Not since October 25, 2021, with one narrow exception for a covenant genuinely tied to a sale of the business.
Short answer
Ontario’s Employment Standards Act, 2000 s.67.2(1) provides that “No employer shall enter into an employment contract or other agreement with an employee that is, or that includes, a non-compete agreement,” and s.67.2(2) makes any contravening covenant void. The prohibition operates on the act of entering into an agreement and was deemed in force on October 25, 2021, so a covenant signed before that date is outside it entirely and falls to be tested on ordinary common-law reasonableness instead.
Section 67.2(3) excuses a covenant only where “there is a sale of a business or a part of a business and, as a part of the sale, the purchaser and seller enter into an agreement” restricting competition, and “immediately following the sale, the seller becomes an employee of the purchaser.” Both conditions must hold. A covenant signed in the purchase agreement at closing, with employment starting the same day, satisfies it; the identical covenant added at HR onboarding six weeks later does not — it is a different agreement, entered into after the sequence the subsection describes has already completed, and it is void. The exception also does not apply to a seller who takes a consulting role rather than becoming an employee — but a consultant who never becomes an employee is outside the prohibition entirely too, and is tested only at common law.
Part XV.1 was added by the Working for Workers Act, 2021 and is deemed to have come into force on October 25, 2021 — 38 days before the Act itself received Royal Assent. A covenant signed before that date was never entered into in contravention of s.67.2(1), so there is nothing for s.67.2(2) to void; it stands or falls on ordinary reasonableness. A target trading for decades can hold covenants across several templates and several outcomes in the same personnel files, separated by nothing but a signature date — and replacing an old, arguably-reasonable covenant with a fresh one during a post-closing standardisation exercise converts an enforceable covenant into a void one.
Section 67.2(4) provides that the prohibition “does not apply with respect to an employee who is an executive,” and s.67.2(5) defines the term by listing offices such as chief executive officer, president and chief financial officer. A covenant with someone holding one of those offices survives regardless of when it was signed.
The sale-exception sequence decided two non-competes six weeks apart, and only one held. The signature-date mechanic is worked through in ninety-six non-competes sorted by signature date. For what happens when a covenant sits in the wrong document altogether, see two sellers, one covenant, two outcomes.
A 30-minute call is enough to tell you whether your structure holds up.
Canadian small-business transaction data is not published anywhere, so most valuations in this country quote an American benchmark. The Deavo–Treadstone Acquisition Index is a daily record of Canadian listings built to replace that: asking-price distributions by province and city are published now, and days on market, departure rates and asking-to-sale spreads follow as the series lengthens. Leave an email and we will tell you as each measure lands.
No pitch, no listings. One email when the first report lands.
