There hasn’t been a splashy announcement this week about restraint of trade or non-compete clauses, but that doesn’t mean employers can relax because the Government has told us that changes are coming.
The Albanese Government’s proposal to ban non-compete clauses for most employees is well advanced. Treasury consultation has closed, submissions are in, and the policy direction makes it clear that restraints of trade are under serious scrutiny and legislative change is coming.
The proposal, as it stands, would prohibit non-compete clauses for employees earning below the high-income threshold. Implementation is earmarked for 2027, once legislation is drafted and passed. In other words, this is no longer theoretical, and so, for employers, the real issue isn’t when the law changes, it’s whether your contracts would survive that change.
Now is the time to get on the front foot and ask some uncomfortable but necessary questions:
Do you actually need the restraint of trade you’re using?
Many employment contracts still include broad, default restraints that haven’t been revisited for years. In practice, they’re often copied forward without proper consideration of the role, seniority, or legitimate business interests involved.
Would your restraint of trade be defensible if challenged today?
Even under current law, restraints must be reasonable and proportionate. Overreach doesn’t protect your business, it weakens your position and increases the risk of unenforceability.
If restraint of trade are banned or curtailed, what’s your real protection strategy?
Confidentiality clauses, IP provisions, and carefully drafted non-solicitation obligations are likely to become more important, not less. Many template agreements are not fit for that purpose in their current form.
Have your templates been reviewed with the proposed reforms in mind?
If your employment agreements still assume that broad non-compete clauses are business-as-usual, there’s a strong chance they will need revision to remain compliant once the law shifts.
Prudent employers are reviewing their employment agreements now, with restraint of trade front of mind, and getting tailored advice on what genuinely needs protecting, and how to do it lawfully in a changing regulatory landscape.
If your templates haven’t been reviewed recently, this is your friendly reminder to put the task at the top of your 2026 ‘to-do list’.
Get in touch to discuss your options with our team.