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The End of Non-Compete Provisions in Australia are Nearly Here!

The End of Non-Compete Provisions in Australia are Nearly Here!

September 9, 2026

Sanicki Lawyers

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Published

9 September 2026

Category

Commercial, Uncategorized

The Federal Government announced reforms to worker restraints in the 2025–26 Budget which include banning:

  • Non-compete clauses for low and middle-income workers ($190,100 per year (2026-2027)) indexed annually on 1 July, the same threshold for unfair dismissal eligibility and the high- income guarantee under the Fair Work Act 2009;

  • Wage-fixing agreements; and

    Non-solicitation (poaching customers) agreements.

    Although the reforms are not yet law, they are likely to take effect in 2027, following further consultation and the passing of legislation through Parliament.

Non-compete clauses

Most employment contracts typically include a clause that restricts an employee, at the end of their employment, from moving to a competitor for period of time (for example, 12 months) and within a defined area (for example, in the whole of Victoria).

They may also seek to restrict an employee from establishing their own business in competition with the employer, which is seen as anti-competitive.

Often you will see a cascading clause that sets out alternative restraint periods – for example, 2 years, then 18 months, 12 months, and down to 6 months. All of which will become unenforceable once the new laws are in place.

Related clauses

Employers can still protect their know-how and confidential information after an employee leaves by protecting their business interests through:

• Non-disclosure agreements to stop or restrict a worker from revealing certain information gained

while working for the employer;

  • Client non-solicitation clauses to stop or restrict workers from asking clients from theiremployer to become a customer of another business;
  • Co-worker non-solicitation clauses to stop or restrict a worker from asking co-workers fromtheir employer to work for another business;
  • No-poach agreements between businesses to not hire the current or former staff of theircompetitors; and
  • Wage-fixing agreements between businesses to cap wages or conditions without informingworkers.

Rationale for the changes

Research found that the threat of the restraints being enforced by an employer discouraged workers from switching jobs even if the restraints were clearly unnecessary or unreasonable, and they had a negative effect on mobility of workers to use their skills and seek better wages and conditions and restricted the ability of new businesses to enter the market.

We will need to see the devil in the details after the consultation period, and the legislation is drafted. However, employers may now need to change their mindset about their ability to restrict their employees from moving to work for a direct competitor or setting up a business in direct competition with them.

Reviewing and updating employment agreements will be necessary, as well as tightening the provisions around protection of the company’s know-how.

Contact

Robert Toth I Special Counsel I Accredited Commercial and Franchise Law Specialist

[email protected]

Mobile 0412 673 757

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