‘Like a padlock on opportunity’: Government moves to reduce non-competes

The Albanese government has drafted legislation that would ban non-compete clauses for Australian workers under a $190,100 salary threshold to limit potential exploitation under current laws.

Minister for Employment and Workplace Relations Amanda Rishworth and Assistant Minister for Productivity, Competition, Charities and Treasury Andrew Leigh have outlined the Labor government’s proposal to remove employment barriers that non-compete clauses can cause for a range of sectors.

The clauses, the statement said, can restrict employees from taking better and higher-paying roles, leading to lower wages and worsened labour mobility and productivity. According to the e61 Institute, one in five Australian workers is currently restricted by such clauses.

In opposition, moving jobs has also been shown to support a productive and more innovative economy, with the research also finding that a ban on non-competes could lead to a 4 per cent increase in wages for a typical worker, equal to approximately $2,500 a year.

Minister Rishworth said “non-compete clauses drag down wages, handcuff workers, and put a handbrake on labour productivity, adding that the move will “help boost job solubility for the more than 3 million Australian workers constrained by a non-compete clause”.

Assistant Minister Leigh said: “Workers shouldn’t need their old boss’ permission to take a better job. Non-compete clauses can act like a padlock on opportunity, holding down wages and keeping people from jobs where their skills are worth more.

“We’re cutting that padlock.”

The news follows earlier coverage by HR Leader that urged employers to take precautions ahead of any scheduled amendments with measures such as reviewing employment contracts, identifying which employees fall below the threshold, reviewing existing restrictive covenant provisions, and ensuring contractual protections operate as intended.

As part of the legislative overhaul, other contractual restraints, such as non-solicitation clauses, no-poach and wage-fixing arrangements, and cascading restraint of trade clauses will be addressed, with appropriate exemptions and safeguards also reformed to protect business interests.

Consultation is open until 2 October.

Want to see more stories from trusted news sources?
Make HR Leader a preferred news source on Google.