Unfair Non-Compete Clauses Could Be Canned For Some Australian Workers

Historically, some Australian workers looking to move to another job or start their own business may have been discouraged or restricted from doing so by non-compete clauses in their employment contracts.

However, this September, the Government released its Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026. This is the draft legislation banning non-compete clauses for Australian workers earning under $190,100.00 per year (the Fair Work Act high‑income threshold), as well as addressing other unfair restraint clauses.

‘The widespread use of these clauses can lead to lower wages, and negatively impact labour mobility and productivity. Building a more innovative and productive economy depends on workers being able to move to jobs where their skills are most valued.’

Joint media release with The Hon Amanda Rishworth MP Minister for Employment and Workplace Relations

Summary of Key Proposed Changes

Non-Compete Terms Banned

Non-compete terms in an employment arrangement are prohibited, even if the employer choses not to enforce the non-compete term.

If this is breached, employers (companies) can face penalties of up to $1,092,000.00 for serious contraventions, or up to $109,200.00 in other circumstances. Individuals involved in the contravention can face penalties of up to $218,400.00 for serious contraventions, or up to $21,840.00 in other circumstances.

Co-Worker Non-Solicitation Terms Banned

Co-worker non-solicitation clauses in an employment arrangement are prohibited for all income levels, even where the employer choses non to enforce the term.

If this is breached, companies can face penalties of up to $1,092,000.00 for serious contraventions, or up to $109,200.00 in other circumstances. Individuals involved in the contravention can face penalties of up to $218,400.00 for serious contraventions, or up to $21,840.00 in other circumstances.

NOTE: Whilst there is no set definition for ‘co-worker’ as per the Bill or Fair Work Act, the term seeks to capture anyone who works or has worked for the employee’s employer. This can include contractors, subcontractors (including their employees), labour hire workers and volunteers.

Restraint-of-Trade Doctrine to be Codified in the Fair Work Act

The Restraint-of-Trade Doctrine is a common law framework that helps decide whether a restriction on someone’s ability to work or conduct business is enforceable.

Following this framework, a post-employment restraint is generally presumed unenforceable unless it can be justified as reasonable. A reasonable restraint is one that protects a legitimate business interest and goes no further than what is necessary.

These common law concepts around protecting legitimate interests and reasonable restraints will be codified in the Fair Work Act.

Prohibiting ‘Cascading’ Restraint Clauses

Cascading restraint clauses will be prohibited. Businesses must provide upfront what restriction is actually reasonable and necessary to protect its legitimate business interest.

For example, instead of stating that an employee cannot work for a competitor for 12, 6, or 3 months within 20, 10, or 5km; the employer might have to specify, for example, to be 6 months within 5km.

If a post-employment restraint includes a cascading provision, this will result in the restraint being unenforceable.

No-Poach and Wage-Fixing Contracts Banned

The cartel conduct provisions in the Competition and Consumer Act will be updated, considering no-poach and wage-fixing arrangements as cartel conduct. These provisions prohibit competitors from working together to manipulate the market in their favour.

What Could This Mean for Australian Workers?

For Australian workers, these proposed changes could provide greater freedom to move between employers, pursue new opportunities, and negotiate better pay and conditions.

Findings from e61 Institute discovered:

• One in five Australian workers have a non-compete clause in their employment agreement.
• Could lift affected workers’ wages by up to four per cent, or about $2,500 per year for the average worker.

Greater Competition = Stronger Industry

Imagine the number of highly experienced veterinary surgeons in a particular area is extremely small. If some of these are subject to enforceable non-compete restraints, they may be unable to move directly to a competing practice nearby.

Lifted restrictions could mean that more businesses are able to recruit from the same pool of experienced workers. As a result, this could encourage a greater flow of skills, experience and ideas throughout an industry.

‘Frankly, we know that over the course of a career, people’s biggest wage gains come not from getting wage gains from your current employer, but from shifting to a different employer. So, you get those big personal wage gains, but you also get big productivity gains when people move to a company that’s a better fit.’

Assistant Minister for Productivity, Competition, Charities and Treasury, Andrew Leigh, via Nine

What Does This Mean For Employers?

These changes will undoubtedly mean greater competition for business.

This may look like:

• Competition between businesses to retain employees.
• Former employees joining or starting competing businesses.
• Competition between businesses to retain clients, customers, or patients who follow employees to competing businesses.

A Particular Consideration for Healthcare Practices

The changes may be particularly relevant for medical, dental, veterinary and allied health practice owners, whose value often lies in key individuals.

Practitioners and other employees can build significant relationships with patients, referral networks and other team members. Practices may also hold valuable intellectual property, commercially sensitive information and established goodwill.

These changes make it increasingly important to understand exactly what you are trying to protect.

Depending on the circumstances, that could include:

• Confidential and commercially sensitive information.
• Intellectual property.
• Client and customer relationships.
• Business systems and processes.
• Key employees and workforce stability.

The appropriate protections will differ between businesses and shouldn’t be treated as a one-size-fits-all provision in an employment contract.

Quick FAQs

This Is Not Law Yet

The Government’s consultation on the exposure draft is open until 2 October 2026. If you would like to have your say, you can do so here.

Until legislation is passed and comes into effect, the existing law continues to apply.

Nevertheless, the direction of the proposed reforms provides businesses with a useful opportunity to consider whether their existing employment agreements and business protections remain fit for purpose.

If your business relies on non-compete or restraint clauses, now may be a good time to understand what those provisions actually protect and whether your broader contractual arrangements adequately protect your business if a key employee leaves.

We Can Help

Aintree Group Legal can assist business and practice owners with reviewing employment contracts, restraint provisions and broader commercial arrangements to ensure they remain appropriate as the regulatory landscape develops.