Introduction
Australia is preparing to ban most non-compete clauses in employment contracts which represents a major shift that will change how employers protect their business after employees leave.
The Federal Government plans to prohibit non-compete restraints for workers earning below the Fair Work Act high-income threshold (currently about $183,000). Legislation is expected in 2026, with commencement likely in 2027.
What the Ban Means
Non-compete clauses prevent employees from joining competitors or starting rival businesses after leaving.
Under the proposed reform, these clauses will become unenforceable for most employees, meaning employers generally won’t be able to stop former staff from working in the same industry once employment ends.
The change is intended to improve job mobility, wages and labour-market competition.
Who Is Affected
The ban is expected to apply to employees earning below the high-income threshold, covering a large proportion of professional, technical and managerial roles, not just lower-paid workers.
Exceptions are likely for:
- senior executives above the threshold
- business owners/equity holders
- sale-of-business restraints
What Happens to Existing Contracts
Once the law starts, existing non-compete clauses for covered employees are expected to become unenforceable.
Employers will need to rely on other protections instead.
How Employers Should Prepare
With non-competes disappearing for most roles, organisations should shift to:
- stronger confidentiality and IP clauses
- client and staff non-solicitation protections
- garden leave provisions
- retention and engagement strategies
HR teams should begin reviewing employment contracts now ahead of the expected 2027 start.
Key Takeaway
The planned non-compete ban is the biggest change to post-employment restraints in decades. Employers will need to move from restricting competition to protecting confidential information, client relationships and talent retention.
Preparing for the Non-Compete Ban
If most non-compete clauses become unenforceable, employers will need new ways to protect confidential information, client relationships, and key talent.
Liquid HR supports businesses in reviewing employment contracts, strengthening restraint clauses, and ensuring compliance ahead of legislative change. You can also explore our HR Outsourcing services, for ongoing, practical HR support as your workforce model evolves.
If your contracts haven’t been reviewed recently, now is the time to act.
