Proposed Changes to Non-Compete Clauses and Employment Restraints

Bee HR Client • September 9, 2026

The Australian employment landscape is set for significant change - contribute to the consultation process

The Australian employment landscape is set for significant change, with the Federal Government proposing reforms to non-compete clauses and other restraint provisions commonly included in employment contracts. While the changes are not yet fully in effect, they signal a major shift in how businesses will be able to protect their interests while balancing employee mobility and career opportunities.


What Is Being Proposed?

The Government has released draft legislation proposing to ban non-compete clauses for employees earning below the Fair Work Act high-income threshold, currently $190,100 per annum. If passed, the reforms are expected to impact millions of Australian workers who would no longer be restricted from moving directly to a competitor or establishing their own competing business after leaving employment.

The proposed reforms extend beyond non-compete clauses and include consultation on:


  • Co-worker non-solicitation clauses
  • No-poach agreements between businesses
  • Wage-fixing arrangements between employers
  • Certain cascading restraint-of-trade provisions commonly used in employment contracts


The intention is to create a more competitive labour market while ensuring workers have greater freedom to pursue career opportunities.


What Does This Mean for Businesses?

For many employers, the proposed changes will require a rethink of how they protect their legitimate business interests.

Historically, non-compete clauses have been viewed as a safeguard against losing clients, intellectual property, confidential information, and key employees to competitors. If the proposed changes become law, businesses may need to rely more heavily on alternative protections such as:


  • Confidentiality agreements
  • Intellectual property protections
  • Client non-solicitation clauses
  • Stronger onboarding and offboarding processes
  • Succession planning and employee retention strategies


Rather than preventing employees from leaving, organisations may need to focus more on creating workplaces where employees choose to stay.


Finding the Right Balance

While employee mobility is important, businesses still have a legitimate need to protect confidential information, trade secrets, customer relationships, client’s poaching employees and commercial investments. The challenge will be finding the right balance between protecting business interests and ensuring employees are not unfairly restricted in their career choices.

Many employers and industry groups have expressed concerns that the reforms may go too far, particularly for employees who have access to commercially sensitive information but fall below the proposed income threshold. Others believe the changes are a necessary step towards a more productive and competitive economy.

There will be a particularly large impact on small and medium businesses in niche industries. There will be nothing in place to stop clients poaching from businesses providing a service.  


Looking Ahead

Although the details may continue to evolve as consultation progresses, the direction is clear: businesses should start reviewing their employment contracts and considering how they will protect their interests in a future where non-compete clauses may no longer be available for many employees.

The proposed reforms represent one of the most significant changes to employment restraints in decades.

To have your say while the legislation is still in draft submit your response before the 2nd of October 2026.


Reform to non-compete clauses and other restraints – draft legislation - Consult hub

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