Many employers hiring in Canada rely on non-disclosure agreements (or NDAs) to protect sensitive company information. But NDAs are facing intense scrutiny: lawyers in Canada are pushing for new rules to reform NDAs, to stop them from being used to silence whistleblowers or workers who have experienced harassment, discrimination, or abuse.
In light of all of this, employers are asking: Are NDAs enforceable in Canada? And how can you use NDAs to protect your company and its global employees? Read on to learn more (note: our guide is for informational purposes, and isn’t intended to provide legal advice).
A non-disclosure agreement (NDA) is a legal contract that prohibits one or more parties from sharing proprietary or confidential information with third parties.
NDAs can be used in a variety of contexts. In the workplace, NDAs are used to protect trade secrets and other information from being shared with competitors. However, some NDAs—which have prevented an employee from speaking out about harassment or abuse, often after a settlement agreement—are facing scrutiny in Canada and around the world (more on that later).
The short answer is yes—Canadian courts have, for the most part, held up NDAs as enforceable. However, there are a few important caveats:
You can generate NDAs, offer letters, and any other documents you need, then easily send them out for e-signature—all through Rippling.
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In Canada, there are two types of NDAs you're most likely to encounter:
These are the things that an NDA should include to be comprehensive and enforceable:
For NDAs to be enforceable in Canada, the courts have determined they need to meet three requirements. They must be:
It's common for employees and contractors in Canada to sign NDAs during their onboarding or when they start a new work contract. An NDA may also be included as a confidentiality clause in a new hire's offer letter or employment contract.
By law, an NDA is considered a legally binding contract in Canada. Canadian courts have historically upheld them as long as they meet the legal requirements above.
However, it's important to note that employment laws and other regulations that affect NDAs can change—and legislation around NDAs in particular is becoming more common in Canada, changing the ways they can be used by employers.
The enforceability of a non-disclosure agreement (NDA) in Canada overseas depends on the specific terms of the agreement, as well as the laws of the country where the NDA is being enforced.
In general, an NDA that is valid and enforceable in Canada may also be enforceable overseas, particularly in countries that recognize and enforce foreign judgments. However, there are many factors that can affect the enforceability of an NDA in a foreign jurisdiction, such as differences in legal systems, cultural norms, and public policy considerations.
In Canada, information that's considered confidential or proprietary can be covered by an NDA. This includes:
Any information that's publicly known or part of the public domain cannot be covered by an NDA. NDAs also aren't allowed to prevent whistleblowers from disclosing criminal activity by a company.
While legal proceedings and settlements can sometimes be covered by an NDA, they're prohibited in some cases. In 2022, Prince Edward Island became the first province in Canada to outlaw non-disclosure agreements in cases of workplace harassment, discrimination, abuse, and sexual misconduct. Now, several other parts of Canada are considering following suit.
Province or City
Restriction in effect or being considered?
Restrictions on NDAs
Prince Edward Island
NDAs limited in cases involving abuse, harassment, and discrimination.
NDAs limited in cases involving abuse, harassment, and discrimination.
NDAs limited in cases involving abuse, harassment, and discrimination.
Victoria, British Columbia
NDAs limited in cases involving sexual harassment.
NDAs banned to prevent disclosure of sexual abuse of students by college or university employees.
Common situations to use an NDA in Canada include:
Rippling makes it simple to create and send out an NDA as part of a job offer package.
Ensure your most sensitive information is protected
Yes. Non-disclosure agreements may also be called confidentiality agreements (CAs), confidential disclosure agreements (CDAs), proprietary information agreements (PIAs), or secret agreements (SAs).
No. An NDA is different from a non-compete clause or non-solicitation agreement. While both types of agreements are used to protect a company's interests, they serve different purposes.
A non-compete agreement is a contractual agreement between an employer and employee that restricts the employee from engaging in certain competitive activities for a specified period of time after leaving the company.
The purpose of a non-compete agreement is to prevent a former employee from taking knowledge, skills, and business opportunities acquired during employment and using them to compete with your company.
In general, non-compete clauses and non-solicitation agreements are seen as a restraint of trade and are therefore more difficult to enforce in Canada. To be enforceable, these types of clauses must be designed to protect a legitimate business interest of the employer, such as confidential information, customer relationships, or trade secrets. The employer may also be required to provide consideration to the employee in exchange for agreeing to the non-compete clause or non-solicitation agreement. Consideration can take the form of a signing bonus, a promotion, or other benefits.
Yes—NDAs are generally used to protect employers by preventing contractors and employees from sharing trade secrets and other proprietary information with competitors.
However, some NDAs are under the spotlight in Canada. One notable example is Hockey Canada, which made headlines after it came to light that a woman who sued the organization, claiming she was sexually assaulted by several Canadian Hockey League players, was asked to sign an NDA as part of her settlement. Hockey Canada ended up dropping the NDA requirement from the woman's settlement before appearing before a parliamentary committee that was investigating the incident. The case had ripple effects, however, and now a number of Canadian provinces and cities have passed or are considering legislation to limit the use of NDAs in cases of sexual assault, sexual harassment, discrimination, and other workplace abuse.
An NDA can help protect employers' confidential information and proprietary assets, which can be crucial to a company's success in today's highly competitive business environment. Benefits include:
The penalties for breaching an NDA can vary, depending on the severity of the breach, what penalties are outlined in the NDA, and whether the breach violated any laws. But an NDA is a legally binding contract, so any breach means legal action can be taken against the violating party.
With Rippling, you can onboard employees and contractors in Canada in just 90 seconds. Generate NDAs, offer letters, and any other documents you need, then easily send them out for e-signature. With Rippling you can manage HR, IT, and Finance in one unified system—and automate your global compliance work.
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