Proposed Ban on Non-Compete Clauses: What Business Owners Need to Know

As your trusted HR consultancy partner, we’re keeping a close eye on proposed legislative changes that could have a significant impact on employment contracts and how businesses manage staff transitions.

The Federal Government has announced plans to introduce a ban on non-compete clauses for employees earning below the high-income threshold (currently $175,000 under the Fair Work Act), with changes potentially taking effect from 2027.

What’s being proposed?

• A ban on non-compete clauses for most employees to promote job mobility and wage growth.
• Closing of loopholes that allow the use of anti-poaching agreements between businesses.
• Consideration of whether non-solicitation clauses (covering clients and co-workers) should also be limited.
• Ongoing consultation on whether non-compete clauses will remain valid for high-income earners.
• Further detail to come regarding penalties, exemptions, and transition arrangements.

What this could mean for your business

If your contracts currently rely on post-employment restrictions to protect your business, it’s worth beginning a review now. While these changes are not yet law, early preparation can help you stay compliant and reduce business risk down the track.

We recommend:

• Auditing your current employment contracts.
• Identifying other ways to safeguard your business (e.g. robust confidentiality, intellectual property protections, and notice periods).
• Staying informed as the policy detail evolves.

We’ll continue to monitor developments and support our clients in adjusting to any confirmed legislative changes.