Reform to non-compete clauses and other restraints on workers
Submission Date: 12 September 2025
The Law Council provided a submission to the Competition Taskforce in response to the Consultation Paper on Reform to non-compete clauses and other restraints on workers.
On 25 March 2025, the Treasurer announced (as part of the 2025–26 Federal Budget), that the Government would implement a ban on non-compete clauses for employees earning less than the high-income threshold in the
Fair Work Act 2009 (Cth) (FW Act).1 The Law Council notes that the Consultation Paper has been developed to inform the implementation of this announcement.
The Law Council is broadly supportive of the Australian Government’s objective of addressing the misuse of non-compete and related clauses as part of its broader competition policy review. The Law Council recognises the potential for this reform to improve labour market efficiency, boost productivity and improve outcomes for workers who might otherwise be unnecessarily restrained.
Members of the legal profession report struggling to advise clients in relation to the applicability and enforceability of post-employment restraint clauses. This applies in relation to advising: employees in relation to restraints; employers seeking to enforce restraints, and; prospective employers whether a potential hire is subject to an enforceable post-employment restraint clause.
While reform is necessary to address the proliferation and misuse of non-compete and related clauses, care must be taken to avoid overregulation, legal uncertainty, and unintended consequences. The common law provides a robust framework for many issues, and statutory intervention should be targeted, clear, and proportionate.
The Law Council has received differing views from its stakeholders in response to some matters. Where this is the case, the Law Council has provided the alternative views separately for consideration by the Competition Taskforce. These views should be attributed to the relevant Constituent Body and/or Committee where they are listed.
The Law Council has responded to each of the Consultation Questions set out in Parts 3–6 of the Consultation Paper.
1 The Hon Dr Jim Chalmers MP, Treasurer, ‘Cracking down on non-compete clauses to boost wages and productivity’ (Media Release, 25 March 2025). The Treasurer also announced that the Government would seek to ‘close loopholes’ in the Competition and Consumer Act 2010 (Cth) that may allow businesses to make agreements that cap wages or conditions or prevent staff from being hired by competitors.
Last Updated on 30/09/2025
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