Are non-compete agreements enforceable in Canada?

Yes, in principle, but only if they are reasonable. Courts start from the premise that restraints of trade are unenforceable, and the party seeking to enforce must show that the covenant protects a legitimate interest and is no broader than necessary in activity, geography, and time.

Can I use a non-compete with Ontario employees?

Generally no. Sections 67.1 and 67.2 of the Employment Standards Act, 2000, prohibit employment non-competes in Ontario since October 25, 2021, except for C-suite executives and sale-of-business scenarios. Existing covenants signed before that date may still be valid under common-law rules.

How long can a non-compete last?

There is no fixed maximum. Employment covenants of six months to one year are more likely to be enforced than longer periods. In sale-of-business contexts, courts have upheld restrictions of up to three to five years where the goodwill protected justifies it.

What geographic scope is considered reasonable?

The scope must match the area where the protected business actually operates or has established relationships. Broad national or international restrictions rarely survive scrutiny unless the business genuinely operates at that scale.

What happens if the non-compete is too broad?

Under Shafron v. KRG Insurance Brokers, 2009 SCC 6, courts generally will not rewrite an unreasonable covenant. An overly broad non-compete is usually struck down entirely, leaving the employer or buyer without protection.

Is a non-solicitation clause a better alternative?

Often yes. Non-solicitation clauses that protect specific customers or employees are generally viewed as less restrictive and are more likely to be enforced, particularly in employment contexts outside Ontario’s ban.

Do I need fresh consideration for a non-compete?

Yes, especially if added mid-employment. Continued employment alone is usually not sufficient consideration; a signing bonus, promotion, or equity grant strengthens enforceability.

Does this template work for sale-of-business transactions?

Yes. The template can be adapted for Canadian share or asset sales, and Canadian courts generally apply a more relaxed reasonableness standard where the covenant protects goodwill the buyer has paid for.

BusinessCanada

Non-Compete Agreement Template

A non-compete agreement restricts a party from competing with a business for a defined period and within a defined geographic area. Use our free Canadian template to draft reasonable restrictions that stand a fair chance of being enforced by Canadian courts — with attention to Ontario’s statutory ban on employment non-competes and the common-law reasonableness test.

Create Your Non-Compete Agreement

Free to useInstant PDFNo account required

NON-COMPETE AGREEMENT

Province Of British Columbia, Canada

COMPANY

Pacific Ventures Inc.

1000 Robson Street, Suite 800, Vancouver, BC V6E 1B5

RESTRICTED PARTY (C-SUITE EXECUTIVE)

Kevin M. Nguyen

45 Burrard Street, Apt 12, Vancouver, BC V6C 2G8

Effective: April 1, 2026

Duration: 12 months | C-Suite Executive

This Non-Compete Agreement (this "Agreement") is entered into as of April 1, 2026 by and between Pacific Ventures Inc. (the "Company") and Kevin M. Nguyen (the "Restricted Party"). The parties agree as follows:

CONSIDERATION

In consideration of a one-time payment of 15,000.00 CAD, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Restricted Party agrees to be bound by the restrictive covenants set forth in this Agreement.

NON-COMPETITION COVENANT

During the term of the Restricted Party's relationship with the Company and for a period of 12 months following the termination of that relationship for any reason (the "Restriction Period"), the Restricted Party shall not, directly or indirectly, within the geographic area of Province of British Columbia and Province of Alberta (the "Restricted Territory"):

(a) engage in, carry on, own, manage, operate, control, be employed by, consult for, or participate in the ownership, management, operation, or control of any business that engages in the following restricted activities:

Providing enterprise SaaS sales consulting or account management services to companies in the cloud computing and financial technology sectors.

(b) assist any person or entity in doing any of the above.

NON-SOLICITATION

During the Restriction Period, the Restricted Party shall not, directly or indirectly: (a) solicit, contact, or transact business with any client or customer of the Company with whom the Restricted Party had material contact or about whom the Restricted Party obtained confidential information during the course of the relationship; or (b) solicit, recruit, hire, or attempt to hire any employee, independent contractor, or consultant of the Company. The parties acknowledge that Canadian courts assess such clauses for reasonableness of scope and duration, and this provision is intended to satisfy that standard.

