An employment contract can follow a worker long after the final day on the job. Across Canada, millions of employees may be subject to restrictions that limit where they can work next, even when those restrictions would be difficult to enforce in court.
On October 29, 2026, Canada’s Competition Bureau urged provincial and territorial governments to limit non-compete agreements, citing OECD research suggesting that between 29% and 39% of Canadian private-sector employees may be covered by such clauses.
The concern extends beyond executives and highly specialized professionals. Restrictions also appear in lower-paying jobs, temporary positions, and workplaces where employees have little access to confidential information.
With Ontario already restricting most new employment non-competes and Ottawa pursuing federal changes, pressure is growing for broader reforms that could reshape job mobility, wage negotiations, and entrepreneurship across Canada.
A Restriction That Can Outlast a Job
A non-compete agreement is a promise not to work for a competing business, or launch a competing venture, after leaving an employer. It might specify a particular industry, geographic area, or time period. For someone whose experience is concentrated in one field, even a short restriction can feel enormous. A salesperson offered a better position by a rival, for example, may hesitate to pursue it if an old contract appears to prohibit the move. The agreement can influence that decision long before anyone asks a judge whether its wording is lawful.
Employers traditionally use these clauses to safeguard commercially sensitive information, established client relationships, or investments in specialized training. Those interests can be legitimate, but a non-compete goes further than simply requiring confidentiality: it can interfere with earning a living in the same line of work. That is the distinction behind the Competition Bureau’s October 29 intervention. The agency is not arguing that businesses should surrender their secrets. It is asking governments to examine whether broad restrictions on workers’ next jobs have become an unnecessary barrier to competition.
The 39% Figure Needs Careful Reading
The headline estimate comes from OECD research using employer and employee surveys conducted in 2025. Canadian employers indicated that between 29% and 39% of private-sector employees were covered by non-compete clauses. In a separate employee survey, 20% of Canadian respondents said they definitely had such a restriction, while another 21% believed they probably did. With more than 13.7 million people working in Canada’s private sector, the Competition Bureau says those figures point to several million potentially affected workers.
The numbers are substantial, but they are not a count of legally enforceable contracts or proof that 39% of employees have been stopped from changing jobs. The OECD-Bocconi research included 2,165 Canadian employee responses and 411 employer responses, using different sampling methods. Respondents also expressed uncertainty about what their contracts contained. The OECD cautions that small differences in estimated prevalence between countries can fall within statistical margins of error. Canada’s placement near the high end is notable; declaring a precise international ranking would go further than the evidence permits.
The Restrictions Reach Far Beyond Executives
The argument for a non-compete is easiest to understand when an employee holds valuable trade secrets or sensitive strategic plans. Yet the Canadian findings extend much further. The OECD reported coverage ranges of 14% to 31% for workers in non-managerial or non-professional occupations, and 20% to 45% for employees on fixed-term contracts. Among workers earning less than $3,000 a month, the estimated range was 15% to 26%. Even among people reporting no access to confidential information, it was 13% to 25%.
That matters because these workers may have fewer financial resources to challenge restrictive language or spend months searching outside their usual field. Imagine a temporary employee finishing an assignment and discovering a clause that seems to rule out the most obvious next employer. The worker may simply abandon the application. The OECD also found that 30% of Canadian firms using non-competes applied them to every employee, regardless of role or seniority. For the Competition Bureau, such blanket use raises serious questions about whether the restriction is tailored to a genuine business risk.
Workers Report Missed Career Opportunities
The potential effects are not limited to a theoretical loss of freedom. Among Canadian workers who reported having a non-compete, approximately 23% told OECD researchers that the restriction had prevented them from changing jobs. Another 12% said it had prevented them from starting a business. Those answers describe the respondents’ experiences and perceptions; they do not establish that every blocked move would have breached an enforceable agreement or that the clauses alone caused every decision.
Nevertheless, they give the policy dispute a recognizable human dimension. A skilled employee could be offered higher pay by a competitor but decide the move is too risky. Someone with enough industry experience to open a small company might postpone the idea because of language signed years earlier. Such choices are rarely visible in court statistics because no lawsuit needs to occur. The Competition Bureau’s concern is that when enough workers decline opportunities quietly, businesses lose access to talent and prospective entrepreneurs never enter the market.
A Clause Can Deter People Without Being Enforceable
Canadian courts already scrutinize employment non-competes closely. In its 2009 Shafron decision, the Supreme Court of Canada emphasized that restrictive covenants are presumed unenforceable unless shown to be reasonable. Wording about the prohibited work, geographic reach, and duration matters, and ambiguous limits can fail. Yet a worker reading a sternly worded contract may not know which provisions could survive a legal challenge. Few people want to finance litigation merely to accept a new job.
The OECD findings capture this gap between legal rights and everyday behaviour. Among Canadian respondents whose non-competes appeared unlikely to be upheld in court, 44% said they would nevertheless reject a competing job that violated the clause. Another 27% said a restriction had already kept them from moving to or starting a competing business. Those figures are based on self-reports and an assessment of likely enforceability, not court rulings on individual contracts. Still, they explain why the Competition Bureau considers case-by-case litigation an incomplete solution: a restriction can succeed in discouraging movement even when an employer might lose in court.
