After I got into work, I did a quick search and found that it's not under labour law as such, but Ontario courts (and presumably Canadian courts in general) frown on non-competes. This article from 1999 suggest that non-solicitation agreements are acceptable, but there's nine conditions that make a non-compete acceptable because it's an 'exceptional' situation.

http://www.zvulony.com/non_compete.html

This is upheld in other articles that I've read that are more recent:

http://www.toronto-employmentlawyer.com/law-advice/employmen... http://blogs.hrhero.com/northernexposure/2008/10/14/noncompe... http://www.brazeauseller.com/articles/29/12/2008/245.aspx