Are non-compete clauses enforceable in Canada?
Enforceability varies by province. Ontario banned non-compete clauses for most employees (not executives) in the Working for Workers Act, 2021 (effective October 25, 2021). In BC and Alberta, non-competes are enforceable if they are reasonable in scope, duration, and geographic area and protect a legitimate proprietary interest (trade secrets, confidential client relationships). Canadian courts apply a strict reasonableness test and will void overbroad clauses entirely (unlike some US courts that 'blue-pencil').
What is the Ontario non-compete ban?
Section 67.1 of Ontario's Employment Standards Act (added by the Working for Workers Act, 2021) voids non-compete agreements for most employees — they are unenforceable. Two exceptions exist: (1) the employee is an 'executive' (defined as a C-suite officer or someone who regularly makes binding decisions), and (2) the non-compete is part of the sale of a business where the employee was an owner. Non-solicitation clauses (restricting solicitation of clients or employees) remain enforceable in Ontario if reasonable.
What damages can an employer recover for a non-compete breach?
If a non-compete is enforceable and breached, the employer can seek: (1) an injunction (court order stopping the competing activity); (2) lost profits — revenues the employer lost because a customer went to the former employee's new venture; and (3) disgorgement of profits the former employee earned through the breach. Proving lost profits requires evidence of actual customer diversions and causation. Courts rarely award speculative damages.