Federal ban on non-competes — a look at what HR needs to know – Canadian HR Reporter Federal ban on non-competes — a look at what HR needs to know – Canadian HR Reporter

In light of the federal government’s proposal to ban non-compete clauses, employers across Canada are encouraged to review their employment agreements. The proposed legislation would apply to federally regulated industries and would prohibit the use of non-compete clauses and other employment-related restrictions in employment contracts.

The legislation establishes exemptions under which non-competes are permissible, specifically in connection with the sale of a business and in respect of individuals employed in executive-level positions.

“In the transactional setting, the issue of non-compete often arises,” said Katy Allen, a partner in the Employment and Labour Group, in an interview with Canadian HR Reporter. “Not every transaction is as cut and dry as a vendor staying on as an employee post-closing in the same role. Sometimes there’s complexity.”

The C-suite exemption applies to executives who report directly to the CEO, creating challenges for organizations with a layered executive structure. Where an employer is concerned about potential competition from an employee, they may consider promoting the individual to an executive-level role in order to fall within the applicable non-compete exemption.

“However, non-competes are pretty difficult to enforce in a lot of cases,” said Katy. That means promoting an employee to access that option would be “a balancing for the individual circumstances,” she added, citing risks of increasing an individual’s role above their actual performance level.

If you subscribe to Canadian HR Reporter, you can read the full article by author Sarah Dobson posted on June 8, 2026.