In a ‘no non-competes’ world, where must employers focus attention?

Scheduled to take effect in 2027, the reform to Australian employment law is anticipated to significantly change the workforce. Here, one lawyer offers guidance for how employers can pivot their contractual approaches in a shifting landscape.

Non-competes are set to be voided or non-applicable for workers earning below the Fair Work Act 2009 high-income threshold, currently at $183,000, and likely to increase in July 2026, as it does every year. Once implemented next year, it is likely to be applied retrospectively for provisions in existing as well as future contracts.

Functioning as a way to protect proven and legitimate business interests, non-compete clauses prevent workers, for a duration, from accepting new employment from a competitor within a specified geographical area should they be terminated or resign from their current position.

In last year’s federal budget, the Albanese government announced it would ban non-compete clauses under the then-threshold of $175,000.

According to workplace specialist Roger Lewis of arch.law, “non-compete clauses have traditionally been included as a standard protection in many Australian employment contracts. If the proposed reform proceeds as indicated, those clauses will no longer be effective for a very large segment of the workforce”.

Lewis also highlighted that the latest reform will affect business structure and employment protections.

He said: “Employers will need to focus much more closely on recruitment, employee management and internal systems to ensure staff are not placed in a position where they can easily compete after leaving the business.”

Lewis urged employment lawyers to review contracts well ahead of the commencement, adding: “The emphasis will shift from broad non-compete provisions to ensuring the remaining permissible restraints – such as non-solicitation and confidentiality clauses – are drafted carefully and are genuinely enforceable.”

He concluded: “In industries where client relationships are central to the value of the business, employers will need to think strategically about how those relationships are protected if non-compete clauses are no longer available.”

While the government signalled a move away from non-compete clauses, other contractual protections, such as confidentiality and non-solicitation regulations, will remain in place.

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