In Canada, a non-competition covenant will be void unless it is reasonable. Such a covenant will be considered unreasonable unless it protects a legitimate business interest of the party in whose favour it is given and is no broader in geographic area, time period and scope of activities covered than is necessary to effectively protect such interest. Generally, a non-competition covenant will be more strictly construed in favour of an employee because of the perceived inequality of bargaining power between the employer and the employee (as compared to a restrictive covenant agreement reached between corporate entities having more equal bargaining power).

Canadian courts will typically not write down overly broad covenants to make them enforceable; rather, they will strike them in their entirety. A Canadian court may delete a section of an overly broad covenant to make it enforceable, but will only do so if it can delete words and have the remainder of the covenant make sense without adding or changing any other words. For example, if a court were to find a covenant prohibiting competition in “North America” to be too broad because prohibiting competition in Canada was all that was reasonably required to protect the legitimate business interests, it would not substitute “Canada” for “North America.” However, if the same court was faced with a covenant that prohibited competition in “Canada, the United States and Mexico,” it might delete “the United States and Mexico” and enforce the covenant with respect to Canada alone. The decision of whether to sever a portion of an overly broad covenant is in the discretion of the court.