Plot Twist: New Exceptions Water Down Ban On Employee Non-Compete Agreements

We  previously wrote about the Ontario government's Bill to ban most non-compete clauses in employment agreements.  That Bill was  passed on Dec. 2, 2021, but there was a last minute plot twist to broaden the exceptions to the ban.

Background

Non-competition contract clauses were already on shaky ground in Ontario due to judge-made law in court decisions.  These cases have typically disapproved of non-competition clauses as anti-competitive and against public policy to the extent that they restrain an employee from legitimately seeking a new job.  A non-compete clause may still be upheld by the courts in exceptional circumstances.   Non-compete agreements were often considered reasonable and enforceable in the case of a sale of a business, to prevent the former owner of the business from competing with the business that was just sold and undermining the value of the sale.