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On November 4, 2025, the Minister of Finance and National Revenue, the Honourable François-Philippe Champagne, tabled Prime Minister Mark Carney's first Liberal government budget.
Among the many measures announced, the government proposes to amend the Canada Labour Code to restrict the use of non-compete clauses in employment contracts of federally regulated businesses, such as banks, interprovincial or international transportation companies, and communications providers (radio, television, etc.).
According to the government, "non-compete agreements that prevent workers from moving to rivals or starting a competing business reduces competition and undermines the efficiency of the labour market."1
This change, "will protect workers' rights, promote labour mobility, strengthen competition, and empower workers to move to a higher-paying job or start their own business."2
The government will launch consultations on the proposed legislative amendments in early 2026.
It is interesting to note that in Ontario,3 since October 25, 2021, employers are already prohibited from agreeing to non-competition clauses in an employment contract or any other agreement with an employee, unless:
- The non-compete agreement is entered into as part of the sale of the business and the seller is subsequently hired by the buyer; or
- the employee is an "executive" in a management position.4
The government's initiative reflects a trend that is already underway in Ontario to stimulate competition, encourage entrepreneurship, and support the competitiveness of the Canadian labour market.
Footnotes
1. Government of Canada. (2025). Budget 2025 (p. 121). Ottawa, ON: Author.
2. Ibid.
3. For more details, please see our article on Bill 27.
4. Ontario Employment Standards Act, 2000, Part XV.1, s. 67.2(3)-(5).
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