The Competition Bureau of Canada is calling on provincial and territorial governments to limit the use of non-compete agreements in an effort to “foster more competitive labour markets.”
In a letter dated Oct. 29, Interim Commissioner of Competition Jeanne Pratt said the breadth of use of non-compete clauses in Canada is “concerning.”
Non-compete clauses can restrict workers from joining a rival company or starting a competing business for a set period of time after leaving a job.
According to a survey from the Organization for Economic Co-operation and Development (OECD), Canada has one of the highest prevalence rates of non-compete clauses with employers reporting that between 29 and 39 per cent of private-sector employees fall under them.
Non-compete clauses were designed to target high-level executives, Jon Pinkus, an employment lawyer and partner at Samfiru Tumarkin LLP in Toronto, told Global News.
He said ideally the clauses should only be used for employees who have a “real fiduciary duty” and who “can do real damage if they go to a competitor.”
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But the data tells a different story. Among Canadian firms that use non-competes, 30 per cent reportedly apply them to every employee regardless of their role or seniority, according to the OECD.
Pratt argued that widespread use of non-compete clauses can reduce job wages, mobility and entrepreneurship.
According to the OECD, 23 per cent of Canadian workers who report having a non-compete agreement say it has prevented them from changing jobs. Approximately 12 per cent self reported that the agreement prevented them from starting a business.
Despite the prevalence of non-compete agreements, Pinkus said many of them are not enforceable.
“The courts may determine that they are an unreasonable, what we call restraint of trade, and invalidate them on that basis,” he said, adding that the responsibility is on the employer to prove a non-compete is necessary.
But more than 40 per cent of employees operating under a non-compete said they would turn down a competing job even if the agreement was unlikely to be upheld in court, according to the OECD.
The Government of Canada committed in its 2025 budget to restricting the use of non-compete agreements which it said will “protect workers’ rights, promote labour mobility, strengthen competition, and empower workers to move to a higher-paying job or start their own business.”
Ontario was the first and only province to enact a statutory ban on the use of non-compete clauses which it did so in 2021.
The province’s Employment Standards Act prohibits most new employment non-competes, with a few limited exceptions including certain agreements associated with the sale of a business and agreements involving senior executives.
Friendly remind:
I’m not a faunt of wisdom. Listening to me is declaring you like face planting on brick walls.
Friendly remind:
Declaring you’re offended by someone’s statement or behaviour is declaring you like face planting on brick walls.
We are supposed to navigate the world’s obstacles. Maybe encounters with life’s many obstacles makes for good story telling, but your insurance company doesn’t give a sh1t and neither do I or other rational people.
If reality is not your friend, please allow me to introduce you to physics, or what I call, the idiots brick wall.
Canada needs a ban, as does everyone, on non-compete clauses.
They are nothing more than a tool for extortion, or stifling actual competition as deemed the heart of capitalism.
The non-compete is in every sense of the word, communist.
Because the government itself made an ass of itself.
I’m not surprised that the LPC doesn’t respect trademarks.
This is why Canada has companies that are monopolies and the government encourages it. Canada has the highest rates in the world for telecommunications because the 3 big players work together to keep the price up another one is Air Canada they completely own the airways within Canada. If competition was allowed in Canada these companies would collapse
This is a great idea to combat absolute corporate power.
The commissioner, along with everyone else in the competition Bureau, ought to be shot. You wonder why the cost of living has skyrocketed? Why your money is so easy to spend but so hard to come by? The competition Bureau has NEVER blocked nor denied a single deal/merger in its entire existence. Gov loves monopolies.