Ontario to ban the legal use of noncompete clauses

The Ontario Liberal government is set to ban noncompete clauses in contracts as part of legislation meant to improve workforce mobility, but critics said the prohibition was not tough enough. The bill bans many…

Ontario to ban the legal use of noncompete clauses

The Ontario Liberal government is set to ban noncompete clauses in contracts as part of legislation meant to improve workforce mobility, but critics said the prohibition was not tough enough.

The bill bans many of the terms found in a broad array of contracts in noncompete agreements, including a clause that prohibits workers from changing jobs for at least a year after signing. Proponents say noncompete clauses restrict employment and discourages hiring. The Ontario government said the ban could affect millions of contracts and would improve job mobility and compete with other jurisdictions, though there are similar measures in place in Quebec and British Columbia.

“It’s a huge relief,” said Leeane Vibert, a lawyer and employment rights expert at the firm Long & McQuade. “What it means is that going forward companies can’t preclude employees from moving freely.”

Contradicting past statements by Prime Minister Justin Trudeau, the provincial government did not prohibit clauses forcing companies to retain workers who might be hurt by going to competitors. But the move is a tough blow to an industry that has lobbied for years. The Ontario government made no exemptions for the millions of workers in sectors that have largely escaped the move to ban noncompete clauses, such as the media, gambling and construction industries.

Though it was unclear from the written legislation what the minimum duration of a noncompete clause would be, it was widely expected that they would be banned for every industry.

Liberal MPP Peggy Sattler said she wanted to make the law “fair and consistent for all employers and all employees,” but did not provide specifics of what she meant.

“Noncompete clauses are harmful, and employers should not be able to put these in place at will,” she said.

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