The key to any successful transportation business is its loyal customers. In today’s economy, however, even loyal customers may be persuaded to change transportation providers if the price is right.
One effective way to protect against this is to include in employment contracts post-employment obligations on departing employees – especially on those employees who are the ‘face’ of the company in the eyes of the customer.
Post-employment obligations include: requiring the former employee not to disclose the employer’s confidential and proprietary information; prohibiting the solicitation of the employer’s customers and employees; and preventing the employee from working for a competitor or starting a competing business.
In recent years, the ability to impose a non-competition requirement on an employee has been restricted. For provincially regulated employers in Ontario (for example, a trucking company whose trucks operate solely within Ontario), non-competition agreements in employment relationships were banned as of Oct. 25, 2021.
There are two exceptions to this ban: the employee holds an executive position (must be a true executive – adding “executive” to the job title is not sufficient), or the employee sold the business to the employer, and is staying on for a period of time.
The Canadian federal government announced in November 2025 that in order to encourage competition and protect a worker’s ability to accept a job with a rival or start their own competitive business, the Canada Labor Code will be amended to restrict the use of non-competition obligations in employment contracts for federally regulated employers (a trucking company that operates trucks that travel across provincial or international borders).
The consultation process for these proposed amendments is expected to begin in early 2026. Given that the prohibition in Ontario has been in place for more than four years — and considering the recent attention given to the mobility of workers across the country — it is expected that the amendments will proceed.
This is not as harsh as it may appear. First, Canadian courts do not like non-competition agreements in employment relationships because they limit an employee’s right to earn a living or start a new business, especially if the employer’s business interests can be adequately protected by a non-solicitation agreement.
Second, before a court will even consider enforcing a non-competition agreement, it assesses the reasonableness of its terms – is “competing business” clearly defined? Is the geographic scope tied to the employer’s operations? And is the temporal scope of the restriction reasonable?
If any of these terms are determined to be ambiguous or unreasonable, the non-competition agreement will not be enforced. As a result, many existing non-competition agreements (which are expected to be grandfathered under the proposed amendments to the Code, following Ontario’s example), may not be enforceable.
Transportation companies can ensure adequate protection of their business interests by including clear and reasonable non-solicitation restrictions in their employment contracts.
It is important that this restriction is imposed at the outset of the relationship, as imposing a non-solicitation restriction on an existing employee can only be done if the employer offers the employee fresh consideration, such as a one-time bonus, or promotion and pay raise, in exchange for the restrictions.
An employer cannot impose these restrictions when the employee is on the way out. The non-solicitation provision should include a statement that it applies no matter why the employee is leaving.
It should also clearly define who is the “customer” – will the employee be able to determine who is off limits by the definition – if not, the definition is unreasonable and the restriction may not be enforceable.
Lastly, the length of the restriction must also be reasonable. These restrictions range from six months to two years, however the longer the restriction is in place, the greater the risk that it may be found to be unreasonable, and therefore unenforceable.
While preventing a former employee from luring customers away is important, a restriction on soliciting employees is also necessary to ensure that the team in place is not eroded because of one departing employee.
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