An employee leaves a business and receives an offer from a competitor. Their former employer points to a clause restricting where they can work.
For the employee, it may stand between them and their next career move. For the employer, it may be viewed as protection for the business they have built.
Proposed federal reforms could significantly change those arrangements.
What has been proposed?
On 7 September 2026, the Australian Government released draft legislation proposing to ban non-compete clauses for employees earning below the Fair Work Act high-income threshold, currently $190,100 a year.
Non-compete clauses generally restrict a person from joining or establishing a competing business after their employment ends.
The proposed reforms also address:
- Co-worker non-solicitation clauses restricting recruitment of former colleagues.
- No-poach agreements between businesses.
- Wage-fixing arrangements between businesses.
- The rules applying to remaining restraints of trade.
These are different types of restrictions, with different effects on employees and recruitment.
Has the law changed?
The September announcement concerns draft legislation. It does not, by itself, make existing non-compete clauses invalid.
The final scope, commencement and treatment of existing arrangements depend on the legislation that is ultimately passed.
Employees should not assume they can disregard an existing clause. Equally, employers should not assume a restraint is enforceable simply because it appears in a signed contract.
Why it matters to employers
Businesses should identify which employment contracts contain restraints and understand what those clauses are intended to protect.
Restricting someone from joining a competitor, protecting confidential information and preventing solicitation of customers are distinct issues. They should not be treated as interchangeable.
Employers may also wish to review how they retain experienced staff. Remuneration, management, working conditions and career opportunities remain practical reasons for employees to stay.
Why it matters to employees
Before accepting a new role, employees should understand any restrictions in their current contract and obtain advice where necessary.
The proposed reforms could create greater freedom to move between employers. Until the final rules are settled, decisions should be based on the law and contractual arrangements that currently apply.
For any workplace competing to attract and retain capable people, this is a development worth following.
This article provides general information about proposed reforms and is not legal advice.