CONFIDENTIALITY

The Restricted Party acknowledges that during the course of the relationship with the Company, the Restricted Party has had or will have access to confidential and proprietary information of the Company. The Restricted Party agrees to hold all such information in strict confidence and not to use or disclose it to any third party, both during and after the relationship, except as required by applicable law or valid court order.

REASONABLENESS

The Restricted Party acknowledges and agrees that: (a) the restrictions in this Agreement are reasonable and necessary to protect the Company's legitimate business interests, including its confidential information, trade secrets, client relationships, and goodwill; (b) the duration, geographic scope, and scope of restricted activities are no broader than reasonably necessary to protect those interests; and (c) the consideration provided is adequate. The parties acknowledge that Canadian courts apply a reasonableness test to restrictive covenants and that this Agreement is intended to satisfy that standard.

REMEDIES

The Restricted Party acknowledges that any breach of this Agreement would cause irreparable harm to the Company for which monetary damages alone would be an inadequate remedy. Accordingly, the Company shall be entitled to seek interlocutory, injunctive, or other equitable relief in any court of competent jurisdiction without the necessity of posting security or proving actual damages. In addition, upon any breach of the restrictive covenants, the Restricted Party shall pay the Company liquidated damages in the amount of 50,000.00 CAD. The parties agree that this amount is a genuine pre-estimate of the Company's anticipated losses and is not intended as a penalty; however, such amount shall only be enforceable if a Canadian court determines it is not punitive.

SEVERABILITY OF RESTRICTIONS

If any court of competent jurisdiction determines that any restrictive covenant in this Agreement is unreasonable or unenforceable, the court is authorized and directed to modify such provision to the minimum extent necessary to make it reasonable and enforceable (blue-pencil severance), and the restriction as so modified shall be enforceable to the fullest extent permitted by law.

GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein. Any dispute arising under this Agreement shall be resolved exclusively in the courts of the Province of British Columbia, and each party hereby attorns to the jurisdiction of such courts.

GENERAL PROVISIONS

Entire Agreement: This Agreement constitutes the entire agreement between the parties regarding the subject matter hereof. Amendment: No modification shall be effective unless in writing and signed by both parties. Severability: If any general provision is held unenforceable, it shall be modified to the minimum extent necessary, and the remaining provisions shall continue in full force. Waiver: Failure to enforce any provision shall not constitute a waiver. Assignment: The Company may assign this Agreement to any successor or acquirer of all or substantially all of its business. Electronic Execution: This Agreement may be executed electronically under applicable provincial electronic commerce legislation.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date first written above.

COMPANY

Amanda K. Richards

Chief Operating Officer

Pacific Ventures Inc.

Date: ____________________

RESTRICTED PARTY

Kevin M. Nguyen

Date: ____________________

What Is a Non-Compete Agreement?

A non-compete agreement is a restrictive covenant in which one party promises not to engage in competing business activities within a defined scope, territory, and time frame. In Canada, these covenants appear most often in share purchase agreements, shareholder agreements, partnership agreements, and (outside of Ontario employment contracts) executive service contracts. The goal is to protect legitimate business interests such as goodwill, trade secrets, and customer relationships.

Canadian courts treat non-competes as prima facie unenforceable restraints of trade, and the burden falls on the party seeking to enforce the covenant to show that it is reasonable. The leading cases are Elsley v. J.G. Collins Insurance Agencies Ltd., [1978] 2 S.C.R. 916, which framed the reasonableness test, and Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, which refused to "blue-pencil" ambiguous geographic language. The test considers scope of restricted activity, geographic reach, and duration, all measured against the legitimate interest being protected.

