In the 2025–26 Federal Budget, the Australian Government announced big changes that could impact how businesses manage employment contracts—particularly around non-compete clauses and no poach agreements. For business owners and employers, now’s a good time to understand how these changes could affect your future hiring and workforce planning.
Non-compete clauses are a common feature in employment contracts. They're typically used to stop former employees from working for a competitor or starting a similar business for a set period after they leave.
But recently, these clauses have come under the spotlight. A report from the Australian Bureau of Statistics (ABS) found that 46.9% of businesses include some form of restraint clause, even for staff in non-executive roles. Even more striking—around 68% of those businesses apply non-compete clauses to most of their workforce.
Economists argue that non-compete clauses reduce job mobility, limit wage growth, and stifle innovation. The concern is that these clauses are stopping skilled people from moving around the workforce, which can hurt productivity in Australia, already a growing issue over the past two decades.
According to the Treasury’s consultation paper, these restraints can be harmful to competition and act as a barrier to new businesses entering the market. Simply put, when workers can’t leave their jobs easily, it becomes harder for other businesses to hire the talent they need to grow.
The Productivity Commission found that removing or limiting unreasonable restraint of trade clauses could lead to increased wages—by up to 2.4% in industries where these clauses are heavily used.
At present, non-compete clauses in Australia are enforced under common law, with some differences between states. In most regions, these clauses are seen as void unless they are reasonably necessary to protect an employer’s legitimate business interests. That could include protecting trade secrets, confidential client data, or preventing key staff from being poached.
In New South Wales, the rules differ slightly—a clause is enforceable unless it is against public policy.
Courts tend to look at the type of business interest involved and whether the clause is fair in terms of time, location, and scope. Importantly, employers cannot use non-compete clauses just to prevent basic competition from a former employee.
The proposed ban on non-compete clauses affects low and middle-income workers. The Fair Work Act defines high-income earners as those making over $175,000 a year. For higher-income employees, the Government plans to consult further on whether and how non-competes should apply.
These changes aren’t in force yet. The Government is still working through policy details, including any exemptions, penalties, or transition plans. Lawmakers expect to introduce legislation in the coming year, and the proposed changes will apply from 2027 onwards.
While the details are still unfolding, this is a smart time to review how your employment contracts are structured—especially if you currently rely on restraint clauses. Knowing the difference between what’s enforceable now and what might change in the future is key to staying ahead.
Need a hand reviewing your current contracts or preparing for what’s coming? It pays to have clear, compliant agreements in place.
Stay across the changes. As workplace laws shift, now’s the time to make sure your contracts and compliance are up to scratch. Whether you're building your team or planning ahead, getting expert support to review your employment arrangements can help you move forward with clarity and confidence. Contact Trekk Advisory for tailored business consultations and practical advice that helps your team and contracts stay future-ready.