5 benefits of Australia’s non-compete clause ban for employees

Non-compete clause
 
The Albanese Government has announced sweeping changes to employment laws that will significantly impact non-compete clauses in Australia. These reforms will remove most restraints that have traditionally restricted Australian workers from switching jobs or joining a competing business. For employees and job seekers, this means greater freedom, improved career prospects, and potentially higher wages.
 
Explore the benefits for workers and uncover real-world examples of how the changes could impact different industries.
 

What is a non-compete clause?

A non-compete clause (sometimes called a restraint clause) is a provision in employment agreements that prevents a worker from joining a competitor or starting a similar business for a set period after leaving their job. Employers argue these clauses protect legitimate business interests such as client relationships, trade secrets, and confidential information.
 
Until now, non-compete clauses were common in industries like professional services, IT, healthcare, and even among childcare and construction workers. While designed to protect business interests, they have often been used in ways that can cap wages or conditions, block staff from pursuing better jobs, and restrict a worker from moving freely in the market.
 

What is the non-compete clause ban in Australia?

Currently, more than three million Australian workers are bound by these clauses. The Australian Government has confirmed it will ban non-competes for most workers through amendments to the Fair Work Act.
 
Key points include:
 
  • Removal of most compete clauses: The ban will apply to millions of Australian workers currently bound by such clauses.
  • Exceptions for specific circumstances: Some high-income earners above the high income threshold (currently $175,000) may still have limited clauses if they are necessary for protecting legitimate business interests.
     
  • Related clauses under review: The government is also examining the use of non-solicitation clauses, poach agreements, and wage-fixing agreements to ensure they do not cap wages or unfairly limit movement.
     
  • No changes to some clauses: Clauses covering intellectual property, confidential information, and trade secrets will remain enforceable.
These changes follow findings from the Treasury e61 Institute that the prevalence of non-compete clauses across industries may have contributed to reduced job mobility, wage stagnation, and limited competition.
 

Advantages for employees and job seekers

1. Greater job mobility

The ban will make it easier for workers to change roles, industries, and employers without legal restrictions. This means faster career moves into positions that offer better pay, improved conditions, and stronger growth opportunities.
 
Example: A marketing specialist previously prevented by a six-month non-compete clause from joining another agency can now move immediately to a higher-paying role without delay.
 

2. Potential for higher wages

Without restrictive clauses limiting movement, employers must offer competitive pay and conditions to attract and retain talent. This gives workers greater bargaining power when negotiating salaries and benefits.
 
Example: In construction, removing a restraint clause means skilled tradespeople can move to better-paying roles without waiting months for restrictions to end.
 

3. Reduced risk of legal disputes and costs

Previously, challenging or breaching a non-compete clause could lead to costly legal disputes, a particular concern for low-income and minimum wage earners. The ban removes this risk, preventing workers from seeking legal assistance simply to pursue a higher-paying job.
 

4. Fairer use of restrictions

The reforms ensure restrictive clauses are only used in rare cases where they are genuinely necessary, such as for senior executives with access to highly sensitive business information, intellectual property, or trade secrets. Most workers will no longer face these barriers.
 

5. Stronger negotiation power for job seekers

With non-compete clauses largely removed, job seekers can openly consider competing offers and leverage them in negotiations. This increases the chances of securing better pay, benefits, and working conditions.
 

What can you do next?

If your employment contract contains a non-compete clause, review it to understand whether the restriction applies to you now and how the upcoming changes might affect your situation. While some clauses will remain for specific circumstances, most will no longer be enforceable once the reforms pass.
 
The move to ban non-compete clauses in Australia is a game-changer for job-seekers. With more freedom to move between roles, now is the perfect time to explore your options. Hays recruiters can connect you with employers actively seeking your skills in industries across Australia. Register your CV today.
 

FAQs

Are non-compete clauses legal in Australia?

Until the ban is fully in effect, non-compete clauses in employment contracts are still technically enforceable, but only if they are reasonable and necessary for legitimate interests.
 
Australian courts often assess:
 
  • Duration of the restriction.
  • Geographic scope of the clause.
  • Whether the role involves access to confidential information or clients.
Once the reforms are implemented, these clauses will be unlawful for most roles.
 

When does the non-compete ban come into effect?

The changes are expected to take effect once amendments to the Fair Work Act are passed, with the ban planned to be fully implemented by 2027.
 

Can I get around a non-compete clause?

Currently, non-compete clauses may be challenged if they are unreasonable in scope, duration, or geographic reach, or not necessary to protect legitimate business interests. Legal advice is recommended before acting.
 

Are non-solicitation clauses enforceable in Australia?

Yes. Non-solicitation clauses can still be enforced if they are reasonable and aimed at preventing the poaching of clients or staff, rather than restricting general job movement.
 

Will existing non-compete clauses remain valid before the ban comes into effect?

Yes. Until the ban takes effect in 2027, existing non-compete clauses can still be enforced if they are considered reasonable and necessary to protect the business.