In the recently announced 2025 Federal Budget, the Albanese Government has stated that if re-elected, it will look to ban non-compete clauses for workers. This comes with an acknowledgement that more than 3 million Australian workers—ranging from childcare workers to construction staff and hairdressers—are subject to non-compete clauses.
Non-compete clauses, restraint of trade clauses and non-solicitation clauses have long been the subject of debate within the Australian courts, with many deemed unenforceable as they often exceed what is reasonably necessary to protect legitimate business interests and unfairly limit workers’ ability to use their skills to secure higher-paying positions elsewhere.
If re-elected, the government intends to implement these changes by 2027. Here’s what employers need to know about the proposed reforms.
Potential Key Changes You Should Know:
- Non-compete clauses will be banned for workers earning less than $175,000 (the high-income threshold in the Fair Work Act);
- Anti-competitive practices such as wage-fixing and “no-poach” agreements will be targeted, spurring more competition for workers;
- The lifted restrictions would likely allow workers to more freely pursue entrepreneurial ventures, including setting up their own businesses, contributing to increased business entry and competition.
What About Your Business?
In the Government’s reform to target anti-competitive business practices:
- Wage-fixing arrangements: Workers may no longer be subject to pay caps and certain work conditions, without first obtaining their knowledge and consent;
- No-poach agreements: New measures may restrict the ability for businesses to prevent competitors from soliciting and hiring their staff.
What Is Yet To Come?
Further details about the policy, including the specifics on the ban and what employers will still be able to enforce and include as employment terms, are yet to be revealed.
The Government will consult on policy details, including exemptions, penalties, and transition arrangements.
It is also considering non-solicitation clauses for clients and co-workers, as well as non-compete clauses for high-income workers.
Subject to consultation and the passing of legislation, the reforms are expected to come into effect in 2027 and will apply prospectively.
What You Should Do Now?
As an employer, these changes could significantly impact your employment contracts — particularly clauses related to non-compete, non-solicitation, and restraint of trade. We recommend that you stay vigilant about upcoming changes from the Federal Government and monitor future email updates from us on this topic.
You may also wish to consider other changes in workforce dynamics and business strategy, including employee incentives and flexible working arrangements, to retain talent and keep skilled employees within your organisation.
With these reforms on the horizon, it is more important than ever for businesses to reflect on how they can adapt to an increasingly open and competitive job market.
If you have any questions about how these changes might affect your business or would like us to review the terms in your current employment contracts, please feel free to reach out to one of our workplace lawyers.
For further information please contact Danny Clifford.
The assistance of Monique Chow, Lawyer, in researching this article is gratefully acknowledged.
