Littler Global Guide - Canada - Q1 2022

Ontario Court Decides on ESA Prohibition Against Noncompete Agreements

Precedential Decision by Judiciary or Regulatory Agency

Authors: Rhonda B. Levy, Knowledge Management Counsel, and Monty Verlint, Partner – Littler LLP

Among other things, Ontario's Bill 27, Working for Workers Act, 2021 (Act), which became law on December 2, 2021, amends the Employment Standards Act, 2000 to prohibit current and prospective employers from entering into an employment contract or other agreement with an employee or an applicant for employment that is, or that includes, a noncompete agreement, except upon the sale of a business or if the employee is an "executive." The Act provides that this prohibition is deemed to be in force effective October 25, 2021, but it does not indicate whether the prohibition applies to noncompete clauses entered into prior to this effective date. This question was recently answered by the Ontario Superior Court of Justice, when it held that the