The federal government’s recently released Canada Strong Budget 2025 (Budget 2025) has proposed several measures with implications for federally regulated employers.

These include:

• Restriction of non-compete agreements. Budget 2025 proposes to amend the Canada Labour Code (the Code) to restrict the use of non-compete agreements in federally regulated employment. Public consultations on these proposed legislative changes will begin in early 2026.
  
  If this change moves forward, the federal jurisdiction will join Ontario as the second Canadian employment law jurisdiction to ban non-competes in employment contracts.

• Increased penalties for wage theft. Budget 2025 proposes to “substantially increase the penalties” imposed on federally regulated employers who engage in “wage theft.” Budget 2025 describes wage theft as the failure to pay compensation rightfully owed to an employee.
  
  This initiative is a continuation of an intended regulatory change announced in the 2024 Fall Economic Statement. At present the Code’s administrative monetary penalty regime for breach of federal minimum standards provides for fines ranging from $500 to $6,000 for errors in calculating wages, or for non-payment of wages. Presumably the revised penalties for non-payment of wages will be significantly higher.
  
  Consultations on proposed changes to the administrative monetary penalty regime will take place over the coming months.

• Employee misclassification. Budget 2025 proposes two initiatives...

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