Breaking The Blunt Arrow: Bill 27's Ban On Non-Compete Agreements

First presented at the LSO's 2022 Annotated Employment Agreement Seminar

1. What was the legal landscape prior to the amendments to the Employment Standards Act, 2000?

A non-competition clause is a type of restrictive covenant. It typically purports to preclude an employee from engaging in work that competes with its former employer's business for a period of time after the employment relationship ends. In the well-known Court of Appeal decision Lyons v. Multari,¹ non-competition clauses were described as a "drastic weapon in an employer's arsenal."² If non-competition clauses are indeed a weapon, the common law served as an effective shield.

Prior to the recent amendments to the Employment Standards Act, 2000 ("ESA"), non-competition clauses were already extremely difficult to enforce. The body of case law considering non-competition clauses in a regular employment law context is replete with criticisms and rejections. The courts have held that only in