Title page 1

Contents 5

Abstract/Résumé 4

Executive Summary 6

1. Introduction 7

2. The economics of post-employment restraints 8

3. The regulation of post-employment restraints in Canada 9

4. The prevalence and the characteristics of post-employment restraints in Canada 11

4.1. The prevalence of non-compete and related clauses is high and rising 11

4.2. Non-compete clauses are being deployed in a fashion that is difficult to reconcile with the traditional view 14

4.3. Restraint clauses are often bundled together and used indiscriminately 16

4.4. Non-compete clauses appear to deter job mobility and business creation 17

4.5. A large share of non-compete clauses appear unenforceable under Canadian law 18

4.6. There is evidence of (firm-to-firm) no poaching and wage fixing agreements 20

5. Concluding remarks 21

References 22

Table 1. Regulation of non-compete clauses in Canada 11

Figure 1. Non-compete and related clauses are relatively common in Canada 12

Figure 2. The use of non-compete clauses is rising in Canada 13

Figure 3. The use of non-compete clauses extends well past executives and specialized professionals in Canada 15

Figure 4. Non-compete and related clauses are frequently grouped together and applied to all workers in Canada 16

Figure 5. Non-compete clauses could have meaningful effects on job mobility and business entry in Canada 17

Figure 6. Reported reasons for complying with non-compete clause in Canada 18

Figure 7. Non-compete clauses can be expansive in scope and fall short of legal requirements in Canada 19

Figure 8. Employees often believe non-compete clauses are binding even when they fall short of legal requirements in Canada 20

Figure 9. Knowledge of no-poaching or wage fixing agreements is widespread in Canada 21

Boxes 5

Box 1. Contractual clauses regulating post-employment activity 8

Box 2. The 2021 reform of non-compete clause in Ontario 10

Box 3. The OECD worker and employer surveys on non-compete and related clauses 13