Bill also contemplates other employment-related restrictions, say employment lawyers
Proposed federal legislation to curb non-compete clauses would mark a “significant” shift in employment practices, labour lawyers say—a change that matters to HR professionals because it will force a rapid overhaul of employment contracts, compliance frameworks and talent retention strategies.
In a report on Bill C‑31, MLT Aikins lawyers Amy Gibson, Megan Kheong and Lynsey Gaudin caution that organisations should begin preparing now, even as the legislation continues to move through Parliament.
Ontario became the first province to prohibit non-compete agreements, effective October 25, 2021, under section 67.1 of the Employment Standards Act (the Working for Workers Act), with exceptions for executives and for the sale of a business. Bill C‑31 would now extend a comparable ban to federally regulated workers.
“An employer cannot agree to, impose on or induce an employee to agree to a non-compete clause or other employment-related restriction,” the authors note, underscoring the breadth of the prohibition.
The definition of a non-compete clause is broad, capturing any term that restricts a worker from engaging in competing activity after employment ends. If enacted, most such clauses would be void, meaning they would be unenforceable and employees would not be bound by them.
For HR professionals, Gibson, Kheong and Gaudin signal that this would eliminate a long-standing tool used to protect business interests. The authors describe the anticipated impact as a fundamental constraint on how employers manage post-employment risk.
Uncertainty around “other restrictions” a key concern
Beyond non-competes, the lawyers point to a second, less-defined category that could expand the reach of the law.
The Bill contemplates “other employment-related restrictions” that may later be defined through regulation, particularly where clauses are seen to “unreasonably restrict” employee mobility.
“Employers operating in these sectors should take note of these proposed changes and consider their implications for existing and future employment agreements,” Gibson, Kheong and Gaudin write.
Exceptions narrow, burden shifts to employers
The MLT Aikins report emphasises that exceptions to the ban are limited. Non-compete clauses may still be allowed in cases involving the sale of a federally regulated business, or for a small group of senior executives, including CEOs and certain direct reports.
“Practically speaking, the employer would have to establish that the non-compete agreement falls into one of the exceptions for it to remain enforceable,” the authors state.
The legislation also introduces reprisal protections, prohibiting employers from penalising workers who refuse such clauses. This includes restrictions on discipline, dismissal or denial of advancement opportunities.
Transition period and preparation urged
Bill C‑31 would come into force on a date set by proclamation, and—under its current drafting—existing non-compete clauses would not be preserved once the provisions take effect.
Despite this, the MLT Aikins lawyers stress that organisations should act promptly. “As the Bill could advance quickly, employers should begin examining alternative means of protecting their legitimate business interests,” they advise.
Recommended steps include strengthening confidentiality and intellectual property provisions, and updating agreements across the workforce.
Support for banning noncompetes
Non-compete agreements broadly prohibit an employee from working for a competitor or starting a competing business for a specified period within a defined geographic area.
“These clauses face greater judicial scepticism because they more severely limit an individual's ability to work in their field,” noted Kyle Lambert, a partner in the Litigation & Dispute Resolution and Employment & Labour Relations groups at McMillan LLP in Toronto, in an article posted in HRD.
More than half of Canadians (52%) support banning non-compete agreements, saying that should be the standard in Canada, while 27% oppose a ban, according to a report released by the Angus Reid Institute in 2024.
Support for doing away with non-competes is highest in British Columbia and Ontario, and—while still a plurality view—lowest in Saskatchewan.
Ottawa is looking to restrict the use of non-compete agreements at banks and other federally regulated workplaces as part of Budget 2025.
