If you have ever signed a contract saying you cannot work for a competitor after you leave, the federal government wants to make that clause unenforceable. On 7 September 2026 it released an exposure draft of the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026, with submissions open until 2 October 2026.
Research by the e61 Institute, which the government is citing to make its case, found at least one in five Australian workers is bound by a non-compete clause. They are not confined to executives. The government says they turn up in the contracts of childcare workers, tradies, receptionists, construction workers and hairdressers.
The draft does three main things, according to law firms Ashurst and Allens.
First, it bans non-compete clauses for employees earning at or below the high-income threshold in the Fair Work Act, currently $190,100 for the financial year ending 30 June 2027 and indexed each 1 July. Casual employees and pieceworkers would be protected from non-competes whatever they earn.
Second, it bans clauses that stop departing staff from poaching their former co-workers, for all employees regardless of pay. It also targets cascading restraints, the clauses that list multiple distances and time periods in the hope a court will enforce at least one.
Third, it turns agreements between employers not to hire each other's staff, or to fix wages, into cartel conduct under competition law, carrying civil and criminal penalties.
"Non-compete clauses drag down wages, handcuff workers, and put a handbrake on labour productivity," Employment and Workplace Relations Minister Amanda Rishworth said. The e61 research the government points to suggests affected workers could see pay rise by up to 4 per cent, around $2,500 a year for a typical worker. Those are the proponent's figures, and business groups dispute the premise behind them.
Timing is the detail to watch. Under the draft, the law would start on the first 1 January, 1 April, 1 July or 1 October after it receives Royal Assent, with a six-month grace period before civil penalties apply. Existing contracts are not automatically wiped. The new rules apply to employment arrangements made or varied after the law starts, and HSF Kramer notes that even an unrelated variation to an existing contract could bring it within scope.
Plenty of protection remains for employers. Confidentiality and trade secret clauses survive, as do clauses stopping former staff from soliciting clients, longer notice periods and garden leave, and non-competes attached to the sale of a business.
Business groups have pushed back. The Australian Industry Group has argued non-competes are "essential to support business productivity, business innovation, investments by businesses in employees, business continuity and growth."
The MPJ Takeaway
This is one of the more consequential workplace changes in years, and it lands squarely on younger workers who switch jobs to get ahead. The strongest argument for it is simple. If an employer's real concern is clients and confidential information, the law still lets them protect both. What it removes is the power to stop someone simply working for a rival. We expect the bill to pass largely intact and the ban to be in force during 2027. Until then, check your contract. A restraint you signed may already be weaker than it looks, and any variation to your contract after the law starts could bring it under the new rules.
Research by the e61 Institute, which the government is citing to make its case, found at least one in five Australian workers is bound by a non-compete clause. They are not confined to executives. The government says they turn up in the contracts of childcare workers, tradies, receptionists, construction workers and hairdressers.
The draft does three main things, according to law firms Ashurst and Allens.
First, it bans non-compete clauses for employees earning at or below the high-income threshold in the Fair Work Act, currently $190,100 for the financial year ending 30 June 2027 and indexed each 1 July. Casual employees and pieceworkers would be protected from non-competes whatever they earn.
Second, it bans clauses that stop departing staff from poaching their former co-workers, for all employees regardless of pay. It also targets cascading restraints, the clauses that list multiple distances and time periods in the hope a court will enforce at least one.
Third, it turns agreements between employers not to hire each other's staff, or to fix wages, into cartel conduct under competition law, carrying civil and criminal penalties.
"Non-compete clauses drag down wages, handcuff workers, and put a handbrake on labour productivity," Employment and Workplace Relations Minister Amanda Rishworth said. The e61 research the government points to suggests affected workers could see pay rise by up to 4 per cent, around $2,500 a year for a typical worker. Those are the proponent's figures, and business groups dispute the premise behind them.
Timing is the detail to watch. Under the draft, the law would start on the first 1 January, 1 April, 1 July or 1 October after it receives Royal Assent, with a six-month grace period before civil penalties apply. Existing contracts are not automatically wiped. The new rules apply to employment arrangements made or varied after the law starts, and HSF Kramer notes that even an unrelated variation to an existing contract could bring it within scope.
Plenty of protection remains for employers. Confidentiality and trade secret clauses survive, as do clauses stopping former staff from soliciting clients, longer notice periods and garden leave, and non-competes attached to the sale of a business.
Business groups have pushed back. The Australian Industry Group has argued non-competes are "essential to support business productivity, business innovation, investments by businesses in employees, business continuity and growth."
The MPJ Takeaway
This is one of the more consequential workplace changes in years, and it lands squarely on younger workers who switch jobs to get ahead. The strongest argument for it is simple. If an employer's real concern is clients and confidential information, the law still lets them protect both. What it removes is the power to stop someone simply working for a rival. We expect the bill to pass largely intact and the ban to be in force during 2027. Until then, check your contract. A restraint you signed may already be weaker than it looks, and any variation to your contract after the law starts could bring it under the new rules.