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Employment

Non-Compete Clauses in Australia and Canada (2026)

By FixMyContractLast updated Oct 2, 20265 min read

Short answer (as of 2 October 2026): In Ontario, an employer has not been allowed to make an employee sign a non-compete since 25 October 2021, with narrow exceptions. Elsewhere in Canada, and in Australia today, a non-compete in an employment contract is enforced only if a court finds it reasonable, and courts often refuse. Australia has published draft legislation to ban non-competes for most workers; it is not law yet.

Canada

Ontario. Section 67.2 of the Employment Standards Act, 2000 prohibits non-compete agreements with employees, and a prohibited one is void. Two exceptions:

  • Executives — the Act names the roles: chief executive officer, president, chief administrative officer, chief operating officer, chief financial officer, and other "chief" positions.
  • Sale of a business — where the seller becomes an employee of the buyer right after the sale. Even an excepted clause must still be reasonable. The ban does not cover non-solicitation or confidentiality clauses.

Rest of Canada. Under the common law, a restrictive covenant is presumed unenforceable unless the employer shows it is reasonable in time, area and the activity it restricts. The Supreme Court of Canada held in Shafron v. KRG (2009) that courts will not rewrite an ambiguous or overbroad clause to save it.

Australia

Today. A post-employment restraint is unenforceable unless it protects a legitimate business interest and goes no further than reasonably necessary. In New South Wales, the Restraints of Trade Act 1976 lets a court read a restraint down to what is reasonable — which is why some contracts list several "cascading" periods and areas.

Proposed ban. The federal government announced in March 2025 that it would ban non-competes for most workers from 2027. Treasury released an exposure draft bill in late September 2026, with consultation closing on 2 October 2026. Under the draft:

  • the ban would cover employees earning at or below the high income threshold ($190,100 for the year ending 30 June 2027);
  • existing restraints would generally continue, but could be caught if the employment arrangement is varied after the start date — even by a change unrelated to the restraint;
  • confidentiality obligations, reasonable notice periods and paid gardening leave would still be allowed. The final law, and its start date, are not known yet.

Five things to check in your clause

  1. Which province or state's law the contract names (governing law).
  2. How long, how far, and which activities it restricts.
  3. Whether it is really a non-compete, or a non-solicitation or confidentiality clause.
  4. Whether anything was given for it, if it was added after you started.
  5. In Australia, whether your contract is varied after any new law starts.

Where FixMyContract fits

Upload your employment contract to find the restraint, non-solicitation and confidentiality clauses and read them in plain English, with the contract's own words beside each point where they can be matched. It doesn't decide whether a restraint would be enforced.

This is general information, not legal advice. Restraint law depends on your province or state and your facts, and the Australian ban is still a draft; talk to a licensed employment lawyer before relying on any of this.

Sources

All links checked 2 October 2026.

  1. Ontario, Your guide to the Employment Standards Act: Non-compete agreements — https://www.ontario.ca/document/your-guide-employment-standards-act-0/non-compete-agreements
  2. Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6 — https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2603/index.do
  3. Treasurer, Cracking down on non-compete clauses to boost wages and productivity (March 2025) — https://ministers.dewr.gov.au/chalmers/cracking-down-non-compete-clauses-boost-wages-and-productivity
  4. Allens, Treasury releases details of proposed ban on post-employment restraints (September 2026; exposure draft, threshold $190,100, consultation to 2 October) — https://www.allens.com.au/insights-news/insights/2026/09/treasury-releases-details-of-proposed-ban-on-post-employment-restraints-no-poach-arrangements-and-wage-fixing/
  5. Restraints of Trade Act 1976 (NSW) — https://legislation.nsw.gov.au/view/html/inforce/current/act-1976-067

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