of a void covenant, and you cannot induce breach of an agreement you never knew about.
Ask the candidate for the document anyway, read it, and record what you decided. Forming your own view on whether a non-compete is enforceable in Ontario is far cheaper than defending the claim later.
What to Do Next: When to Call a Lawyer
Move quickly, because Ontario courts decide these disputes in days rather than months. An employer who waits while customers migrate weakens the very urgency it needs.
Employees should resist the instinct to ignore the letter. Answering through counsel costs far less than an injunction motion, and the argument that a non-compete is not enforceable in Ontario is usually stronger than people assume.
One realistic note for employees. If your employer simply included an illegal clause, the Ministry may find a contravention, but section 104 of the ESA does not extend compensation orders to Part XV.1, so there is no statutory payout for work you turned down because of it.
Whether a non-compete is enforceable in Ontario is rarely obvious from the clause alone. If you are holding one, or enforcing one, contact Cowan before you act on it.
