Why non-compete bans won’t hurt client-list or trade-secret businesses
By Julius Melnitzer | November 11, 2026
The Competition Bureau wants every province to restrict non-compete agreements. But businesses that rely on client relationships and confidential information will find that little has changed. The real loss is a bluff that worked mostly because workers didn’t know enough to challenge what they had signed.
The Competition Bureau’s interim commissioner, Jeanne Pratt, wrote an open letter to provincial labour ministers on Oct. 29 asking them to restrict non-competes. She cited Ontario, which barred most new non-competes in 2021, and Ottawa, whose pending Bill C-31 would do the same for federally regulated workplaces.
Businesses that depend on client lists, like insurance brokers and financial advisers, might be surprised to discover that there’s not much they have to worry about.
The entire justification for non-competes is in protecting personal connections and trade secrets. But Pratt’s letter relies on OECD surveys showing that:
- Up to 39 per cent of Canadian private-sector employees are subject to non-competes;
- Thirty per cent of firms that resort to non-competes impose them on the entire payroll; and
- Up to 25 per cent of workers with no access to confidential information are bound by one.
The upshot is that, for the most part, all non-competes do is protect employers by discouraging people from leaving.
Canadian courts are unimpressed with non-competes as well, presuming them to be unenforceable restraints of trade. The burden is on employers to show a clause is reasonable, and courts have ruled that non-competes can’t stand when a non-solicitation clause would have sufficed.
But many employers still resort to non-competes. The OECD surveys found that 44 per cent of workers whose clauses were likely unenforceable would still have turned down competing offers. What that demonstrates is that many workers just won’t challenge non-competes. It’s fair to ask to what extent employers count on that.
This is not to deny that client relationships and trade secrets are legitimate interests for employers to protect. But, as Pratt points out, other tools are available. Ontario’s legislation, for example, leaves non-solicitation and confidentiality clauses untouched, as well as clauses that give employers ownership of what employees invent or create in the workplace. Consequently, reasonable non-solicitation terms can protect employers without unduly restricting employees’ prospects.
The law is also clear that senior employees who owe fiduciary duties can’t take away business opportunities they were pursuing for their employers. If confidential information is involved, employers can sue for breach of confidence whether or not a confidentiality agreement is in place.
That’s just as well, because the statutory exceptions in existing and proposed legislation won’t help most of these employers. Ontario allows non-competes for executives and when a business is sold. The federal bill limits the exception to the CEO and C-suite officers who report directly to the CEO. The people with whom clients actually engage — top producers and account managers, for example — aren’t exempt.
One key distinction between Ontario’s law and the federal bill is that Bill C-31 doesn’t grandfather existing non-competes; instead, it voids them a year after it comes into force. It also prohibits “other employment-related restrictions,” a category the regulations will define and that may cover any term that unreasonably restricts an employee’s ability to work. That could include non-solicits, the kind of targeted tool Pratt says employers can often rely on.
If federally regulated employers are going to worry about anything, it should be the regulations.
Julius Melnitzer is a Toronto-based writer who focuses on law, legal affairs, and the business of law. Follow him on LegalWriter.net or email him at julius@legalwriter.net.