The Australian Government will ban non-compete clauses for most workers earning under $175,000 per year, starting in 2027. Here’s a quick breakdown of what these changes entail.
What is a non-compete clause?
A non-compete clause is a condition in your job contract that tries to ban you from working for a competitor or starting a similar business after you leave your job. Some clauses even try to ban you Australia-wide or from the entirety of your industry for as long as 2-3 years.
What is changing?
From 2027, the Australian Government will ban non-compete clauses for most workers earning below the “high income threshold” (currently $175,000) under the Fair Work Act 2009. This includes:
- Childcare workers
- Construction workers
- Hairdressers
- Many other everyday employees
- Almost all casual and part-time workers
Why is this changing?
The Government has proposed these changes to:
- Help workers switch jobs more easily
- Raise wages (estimated increase of up to $2,500 a year for the average worker)
- Improve national productivity (boosting GDP by $5 billion)
Are any other workplace restrictions being looked at?
The Government is also planning to ban wage-fixing agreements between companies (where they agree to cap salaries) and no-poach agreements (where companies agree not to hire each other’s staff).
Will the ban apply to contractors?
This is not fully clear yet. The Australian Government is still consulting. There are concerns that contractors or people working through their own companies might fall into a grey area.
When does the ban begin to apply?
The ban will go into effect from 2027. The ban will not apply to past contracts (prospective only), but transitional rules are still being worked out.
What does this mean for employers?
The ban will go into effect from 2027. The ban will not apply to past contracts (prospective only), but transitional rules are still being worked out.
What are the penalties for employers?
There are potentially very high fines for employers, possibly under the Competition and Consumer Act 2010, such as:
• $50 million, or
• 3x the benefit gained, or
• 30% of annual turnover (if the above can’t be calculated)
What about NSW, isn’t it different?
Yes. NSW has a unique Restraints of Trade Act 1976.
In NSW, even if a clause is unreasonable, courts can enforce part of it if it is not against public policy, which includes a worker’s right to look for the employment that pays or suits them best. The new federal law will need to be carefully aligned with this.
Are non-solicitation clauses banned too?
Not yet. Non-solicitation clauses (which stop you from contacting clients or co-workers after leaving a job) may also come under review, but they are not the same as non-compete clauses.
What should employees and employers do now?
Employees:
- Know your rights—your ability to move jobs may become easier soon.
- Don’t be intimidated from looking for better jobs by non-competes if you earn under $175,000.
Employers:
- Start reviewing your contracts and employment practices.
- Watch for updates from the Australian Government, ACCC, and Fair Work.
Who’s in charge of enforcing this?
Enforcement may involve:
- Australian Competition and Consumer Commission (ACCC)
- Fair Work Commission
- Possibly the courts, depending on the issue
Information accurate as of 30th June 2025. The information above is not legal advice. If you have a legal issue, please get specific legal advice.
