Australia’s non-compete rules could change from 2027, with the Federal Government proposing to ban non-compete clauses for workers earning below $190,100.<\/p>\n
The proposed reforms could affect how businesses approach employment contracts, recruitment and retention, while giving some workers greater freedom to move between employers.<\/p>\n
The reforms are not yet law. Draft legislation was released on 7 September 2026, with consultation open until 2 October 2026. The proposed changes would need to pass through the legislative process before they take effect.<\/p>\n
A non-compete clause is a provision in an employment contract that restricts an employee from working for a competitor, starting a competing business or carrying out certain work after their employment ends.<\/p>\n
Businesses have traditionally used non-compete clauses to help protect legitimate business interests, such as confidential information, intellectual property, customer relationships and commercially sensitive knowledge.<\/p>\n
The proposed reforms could change when and how these restrictions can be used in Australia.<\/p>\n
The Federal Government has released draft legislation proposing to ban non-compete clauses for Australian workers earning below $190,100 per year<\/strong>.<\/p>\n The $190,100 figure is the Fair Work Act’s high-income threshold and is indexed annually. The Government is also consulting on other employment restraints, including co-worker non-solicitation clauses, no-poach arrangements, wage-fixing arrangements and cascading restraint clauses.<\/p>\n The proposed reforms are intended to commence in 2027, but the exact timing and final requirements will depend on the consultation and legislative process.<\/p>\n This means employers and employees should treat the current proposals as proposed changes, not changes that are already in effect<\/strong>.<\/p>\n The Government’s position is that non-compete clauses can restrict workers from moving to other jobs and can affect competition and productivity.<\/p>\n The Government has cited research from the e61 Institute which found that around one in five Australian workers are subject to a non-compete clause. It has also cited research estimating that affected workers could experience wage increases if non-compete restrictions were removed. These are the Government’s cited findings and estimates, rather than a guaranteed outcome of the proposed reforms.<\/p>\n There is also a broader policy question about how employers can protect legitimate business interests while allowing workers to move between jobs.<\/p>\n For candidates covered by the proposed changes, removing non-compete restrictions could provide greater flexibility when considering a new role.<\/p>\n A worker who currently has a non-compete clause may be restricted from joining a competitor for a particular period or working within a particular market. If the proposed reforms become law as drafted, those restrictions would no longer apply to workers covered by the proposed ban.<\/p>\n This could give candidates more freedom to consider career progression, higher-paying roles or opportunities with other organisations.<\/p>\n However, the proposed changes do not mean that every employment restriction would disappear.<\/p>\n Confidentiality obligations, intellectual property provisions and other contractual arrangements may continue to apply. The Government is also consulting on other forms of restraint, so the final position may be broader than non-compete clauses alone.<\/p>\n For employers, there could be both opportunities and challenges.<\/p>\n One potential benefit is access to a broader pool of experienced candidates. A candidate who may previously have been restricted from joining a competitor could potentially become available to other employers.<\/p>\n However, businesses may also need to review how they protect legitimate business interests.<\/p>\n If non-compete clauses can no longer be used for workers covered by the proposed reforms, employers may need to place greater emphasis on other appropriate protections, such as confidentiality arrangements, intellectual property provisions and measures relating to client relationships.<\/p>\n The Government has specifically indicated that it is consulting on appropriate exemptions and safeguards to protect legitimate business interests.<\/p>\n For employers, the proposed reforms could therefore be relevant not only to employment contracts, but also to recruitment and retention strategies.<\/p>\n Potentially.<\/p>\n If employees have fewer contractual restrictions on moving to another employer, businesses may need to think more broadly about how they attract and retain people.<\/p>\n Competitive remuneration is one factor, but retention can also be influenced by career development, flexibility, workplace culture, leadership and opportunities to learn new skills.