‘This isn’t a free-for-all’: Protecting business interests amid changing restraint landscape

As the government prepares to legislate landmark restraint-of-trade changes, one legal expert is flagging what these changes to the Fair Work Act will require of employers.

In a recent episode of The Legal Brief, Kingston Reid partner Emily Baxter outlined the details of the recently released Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 and identified how it necessitates proactive employer action.

Baxter explained that the government’s intention to adjust business trade restraints would mark the first national legislation to explicitly ban and penalise post-employment restraint of trade clauses, thereby marking a “real shift for employers and for HR professionals to be across”.

Should the bill be passed, employees below the current high-income threshold of $190,100 a year will be able to start working for a competitor or launch a rival business, invite former colleagues to work with or at either company, and will not forfeit accrued bonuses or be made to pay back certain costs at departure.

Given the threshold, protections will still exist at the higher end of the market.

Unlike non-compete clauses, however, non-solicitation clauses do not have an income restriction; further, they would apply to contractors, volunteers, and numerous workers beyond direct employees.

Baxter explained that the draft legislation signals a governmental intention to simplify what can be cascading clauses and bolster competition, noting: “the proposed change essentially means that there will be more open competition or the intention is that there’ll be open competition in the market where people can move more freely between employers”.

Acknowledging likely concern from employers related to the protection of business interests, Baxter said: “If you’ve got people looking to leave your organisation, you’ve got that reverse risk now where post-employment obligations that you may have been able to enforce in the past might be much more difficult to enforce or may in fact be prohibited if this legislation passes.”

“From a practical perspective, this type of non-compete or this type of post-employment obligation is probably one of the most difficult to enforce at the moment anyway … a business needs to demonstrate that the restraint of trade is necessary to protect its legitimate business interests.”

Baxter said employers should review employment contracts ahead of any legislation, given the time and consideration any possible changes will necessitate.

Any changes, she said, will require contracts of employment and any relevant restraint clauses to be more specifically drafted for the individual employee, compared to templated clauses and contracts regardless of the position.

“One of the things that businesses can start doing, or HR leaders can start doing, is thinking about what are the types of positions in a business that you might need post-employment obligations to be enforceable in relation to whether those particular roles will fall within these protections,” she said.

In addition, it is worth considering ahead of time any further or alternative means of protecting business interests, such as longer periods of garden leave or extended notice periods.

However, Baxter noted that the latter will come with an additional cost, which may or may not be worth the change.

Further, Baxter urged employers to consider – both under the current and potential new framework – strengthening the protection of confidential information and intellectual property.

“While there might be restrictions on non-competes and restrictions on non-solicitation, this isn’t a free-for-all. It’s not going to allow employees to take to a competitor all of your confidential information, your trade secrets, all of your know-how – that’s still going to be protected by other legislation. It’s protected under the common law, and it’s protected under corporations legislation as well,” she said.

“That’s something that businesses really should be looking at. Making sure that they’ve got frameworks in place to keep information confidential, making sure it’s currently only accessible to employees who need to be able to access things that are highly confidential and marked confidential so that you can really establish that protection in the future if you need to.”

Noting that the exposure draft indicates there will unlikely be a delay pushing the legislation through, Baxter said employers should embrace the potential changes and take them as an opportunity to consider employee experience as much as the HR and legal changes.

“Let’s think about what we can do as a positive step to make our workplaces more enjoyable for people so that they have less incentive to leave in the first place,” she said.

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