Free To Move: The Proposed Ban On Non-Compete Clauses And What It Means For Hiring And Keeping Talent

What Is Proposed

On 7 September 2026 the Government released exposure draft legislation, the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026. Consultation closed on 2 October 2026. The Bill is not yet law and may change before it is introduced into Parliament. In summary, it would:

• Ban non-competes below the high-income threshold. Including a non-compete in an employment arrangement for an employee earning at or below the Fair Work high-income threshold (currently $190,100, indexed) would be a civil penalty contravention. Indirect restraints, such as forfeiting a bonus for joining a competitor, are caught.
• Ban co-worker non-solicitation clauses for everyone. Clauses stopping a departing employee from approaching former colleagues would be prohibited regardless of salary.
• End cascading restraints. Clauses with alternative periods or distances would be void in their entirety; courts could no longer read them down.
• Tighten the test for higher earners. Non-competes above the threshold must protect confidential information or client relationships, be reasonable and go no further than necessary. Protecting a “stable workforce” would no longer count.
• Treat no-poach and wage-fixing deals as cartel conduct. Agreements between businesses not to hire each other's staff, or to fix wages, would attract civil and criminal penalties.

What Remains Available To Employers

Confidentiality obligations, agreed notice periods, garden leave on full pay and retention payments sit outside the ban. Non-competes given on the sale of a business or in shareholder agreements continue to be assessed under existing principles. Once in force, the regime would replace the common law test, and the Restraints of Trade Act 1976 (NSW), for employee restraints.

Timing and Existing Contracts

Under the draft, the Bill would commence on the first quarter-day after Royal Assent, followed by a six-month transition before penalties apply to new arrangements. Existing restraints get the benefit of that transition, but varying an existing contract in any way, even a pay rise, may bring the whole arrangement under the new rules. A valid non-compete would also stop operating while an employee's earnings sit at or below the threshold.

An opportunity to bring good people on board

The Government cites research that about one in five Australian workers is bound by a non-compete. When the ban takes effect, many skilled candidates who have hesitated to move, or whom employers have avoided approaching for fear of litigation, will be free to change jobs. Growing businesses should plan for that:

• Recruit with confidence. Candidates under the threshold will be able to join you without the threat of a non-compete, though their confidentiality obligations will still bind them.
• Retain through reward, not restraint. Competitive pay, development pathways, retention payments and well-designed incentive plans will do more to keep your best people than a clause.
• Onboard carefully. New hires must not bring a former employer's confidential information or clients' data with them.
• Mind team moves. Even once co-worker non-solicitation clauses are banned, other duties may still apply, so get advice before recruiting several people from one firm.

What Employers Should Do Now

• Audit employment contracts, templates, policies and incentive plans for non-competes, non-solicitation and cascading clauses.
• Strengthen confidentiality terms and review notice and garden leave provisions.
• Think carefully before varying existing contracts during the transition period.
• Review any no-poach or wage arrangements with competitors, joint venture partners or labour hire providers.

How Eventus Can Help

Our Employment team advises employers and senior employees across Melbourne, Sydney, Brisbane, the Gold Coast and Perth on employment contracts, restraints, confidentiality and incentive arrangements, and recruitment from competitors. Where a dispute arises, we are supported by our national litigation team.

To review your contracts before the new laws take effect, or to plan a recruitment drive, contact the Employment team or visit eventus.com.au/contact.