Since October 25, 2021, the Employment Standards Act, 2000, S.O. 2000, c. 41, sections 67.1 and 67.2 prohibit most employment non-competes in Ontario, with narrow exceptions for executives and the sale of a business. Other provinces continue to apply the common-law test. As a result, the template is most commonly used for sale-of-business transactions, shareholder and partnership arrangements, and senior executive engagements.

What's Covered in This Template

Our non-compete template is structured around the reasonableness factors Canadian courts apply.

Parties and Context

Identifies the restricted party, the beneficiary, and the transaction or relationship giving rise to the covenant.

Legitimate Business Interest

Recitals identifying the goodwill, trade secrets, or customer relationships the covenant is designed to protect.

Restricted Activities

A narrow and specific description of the competing business activities the party agrees not to undertake.

Geographic Scope

Clear geographic boundaries tied to where the protected business actually operates.

Duration

A time-limited restriction period, typically ranging from six months to two years depending on context.

Consideration

Recognition of the payment, equity, or continued engagement provided in exchange for the covenant.

Carve-Outs

Permitted passive investments and activities that fall outside the restriction.

Remedies

Right to injunctive relief and damages for breach of the covenant.

Severability

Standard severability language acknowledging the Shafron limits on judicial re-writing.

Governing Law

Selection of the applicable Canadian province and courts with jurisdiction over disputes.

How to Create a Non-Compete Agreement

Follow these steps to draft a covenant that is more likely to be enforced.

1
Identify the Legitimate Interest
Pinpoint the specific goodwill, trade secrets, or customer relationships that justify a restrictive covenant.
2
Draft a Narrow Restricted Activity
Describe the prohibited activities as precisely as possible — broad "any business" language is routinely struck down.
3
Set Reasonable Geography and Duration
Limit the territory and time period to what is genuinely necessary to protect the interest, often informed by where and how long the business actually operates.
4
Confirm Consideration and Province
Ensure fresh consideration is provided (in employment contexts especially) and select the governing province, noting Ontario’s employment ban.
5
Review and Sign
Preview the agreement, check each restriction against the reasonableness test, and download the PDF for signature.

Legal Considerations

Enforceability of non-competes in Canada depends on statute, province, and the common-law reasonableness test.

This template is for informational purposes only and does not constitute legal advice. Consult a qualified lawyer in your province for advice specific to your situation.

Reviewed for Canadian law

Ontario’s Employment Non-Compete Ban

Sections 67.1 and 67.2 of the Employment Standards Act, 2000, S.O. 2000, c. 41, prohibit non-compete agreements between employers and employees in Ontario, effective October 25, 2021. Narrow exceptions apply to C-suite executives (defined in section 67.1(3)) and to non-competes entered into in connection with the sale of a business where the seller becomes an employee of the buyer. Covenants within the ban are void, not merely unenforceable.

Common-Law Reasonableness Test

Outside the Ontario ban, the test from Elsley v. J.G. Collins Insurance Agencies Ltd., [1978] 2 S.C.R. 916 asks whether the covenant protects a legitimate proprietary interest and whether its scope, geography, and duration go no further than necessary. Courts are stricter with employment covenants than with sale-of-business covenants, where the seller has been compensated for the goodwill being protected.

Blue-Pencil and Notional Severance Limits

In Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, the Supreme Court of Canada held that courts generally will not rewrite an unreasonable or ambiguous restrictive covenant to make it enforceable. Minor severance may be permitted, but a badly drafted covenant is more often struck down in full. Precise drafting is therefore essential.

Competition Act Considerations

Section 90.1 of the Competition Act, R.S.C. 1985, c. C-34, addresses agreements between competitors that substantially lessen competition. Recent amendments have expanded the Competition Bureau’s focus on wage-fixing and no-poach agreements under section 45. Parties drafting non-competes between businesses should consider whether section 90.1 or section 45 applies.

Frequently Asked Questions

Create Your Non-Compete Agreement Now

Protect legitimate business interests with a carefully drafted non-compete. Fill in the details, preview your agreement, and download the PDF in minutes.

Create Your Non-Compete Agreement Browse All Templates

Free · Instant PDF · No account required