Canada’s competition watchdog calls for limits on non-competes

Canada’s Competition Bureau asked provincial and territorial labour ministers on October 29 to restrict employment non-compete agreements, putting workers’ ability to change jobs at the centre of a policy request to governments.

A non-compete can restrict someone from taking a job with a competing business or starting one after leaving an employer. For a worker considering a move, the question is therefore not only whether a new opportunity exists but also what an employment agreement says about pursuing it. The Bureau’s request does not itself change a contract or create a nationwide ban.

In its announcement, the Bureau cites an OECD employer survey estimating that non-competes cover 29% to 39% of Canadian private-sector employees. That is the Bureau’s account of the estimate: the survey’s methods, field dates and representativeness were not independently reviewed for this report. The range does not establish what happens to any particular worker or measure the effect of a policy change.

In an open letter, interim competition commissioner Jeanne Pratt argues that overly broad restrictions can impede job mobility and entrepreneurship, including when workers hesitate to challenge them. The letter is the Bureau’s policy case; it does not independently prove the size of those effects.

The Bureau also recommends guidance and education, resources for enforcement, and narrower ways to protect legitimate business interests. These are proposed measures for governments to consider, not requirements shown to have been adopted. No worker, employer or provincial response was independently reviewed for this report.

Analysis — Mira Vale: The Bureau’s approach addresses a practical distinction between restricting clauses in the first place and expecting workers to challenge them afterward. If a worker hesitates to contest a clause, the prospect of a challenge may do little to clarify the next career move. At the same time, the recommendation leaves a design question for governments: how to protect specific legitimate business interests without imposing a broader restraint on mobility than needed. The evidence here does not establish that any particular balance will be adopted or predict its effects. Readers can watch for provincial or territorial decisions and their details to see whether the request becomes a rule.

Source note: Both documents are from the Competition Bureau; the announcement describes the same letter. They are not independent corroboration.