Australia moves to ban non-compete clauses

A better job should not require permission from your former boss.

The Australian Government has released draft legislation to ban non-compete clauses for employees earning below the Fair Work Act’s high-income threshold, currently $190,100 a year. If passed, the changes are expected to begin in 2027.

Non-compete clauses are restrictions buried in employment contracts that can prevent someone from joining a competitor, starting a similar business, or working in a particular area after they leave. They have appeared in contracts for everyone from childcare workers and tradies to office staff, not only senior executives.

The Government says about one in five Australian workers is covered by a non-compete. Its argument is simple: when people are free to move to a better role, employers have to compete harder on pay, conditions and career opportunities.

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The reform would not mean businesses lose every protection. Employers would still be able to protect genuine confidential information and, subject to final legislation, other legitimate business interests. But a broad restriction on someone using their skills to earn a living is set to become much harder to impose.

The Government is also consulting on related restrictions, including clauses that stop former employees recruiting co-workers, as well as no-poach and wage-fixing arrangements between businesses.

For workers, the proposed change could mean more freedom to take the next opportunity. For employers, it is a prompt to retain people through better jobs—not contractual handcuffs.

Note: the ban is proposed draft legislation and is not yet law.

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