Non-compete ban: draft law out for consultation

What changed

Under the draft, a non-compete term would have no effect for an employee earning under the high income threshold, and an employer that includes one would face a civil penalty. Casual employees and pieceworkers would be covered whatever they earn.

Clauses that stop employees from approaching former co-workers to join them elsewhere would also be banned, regardless of the employee's income.

The proposed changes would apply to new employment contracts and existing contracts that are changed after the new rules start. The ban applies to employees, not independent contractors.

The draft would also ban certain agreements between businesses not to hire each other's workers or to fix what workers are paid. There is a narrow exemption for labour hire. For example, a no-poach term could last no more than three months after a placement ends.

Under the draft, the ACCC would oversee the business-to-business restrictions, while Fair Work would oversee the employee non-compete rules.

Who it affects

• Employers using non-compete or co-worker non-solicitation clauses for staff earning under the high income threshold, and for any casual employees.
• Recruitment agencies whose client or supplier agreements limit hiring each other's staff or set pay, which would need to fit the labour hire exemption.
• Businesses with informal understandings with competitors about hiring or pay.

What to do

• List the contracts and templates that contain non-compete, non-solicitation or no-poach terms.
• Check which affected employees earn under the high income threshold, and which are casuals or pieceworkers.
• Review client and supplier agreements for terms that stop either side hiring the other's staff or that set pay rates.
• Ask your adviser whether those agreements would fit the draft labour hire exemption.
• Watch for the final bill. The detail may change after consultation closes on 2 October 2026.