Reform to non-compete clauses and other restraints, draft legislation

On 7 September 2026, the Government released exposure draft legislation, the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026, which would prohibit non-compete clauses in employment arrangements for employees earning below the Fair Work Act high income threshold of 190,100 dollars. The draft Bill would also prohibit enforcement of existing non-compete terms that fall within the ban and would prohibit non-solicitation terms affecting co-workers for all employees regardless of income.

The draft Bill proposes to expand the cartel conduct provisions of the Competition and Consumer Act 2010 so that no-poach and wage-fixing arrangements between businesses are treated as cartel conduct, and separately proposes a ban on cascading restraint of trade clauses. The term non-compete is defined broadly to capture any term or condition of employment, including terms in deeds, workplace policies or unwritten arrangements, that limits an employee's ability to be involved in another business or to commence subsequent employment after leaving. The proposed prohibitions on non-compete terms would not apply to non-employment arrangements such as sale of business agreements or shareholder agreements.

The Government has said these reforms are intended to improve wage growth, labour mobility and productivity, citing research suggesting around one in five Australian workers are currently subject to a non-compete clause. Submissions on the exposure draft close on 2 October 2026 through the Treasury Consultation Hub. The legislation remains in draft form and has not been introduced into Parliament.