Competition Bureau chief urges limits on non-compete clauses for workers

Posted October 29, 2026 1:35 pm

2 min read

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.

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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.

“It is quite burdensome,” Pinkus said. “And [it] has been looked upon fairly dimly by both legislatures and the courts.”

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.

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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.