Ontario Government Introduces Bill To Prohibit Non-Compete Agreements For Employees

On October 25, 2021, the Ontario government introduced Bill 27, Working for Workers Act, 2021 (Bill 27), that if passed, would significantly change employment laws, including imposing a prohibition on non-compete agreements for employees.

Under Bill 27, Ontario’s Employment Standards Act, 2002 (the Act), would be amended to prohibit “employers from entering into employment contracts or other agreements with an employee that are, or that include, a non-compete agreement.” The Act would define non-compete agreements as:

[A]n agreement, or any part of an agreement, between an employer and an employee that prohibits the employee from engaging in any business, work, occupation, profession, project or other activity that is in competition with the employer’s business after the employment relationship between the employee and the employer ends.

However, Bill 27 provides an exemption under the Act if, following the sale of a business (or part of a business), the seller becomes an employee of the purchaser, the purchaser and the seller are allowed to enter into an agreement that prohibits the seller from engaging in any business, work, occupation, profession, project or other activity that is in competition with the purchaser’s business after the sale.

In a news release, the province indicated that employers would still be able to protect their confidential information and intellectual property through narrower clauses.

Summary By: Olalekan (Wole) Akinremi