The 2025 Guide to Ontario Employment Contracts: Non-Competes, Non-Solicits, and Confidentiality

• by Admin
• October 29, 2025

The 2025 Guide to Ontario Employment Contracts: Non-Competes, Non-Solicits, and Confidentiality

Introduction: The Fine Print That Defines Your Future

Signing a new employment agreement is a milestone. For employers, it’s the start of a new relationship you hope will grow your business. For employees, it’s an exciting new chapter in your career. But in the rush to get started, it's easy to skim over the "legal" sections—specifically, the restrictive covenants.

These clauses, most commonly non-competition, non-solicitation, and confidentiality clauses, are some of the most critical and misunderstood terms in any Ontario employment contract. They dictate what you can (and cannot) do after the employment relationship ends.

For employers in Brampton, a poorly drafted clause can mean zero protection for your clients and trade secrets. For employees, signing an overly broad clause can severely limit your ability to earn a living in your chosen field.

And in 2025, the legal landscape in Ontario is dramatically different than it was just a few years ago. Understanding these changes is not just good practice—it's essential.

Disclaimer: This article provides general information on Ontario employment law as of 2025. It is not a substitute for legal advice. We strongly recommend consulting with an employment lawyer to review your specific situation.

1. The Non-Compete Clause: A Ban with Few Exceptions

What is a Non-Compete Clause?

A non-competition clause (or "non-compete") is a term in an employment agreement that attempts to restrict an employee from working for a competitor, or starting a competing business, for a certain period of time and within a specific geographic area after they leave their job.

The Big Change: Are Non-Competes Legal in Ontario in 2025?

For the vast majority of employees in Ontario, the answer is NO.

In late 2021, the Ontario government passed the Working for Workers Act, 2021 (also known as Bill 27). This legislation officially banned employers from entering into employment contracts that contain non-compete clauses.

This is the most significant change to this area of law in decades. If you are a software developer, a sales professional, a marketing manager, or any other non-executive employee in Ontario, a non-compete clause in any agreement you signed after October 25, 2021, is void and unenforceable.

The Only Two Exceptions

The Working for Workers Act provides only two very specific exceptions where a non-compete might be permissible:

• C-Suite Executives: The ban does not apply to individuals who hold "chief executive" positions. This is a very high bar. It includes roles like Chief Executive Officer, President, Chief Financial Officer, Chief Operating Officer, etc. This narrow exception recognizes the unique level of information and strategic importance these roles hold.
• Sale of a Business: If you sell your business and, as part of that sale, you become an employee of the purchasing company, the purchaser can legally bind you to a non-compete clause. This is to protect the goodwill and assets (like client lists) that they just paid for.

For Brampton employers, this means you must audit your contracts. Relying on an old template with a non-compete clause is not only useless—it signals bad faith and could complicate the enforcement of your other, legitimate clauses.

2. The Non-Solicitation Clause: Protecting Your Client List

With non-competes effectively banned, the non-solicitation clause has become the most important tool for employers.

What is a Non-Solicitation Clause?

A non-solicitation clause does not stop you from working for a competitor. Instead, it prevents you from actively soliciting (i.e., "poaching") clients, customers, or sometimes even other employees from your former employer for a set period.

Example: You leave your sales job at a Brampton logistics company. A non-solicitation clause would likely prevent you from calling your old client list to convince them to move their business to your new company.

Are They Enforceable? Yes, IF "Reasonable"

Unlike non-competes, non-solicitation clauses are still perfectly legal in Ontario, but only if they are "reasonable." Canadian courts are very cautious about restricting someone's ability to work. To be enforceable, a non-solicitation clause must be narrowly drafted and protect only the employer's legitimate business interests.

The "Reasonableness Test" for a non-solicitation clause includes:

• Temporal Scope (Time): The restriction must be for a limited time. A period of 6 to 12 months is common. A clause for 5 years would almost certainly be struck down.
• Activity Scope: The clause should be limited to clients or customers the employee personally had contact with or had influence over. A blanket ban on soliciting any of the company's thousands of clients, even ones the employee never met, is often seen as unreasonable.
• Clarity: The language must be clear and unambiguous.

Watch out for "non-dealing" clauses, which are more restrictive. They attempt to stop you from even accepting business from a former client who contacts you first. Courts are even more skeptical of these.

3. The Confidentiality Clause (NDA): Protecting Your Secrets

This is the one restrictive covenant that is, and will likely always be, highly enforceable.

What is a Confidentiality Clause?

Also known as a Non-Disclosure Agreement (NDA), this clause prevents an employee from using or disclosing the employer's "confidential information" or "trade secrets," both during and after employment.

What is "Confidential Information"?

This is the key question. A confidentiality clause is only as strong as its definition of what's being protected. This typically includes:

• Client lists and contact information
• Pricing strategies and financial data
• Marketing plans and business strategies
• Proprietary software, formulas, or designs (trade secrets)

This clause cannot protect information that is already publicly available. More importantly, it cannot stop you from using the general skills, knowledge, and experience you acquired during your job. For example, a clause can't stop a mechanic from using their knowledge of how to fix an engine, but it can stop them from taking the dealership's private customer list.

A confidentiality clause is the most powerful and enduring protection an employer has. For employees, it's a serious obligation that lasts long after your last day.

How the Three Clauses Compare (2025 Ontario)

Clause Type	What It Restricts	Enforceable in Ontario (2025)?
Non-Compete	Working for a competitor.	NO (Banned), except for C-Suite Execs or in a sale of business.
Non-Solicitation	Actively poaching clients or staff.	YES, but only if it is reasonable in time, scope, and activity.
Confidentiality	Disclosing or using company secrets.	YES, almost always, as long as the information is truly confidential.

Conclusion: Read Before You Sign, Draft Before You Hire

The rules of the game have changed in Ontario.

For employees in 2025, the good news is that your mobility is protected. You can no longer be "benched" by a non-compete clause. However, you must still pay close attention to non-solicitation and confidentiality clauses, as a breach can lead to a costly lawsuit. Never assume a clause is unenforceable just because it seems broad.

For employers in Brampton, it's time to update your employment agreements. Relying on an old template with an illegal non-compete clause is a major liability. Your focus must now be on drafting iron-clad, reasonable non-solicitation and confidentiality clauses to protect the business you've worked so hard to build.

Whether you are an employee reviewing a new offer or an employer looking to protect your business, the language in your contract matters.