<\/p>\n The proposed reforms do not remove the ability for employers to create compelling workplaces. They could, however, reduce the ability to rely on contractual restrictions as a way of limiting employee movement.<\/p>\n The proposed reforms are not yet law, so businesses should not assume that existing non-compete provisions have already become invalid.<\/p>\n However, this may be a useful time to review existing employment contracts and understand where non-compete clauses and other restraints are currently being used.<\/p>\n Employers could consider:<\/p>\n Employers should obtain appropriate legal advice before changing employment contracts or relying on particular restraint provisions.<\/p>\n The Federal Government’s draft legislation is currently subject to consultation, with submissions closing 2 October 2026<\/strong>.<\/p>\n The proposed reforms will then need to progress through the legislative process. If passed, the changes are intended to commence from 2027.<\/p>\n For employers and candidates, the key point is that the rules have not changed yet<\/strong>.<\/p>\n The proposed reforms are worth watching because they could have implications for recruitment, employee mobility, retention and employment contracts across a wide range of Australian industries.<\/p>\n <\/p>\n The Federal Government has proposed legislation to ban non-compete clauses for workers earning below $190,100. The proposal is not yet law and must go through the legislative process.<\/p>\n The proposed reforms are intended to commence in 2027, subject to consultation and the legislation passing Parliament.<\/p>\n The proposed threshold is $190,100 per year. This is the Fair Work Act high-income threshold and is indexed annually.<\/p>\n Yes. The proposed reforms have not yet taken effect. Existing employment arrangements should continue to be considered under the current legal framework until any new legislation commences.<\/p>\n It depends on the employee’s employment contract and the applicable law. A non-compete clause may restrict a worker from joining a competitor for a specified period or under particular circumstances. The proposed reforms could change these restrictions for workers covered by the proposed ban.<\/p>\n No. The current proposal focuses on workers earning below $190,100. The Government is also consulting on how the reforms should apply to higher-income workers and on appropriate exemptions and safeguards.<\/p>\n The proposed reforms concern non-compete and other restraint arrangements. Confidentiality and intellectual property protections are separate issues, although employers should review their contracts and seek legal advice about how best to protect legitimate business interests.<\/p>\n There is no need to assume existing clauses have already been removed or are no longer relevant. Employers can review their current contracts, identify the business interests they are intended to protect and monitor the proposed legislation as it progresses.<\/p>\n The Australian Government Treasury is consulting on the draft legislation, with submissions open until 2 October 2026. Employers can refer to Treasury’s consultation material for the latest information as the reforms progress.<\/p>\n <\/p>\n Source:<\/strong> Australian Government Treasury, Reform to non-compete clauses and other restraints<\/em>, September 2026.<\/p>\n","protected":false},"excerpt":{"rendered":" Australia’s non-compete rules could change from 2027, with the Federal Government proposing to ban non-compete clauses for workers earning below $190,100. The proposed reforms could affect how businesses approach employment contracts, recruitment and retention, while giving some workers greater freedom to move between employers. The reforms are not yet law. 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What could the proposed reforms mean for candidates?<\/strong><\/h2>\n
What could the proposed reforms mean for employers?<\/strong><\/h2>\n
Could the reforms affect employee retention?<\/strong><\/h2>\n
What should employers do now?<\/strong><\/h2>\n
\n
What happens next?<\/strong><\/h2>\n
\nFrequently Asked Questions (FAQs)<\/strong><\/h2>\n
Are non-compete clauses being banned in Australia?<\/strong><\/h3>\n
When will non-compete clauses be banned in Australia?<\/strong><\/h3>\n
What is the income threshold for the proposed non-compete ban?<\/strong><\/h3>\n
Do non-compete clauses still apply in Australia?<\/strong><\/h3>\n
Can an employee work for a competitor after leaving their job?<\/strong><\/h3>\n
Will the proposed reforms apply to everyone?<\/strong><\/h3>\n
Will employers still be able to protect confidential information?<\/strong><\/h3>\n
What should employers do about existing non-compete clauses?<\/strong><\/h3>\n
Where can employers find information about the proposed non-compete reforms?<\/strong><\/h3>\n