Non-compete clause ban ‘a clear disconnect from the realities of the business community’

As the proposal to ban non-compete clauses by the Albanese government begins to set in, criticisms of the change for workers and businesses have grown, with one person labelling it as “unnecessarily adversarial”.

Alongside the 2025 budget presented by Treasurer Jim Chalmers, the introduction of the move to ban the use of non-compete clauses for workers who earn less than the high-income threshold ($175,000) was also brought forward – earning praise from some and criticism from others.

HR Leader recently spoke to Karlie Cremin, co-founder of Dynamic Leadership Programs Australia (DLPA), who expressed a rather disappointed outlook on the changes and how they will impact Australian business moving forward.

“The government’s proposal to ban non-compete clauses demonstrates a clear disconnect from the realities of the business community. While we understand the intention behind encouraging workforce mobility, this approach is unnecessarily adversarial and overlooks the practical reasons businesses use these agreements,” Cremin said.

“In today’s world, where intellectual property and proprietary knowledge are becoming more complex, it’s strange to see such a broad and simplistic take on the issue. Non-compete clauses are typically short-term and designed to prevent unfair poaching of staff and clients, not to restrict career movement.”

“The assumption that only individuals earning over $175,000 hold valuable trade secrets is an oversimplification that ignores the way modern businesses operate.”

Cremin called for a more balanced approach that understands the importance of businesses protecting the confidentiality of private information.

“A more balanced approach would recognise the legitimate need for businesses to protect sensitive information while still supporting employee mobility. We urge the government to engage more closely with industry stakeholders to develop policies that reflect the realities of today’s business environment,” Cremin said.

Hicksons partner Warwick Ryan added that the banning of non-compete clauses could have huge repercussions for family or small businesses across Australia.

“There is a case for the prohibition of non-competition clauses for employees earning less than, for example, $100k per year. But preventing such clauses for employees over that threshold can be challenging for many families and small businesses,” Ryan said.

“The high-income threshold may not be reflective of income levels within the family and small-business sector. Employees in small businesses are generally not paid such high salaries because they are unaffordable.”

“Yet employees on smaller salaries have access to critical information and key relationships. Without protections of post-employment restraint clauses, the employer’s business may be vulnerable to an opportunistic employee.”

Kace O'Neill

Kace O'Neill is a Graduate Journalist for HR Leader. Kace studied Media Communications and Maori studies at the University of Otago, he has a passion for sports and storytelling.