The way Australian employers protect their businesses when employees leave could be about to change significantly.
On 7 September 2026, the Federal Government released the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026, proposing substantial reforms to non-compete clauses and other post-employment restraints.
While the Bill is currently draft legislation and has not yet become law, employers should start considering its implications now. If enacted, the reforms are intended to commence from 2027 and could require many businesses to reconsider the restraint clauses contained in their employment contracts, deeds and workplace arrangements.
What is changing?
Perhaps the most significant proposal is a ban on non-compete clauses for employees whose annualised full-time equivalent earnings are at or below the Fair Work Act high-income threshold, currently $190,100.
A non-compete clause typically prevents an employee, after leaving employment, from working for a competitor or establishing a competing business for a particular period.
Under the proposed reforms, employers would not simply be prevented from enforcing prohibited clauses. The inclusion of the clause itself in an employment arrangement could constitute a contravention, potentially exposing an employer to substantial civil penalties. Employers could also face penalties for attempting or threatening to enforce a non-compete clause which has become unenforceable under the new regime.
The reforms are broader than non-compete clauses alone.
Co-Worker Non-Solicitation Clauses
The Bill proposes to prohibit co-worker non-solicitation clauses for all employees, regardless of their income.
These clauses commonly seek to prevent departing employees from recruiting former colleagues into their new business or employer. Under the proposed regime, merely including such a provision in an employment arrangement could attract penalties.
Cascading Restraints
Many Australian employment contracts currently contain “cascading” restraint clauses. These are alternative restraint periods of 12 months, 6 months and 3 months, coupled with different geographical areas.
The Bill proposes that post-employment restraints drafted in this cascading manner will be entirely unenforceable.
For other permissible post-employment restraints, including certain client non-solicitation and non-dealing clauses, employers would need to demonstrate that the restraint is necessary to protect a recognised legitimate business interest and that it is reasonable. Those legitimate interests are proposed to focus on confidential information and relationships with customers, clients and professional networks.
No-Poach and Wage-Fixing Arrangements are also Under Scrutiny
The reforms also extend beyond the employer-employee relationship.
The Bill proposes amendments to the Competition and Consumer Act 2010 (Cth) that would treat certain no-poach and wage-fixing arrangements between businesses as cartel conduct.
A no-poach arrangement may arise where businesses agree not to recruit or employ each other’s staff. Wage-fixing arrangements can involve businesses agreeing to fix, maintain, decrease or control employee remuneration or other employment conditions.
If enacted, these changes would carry potentially serious consequences, including civil and, in some circumstances, criminal cartel penalties. The ACCC would be responsible for investigating and enforcing the new prohibitions.
What should employers do now?
Employers should not necessarily start deleting restraints from their contracts immediately. The Bill is still in draft form and its final terms may change before it is enacted.
However, businesses should start identifying their exposure now.
Now is the time to review your restraints
The proposed reforms represent one of the most significant changes to the regulation of post-employment restraints in Australia in years.
For employers, the issue is not simply whether an existing non-compete clause remains enforceable. Businesses may need to reconsider how they protect confidential information, customer relationships, intellectual property and commercial goodwill when key employees leave.
If your employment contracts contain restraint of trade, non-compete or non-solicitation provisions, contact our employment law team to arrange a review of your existing contracts and determine how your business can prepare for the proposed reforms.
Article by Ee-Shuen Goh and Kayte Lewis
This article is general in nature and is not legal advice. If you need assistance understanding how the proposed changes to post-employment restraints may affect your business, or require support reviewing or updating your employment contracts, procedures and policies, or other employment law matters, Voice Workplace Lawyers can assist you.
We help people and businesses navigate the complexities of the Fair Work Act and Federal and State Workplace Laws with confident and practical advice. You can contact us at office@voicelawyers.com, give us a call at 02 9261 1954 or use the link on our website to book a consultation to speak with one of our lawyers.