A nationwide ban on non-compete clauses in Australia is proposed to come into effect from 2027. Announced as part of the 2025–26 Federal Budget, this significant industrial relations reform aims to boost wages, encourage innovation, and remove unfair restrictions on job mobility.
If your organisation currently includes non-compete clauses in employment contracts, this guide outlines what’s changing, what stays the same, and what steps employers should take now.
What’s changing with non-compete clauses in Australia?
Under the reform, non-compete clauses will be banned for all employees and contractors earning under the high-income threshold (currently $175,000). These clauses are typically used to prevent workers from joining a competitor or starting a competing business after their employment ends.
The Government estimates that banning these clauses will benefit up to 3 million workers and could increase average wages by 4% annually. This change follows the findings of the Treasury’s Competition Review, which found that non-competes suppress wage growth and limit job mobility, particularly among low- and middle-income workers.
For more information, view the official announcement from the Department of Employment and Workplace Relations: https://ministers.dewr.gov.au/chalmers/cracking-down-non-compete-clauses-boost-wages-and-productivity
How will the ban affect Australian employment contracts?
Employment contracts that rely on post-employment restrictions will need to be reviewed and updated. While the ban specifically targets non-compete clauses, it does not affect other forms of contractual protections:
- Confidentiality and commercial-in-confidence clauses remain fully enforceable
- Non-solicitation clauses, which prevent former employees from contacting clients or staff, are not included in the ban
- Protection of intellectual property and trade secrets is still covered under contract and common law
Why the government is banning non-competes
The reform addresses growing concerns that non-compete clauses are used excessively, even in low-paid roles that don’t involve access to confidential information—such as retail, aged care, construction, and hospitality. The Productivity Commission and multiple legal reviews found these clauses to be anti-competitive and economically inefficient.
International examples, like the US state of Oregon, show that similar bans have led to stronger wage growth and more job creation.
What employers can do to prepare for the non-compete ban
- Audit existing employment contracts to identify non-compete clauses, especially for workers under the income threshold
- Review and strengthen confidentiality agreements to ensure business-critical information remains protected
- Start planning compliant contract templates for new hires ahead of the 2027 implementation date
- Focus on talent retention strategies—invest in leadership, professional development, and a strong organisational culture instead of legal restraints
- Watch for consultation updates on how the reforms will be legislated and enforced
Final thoughts
This ban reflects a shift in Australia’s employment law landscape, encouraging organisations to protect their interests through culture and engagement, rather than restrictive clauses. The change presents an opportunity to rethink how you attract and retain top talent—especially those who value mobility and career progression.
Need help preparing your business? Contact LDN for expert advice on workforce development, legal compliance, and leadership training that supports a high-performance, low-risk workplace.
