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ARTICLE · 23 JUNE 2026

Sweeping Changes Proposed To Non-Compete Clauses For Federally Regulated Employers

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Bill C-31 proposes significant amendments to the Canada Labour Code that would prohibit non-compete clauses and other post-employment restrictions for federally regulated employers, with limited exemptions for senior executives and business sale transactions. The legislation includes anti-reprisal protections and places the burden of proof on employers, while existing non-compete clauses would remain valid for only one year after the law takes effect.

CanadaEmployment and HR
Camille Dunbar
Camille Dunbar
Kibati Femi-Johnson
Kibati Femi-Johnson
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Restrictive covenants in employment contracts typically come in three forms: non-compete, non-solicit and confidentiality clauses. These covenants, often referred to as “restraints of trade,” have long been scrutinized by Canadian courts.

In May 2026, the federal government introduced Bill C-31, which proposes sweeping reform to the Canada Labour Code that would prohibit non-compete clauses and other post-employment restrictions for federally regulated employers.

What Federally Regulated Employers Need to Know Now

  • Bill C-31 is not yet in force. If enacted, there will be a one-year transition period from the date the amendments come into force. Employers will be immediately prohibited from entering into new non‑compete clauses, but existing clauses will remain temporarily in force and will be rendered void after the one‑year transition period.

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