Wage Bargaining and Productivity Are Also at Stake
A worker who can credibly accept another job has a stronger position when negotiating pay or working conditions. Non-competes can weaken that leverage by reducing the number of realistic alternatives. The OECD’s 2026 Employment Outlook found that, across surveyed countries, workers with non-competes advanced roughly three percentiles less through the earnings distribution over a 25-year career than comparable workers with confidentiality agreements but no non-compete. That is an international association, not an estimate that Canadian wages fall by three percentage points.
Researchers also connect widespread restrictions with slower movement of people and ideas between firms. An OECD cross-country analysis associated a 10-percentage-point increase in non-compete prevalence with 1.9% lower aggregate productivity. These findings do not prove that eliminating clauses would automatically deliver those gains in Canada. There are trade-offs: protecting training investments or confidential know-how can benefit businesses, and some research finds different outcomes for highly educated employees. The broader concern is whether indiscriminate use sacrifices more wage growth, innovation, and business creation than it protects.
Ontario Already Offers a Model—With Limits
Ontario moved ahead of most of the country in 2021. Since October 25 of that year, its Employment Standards Act has generally prohibited employers from entering into new non-compete agreements with employees. The prohibition also covers agreements made with applicants and former employees. There are narrow exceptions, including certain transactions where someone sells or leases a business and then becomes an employee of the buyer, and agreements involving executives such as chief executive officers or chief financial officers.
The timing is important. Ontario’s ban does not automatically erase a non-compete signed before October 25, 2021; older provisions may still be assessed under the common law. Nor does the legislation outlaw ordinary non-disclosure or non-solicitation agreements, although their enforceability can still be disputed. An Ontario employee examining a contract therefore needs more than a headline about a ban: the signing date, the person’s position and the exact wording can all matter. The province’s rules demonstrate how legislation can prevent many restrictions from being imposed in the first place, without removing every potential contractual dispute.
Ottawa’s Proposal Is Still Before Parliament
The federal government has taken a separate route through Bill C-31, the Budget 2025 Implementation Act, No. 2. Introduced in May 2026, it proposes changes to the Canada Labour Code that would generally prohibit non-compete clauses in federally regulated employment. That includes important parts of banking, telecommunications and interprovincial transportation. The legislation provides for exemptions involving certain senior leaders and qualifying business transfers, rather than applying an identical rule to every position.
As of October 30, 2026, Parliament’s official legislative record shows Bill C-31 at the House of Commons committee stage. Its non-compete provisions are therefore proposals, not a nationwide prohibition already in force. The text also contains protection against reprisals for refusing prohibited restrictions, along with a transitional arrangement for some existing clauses if the bill becomes law. Those details could become significant to workers and employers, but both enactment and implementation still matter. The Competition Bureau has urged prompt passage while warning that federal reform alone would leave much of the private-sector labour market dependent on provincial and territorial rules.
Protecting Business Secrets Need Not Mean Blocking Careers
Employers have legitimate reasons to worry when experienced staff leave. A departing engineer might know a confidential product design; a salesperson may know sensitive pricing or customer information. But preventing either person from taking any job with a competitor is not the only possible response. Confidentiality obligations can protect information, while appropriately drafted non-solicitation provisions can address attempts to take clients or colleagues. Ontario’s guidance explicitly distinguishes those agreements from a ban on working for a rival.
The OECD’s Canadian employer survey shows how common the alternatives already are: 48% of private-sector employees were reported covered by non-disclosure agreements, while 28% were covered by client non-solicitation clauses and 26% by colleague non-solicitation clauses. These figures do not mean every such provision is reasonable or enforceable; overly broad restrictions can still be challenged. They do show that firms often use more targeted contractual tools alongside non-competes. The Competition Bureau’s position is that governments can preserve legitimate protections without routinely limiting a worker’s ability to use ordinary skills and experience elsewhere.
The Next Decision Rests With Provinces and Territories
The October 29 letter does not itself ban a single contract. Interim Commissioner of Competition Jeanne Pratt is asking provincial and territorial labour ministers to consider reforms that would limit unnecessary non-competes, complement Ontario’s law and the federal proposal, and make the rules clearer across Canada. The agency also stresses education and enforcement. A prohibition written into legislation may offer little practical reassurance if workers still encounter misleading clauses or cannot discover what the law says.
For employees, the immediate question is what their own agreement actually restricts, when it was signed and which jurisdiction governs their workplace. For employers, the question is whether protecting a particular secret truly requires limiting someone else’s next job. Neither answer can be reduced to the 39% headline, and the legal position depends on the facts. The wider stakes are economic: a competitive labour market needs businesses willing to hire and workers able to consider offers. Provinces now face a choice about how much contractual uncertainty they are prepared to leave in the path of that exchange.
