On May 6, 2026, the federal government proposed Bill C-31, the Budget 2025 Implementation Act, No. 2 (“Bill C-31”). Amongst the proposed changes, Bill C-31 aims to amend the Canada Labour Code R.S., c. L-2 (the “Canada Labour Code”) to prohibit a federally regulated employer from agreeing to a non-compete clause or “other employment-related restriction” with an employee or trade union or imposing one on an employee, unless certain exceptions apply.
The Canada Labour Code is the legislation that sets out the federal minimum requirements for industries such as telecommunications, airlines, banking, and other industries. This legislation defines a non-compete clause as a clause in an agreement, or a term or condition of employment that prohibits an employee from engaging in any business, work, occupation or trade, profession or other activity that is in competition with the employer’s federal work, undertaking or business after the employee ceases to be employed. While “other employment- related restriction” is defined as a term or condition of employment, or a clause in an agreement, that is not a non-compete clause and is part of a class specified in the regulations. The progress and details of Bill C-31 can be found here.
Bill C-31 also proposes to prohibit a federally regulated employer from retaliating against an employee if an employee refuses to agree to or comply with a non-compete clause or other employment related restriction. In particular, this legislation would bar employers from dismissing, demoting, or otherwise disciplining employees who refuse to agree to a prohibited clause or comply with a non-compete clause, unless certain exceptions apply. These exceptions apply to certain executive roles (i.e., chief executive officer, chief financial officer etc) or employees who hold or perform functions of a position that is part of a class of positions that is specified in the regulations. In addition, a non-compete clause would be permitted in connection with the sale, transfer or merger of a business where the individual ediately after a transaction. If passed, this legislation provides a one-year transition period from the date the proposed amendment comes into force.
If you have questions about Bill C-31, employment compliance issues, or workplace law, please contact Tiffany Lee at lee@pushormitchell.com.
