Non-Disclosure Agreements in Ontario: What You're Actually Signing

What Makes an NDA Enforceable in Ontario?

Like any contract, an NDA requires:

• Consideration: Something of value exchanged — in employment, the job itself is consideration if signed before starting. Signing after employment requires fresh consideration (raise, promotion, bonus).
• Certainty: The "confidential information" must be defined with reasonable specificity — overly vague NDAs that claim to cover everything are difficult to enforce
• Reasonable scope: Duration and geographic scope must be proportionate to the legitimate business interest being protected
• Mutual assent: Signed voluntarily — duress or unconscionability can void an NDA

Common NDA Clauses — and Their Limits

• Non-solicitation of employees: Generally enforceable if reasonable in duration (1–2 years) and scope. A clause prohibiting any contact with any former colleague forever is likely void.
• Non-solicitation of clients: Enforceable if limited to clients the employee actually worked with and time-limited.
• Non-compete clauses: Very rarely enforced in Ontario employment contracts — courts view them as a restraint of trade contrary to public policy unless the business interest is exceptional (e.g., sale of a business).
• Perpetual confidentiality: Clauses that last "forever" for information that is publicly available or generally known in the industry may not be enforced.

NDAs and Harassment Settlements: Ontario's New Rules

In 2020, Ontario amended the Employment Standards Act with provisions aimed at NDAs in harassment, discrimination, and sexual misconduct settlements:

• An NDA in a settlement of workplace harassment/sexual harassment claims cannot prevent the signatory from telling their spouse, a regulated health professional, a member of the clergy, or a lawyer
• A complainant can request that the NDA allow them to identify the respondent's name publicly — the employer cannot refuse to settle solely on this basis
• Employers cannot require NDAs as a precondition of continuing employment if they would cover harassment

Trade Secrets vs. Confidential Information

Even without an NDA, trade secrets are protected by common law. Under Ontario and Canadian law, a trade secret must be: (1) not generally known, (2) valuable because it is secret, and (3) subject to reasonable efforts to maintain secrecy. NDAs augment trade secret protection by providing a clearer contractual basis for damages and injunctions.

What to Look For Before You Sign

• Is "confidential information" defined too broadly? Ask for a specific carve-out for publicly available information.
• Is the NDA mutual — or only one-sided? Unilateral NDAs heavily favour the party who drafted them.
• What are the remedies for breach? "Injunctive relief without bond" and "liquidated damages" clauses deserve scrutiny.
• Does it include a non-compete? These are almost always unenforceable in Ontario employment — but they are still signed and cause chilling effects.