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Non-compete clauses are set for significant reform in Australia. Under the proposed Australian non-compete ban, the Federal Government plans to prohibit these clauses for employees earning below the Fair Work Act high-income threshold. The threshold is $190,100 from 1 July 2026 to 30 June 2027, with the reforms intended to take effect from 2027, subject to legislation passing Parliament.
For employers, now is the time to review restraint clauses, confidentiality protections and non-solicitation provisions rather than waiting for the legislation to take effect.
What the Australian Non-Compete Ban Could Mean for Employers
The proposed reforms are straightforward in intent, non-compete clauses should not be used to restrict the movement of low and middle-income workers. The Government’s position is that these clauses suppress wages, limit career mobility and reduce competition, particularly in industries where they have become standard contract boilerplate rather than genuine business protection.
The Key Details
- Who it affects: Employees earning below the high-income threshold of $190,100.
- When: Reforms are targeted for 2027, subject to consultation and legislation passing Federal Parliament.
- Where it applies: Nationally.
Why Non-Compete Clauses Matter Now
Under the Restraint of Trade Act 1976 (NSW), Courts have always had the power to void restraints that are unreasonable or contrary to public policy. What has shifted is the benchmark for what “contrary to public policy” means.
With the Federal Government’s position now clearly on the record, NSW Courts are using that policy direction as live context when deciding whether to enforce a non-compete clause.
The Practical Result:
If your employee earns under $190,100, there is already a strong argument that their non-compete is unenforceable today, before a single piece of legislation has passed.
4 Steps Every Employer Should Take on Non-Compete Clauses
- Audit your contracts.
Identify every employment agreement that contains a non-compete or restraint of trade clause. - Check the salary threshold.
Any employee earning below $190,100 is high-risk territory. Do not assume those clauses will hold. - Strengthen your alternatives.
Well-drafted confidentiality clauses, IP protection provisions and non-solicitation clauses remain enforceable and are often more effective than
a broad non-compete anyway. - Get advice before you act.
If you are considering enforcing a restraint against a departing employee, seek specific legal and HR advice first, the landscape has shifted.
The Bottom Line
Non-compete clauses are not dead yet, but they are on notice. The employers who act now, review their contracts and build smarter protections will be far better positioned than those who wait for 2027 to force their hand.
PerformHR works with Australian businesses to review employment contracts, strengthen HR compliance and build people frameworks that hold up. Ready to review your contracts before this catches you off guard?
Contact the PerformHR team to start the conversation today on 1300 406 005 or email info@performhr.com.au.
This article is general in nature and does not constitute legal advice. PerformHR recommends seeking specific legal counsel in relation to any existing restraint of trade provisions.
“The law hasn't changed yet. The courts have. And most employers don't know it.”
