Contract Review in Canada: Your Rights Before You Sign

Canada offers some of the strongest contract protections in the English-speaking world — and one of the most significant recent changes in employment law anywhere. In 2021, Ontario became the first major common law jurisdiction in North America to ban non-compete agreements outright through the Working for Workers Act. That single change affects more than 15 million people in Canada's most populous province.

But Ontario's ban is just one example of how Canadian contract law diverges sharply from what many people — especially those familiar with US law — expect. The most fundamental difference is this: there is no at-will employment in Canada. Every employee is entitled to reasonable notice of termination or pay in lieu of notice. An employer cannot simply end your employment without consequence.

How Canadian Contract Law Works

Canada is a federation with contract law split between federal and provincial jurisdiction. The Canada Labour Code governs federally regulated industries — banking, telecommunications, interprovincial transportation, and federal government employees — which account for roughly 6% of the workforce. The remaining 94% fall under provincial employment standards legislation.

This means your rights depend heavily on which province you work in. Ontario's Employment Standards Act, 2000 (ESA) sets different minimums than British Columbia's Employment Standards Act (RSBC 1996) or Quebec's Act Respecting Labour Standards (ARLS). Alberta, Saskatchewan, and the Maritime provinces each have their own frameworks.

Quebec is a special case: it operates under a civil law system derived from French law rather than the common law system used in the rest of Canada. Quebec's Civil Code governs contracts in ways that differ fundamentally from the other provinces — including different rules around good faith obligations and contract interpretation.

Employment Contracts

Notice of termination. Provincial employment standards set statutory minimums for notice (typically one week per year of service, capped at eight weeks in most provinces). But the common law entitlement to "reasonable notice" is often significantly higher — courts regularly award 12 to 24 months of notice for long-tenured employees. Your employment contract can limit your notice entitlement to the statutory minimum, but only if the limitation clause is clear, unambiguous, and doesn't fall below the statutory floor. If the clause is poorly drafted, courts will set it aside and award common law reasonable notice instead.

Non-compete agreements. Ontario's Working for Workers Act, 2021 (Section 67.2 of the ESA) prohibits employers from entering into non-compete agreements with employees, with a narrow exception for the sale of a business. This ban applies to new and existing agreements. In other provinces, non-competes are technically possible but courts are deeply skeptical — they must protect a legitimate business interest, be reasonable in scope and duration, and not be broader than necessary. In practice, most non-competes outside Ontario are either struck down or narrowly interpreted by courts.

Non-solicitation agreements. These remain enforceable across Canada, including Ontario, provided they are reasonable. Courts distinguish between preventing you from soliciting your former employer's specific clients (generally enforceable) and preventing you from working in an industry (generally not enforceable).

Probationary periods. Many employment contracts include a probationary period, typically three to six months. During probation, the employer may be able to terminate with the statutory minimum notice rather than common law reasonable notice. However, the probationary clause must be clearly drafted and cannot be used to circumvent basic employment standards protections.

Intellectual property. Unlike the US, Canada does not have a broad "work for hire" doctrine. Under the Copyright Act (RSC 1985, c C-42), the default rule is that the creator owns the copyright — with an exception for works created in the course of employment, where the employer owns the copyright unless there's an agreement to the contrary. For contractors, the contractor retains copyright unless it's explicitly assigned in writing.

Residential Leases

Each province has its own Residential Tenancies Act. Common protections across most provinces include limits on security deposits, requirements for written leases, and restrictions on rent increases.

Ontario. The Residential Tenancies Act, 2006 (RTA) prohibits landlords from charging a deposit greater than one month's rent, and that deposit can only be applied to the last month's rent — not to damages. Rent increases for most units are capped annually by a guideline set by the province (2.5% for 2025). Landlords cannot evict without an order from the Landlord and Tenant Board.

British Columbia. The Residential Tenancy Act (SBC 2002) limits security deposits to half a month's rent. Rent increases are capped annually. Landlords must complete a condition inspection report at move-in and move-out.

Quebec. The Civil Code of Quebec governs residential leases. There is no security deposit — Quebec is one of the very few jurisdictions in the world that prohibits them entirely. The Régie du logement (now the Tribunal administratif du logement) handles disputes.

Freelancer and Contractor Agreements

The distinction between employee and independent contractor matters enormously in Canada. The CRA uses a multi-factor test examining the level of control, ownership of tools, chance of profit/risk of loss, and integration into the business. Misclassification can result in reassessment for CPP, EI, and income tax.

When reviewing a contractor agreement, look for terms that suggest employment: requirements to work set hours, use of the company's equipment, inability to subcontract, and exclusivity obligations. If the contract walks like employment, the CRA will treat it as employment regardless of the label.

Key Red Flags in Canadian Contracts

A termination clause that provides less than the provincial employment standards minimum is void, and the entire clause may be set aside in favour of common law reasonable notice — which could mean months of additional pay. This is one of the most litigated areas of Canadian employment law.

A non-compete clause in Ontario signed after October 25, 2021 is void under the Working for Workers Act. If your Ontario employer is asking you to sign one, they may not be aware of the current law.

A lease clause requiring a deposit exceeding provincial limits is void. In Quebec, any deposit clause is void.

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This article is for informational purposes only and does not constitute legal advice. For advice specific to your situation, consult a licensed lawyer in your jurisdiction. Last verified: March 2026.