Government moving through consultation on non-competes ban

The Labor government is moving forward with another one of its election campaign promises, with the release of a consultation paper for its decision to ban non-compete clauses.

With Parliament kicking off last week, the returning Labor government is working to integrate some of its bigger workplace election promises, with Treasurer Jim Chalmers and Minister for Workplace Relations Amanda Rishworth announcing the next step in their move to ban non-compete clauses.

The pair announced that a consultation paper aimed at gathering insights and feedback from stakeholders across the workplace pertaining to their policy of banning non-compete clauses for employees who fall under the high-income threshold ($183,100) seeks to understand how the legislation can boost productivity and wages.

“Reforming non‑compete clauses is about encouraging aspiration, unlocking opportunity, lifting wages for working people, and making Australia’s economy more dynamic and competitive,” said Chalmers and Rishworth in a statement.

“Right now, more than 3 million Australian workers are covered by these clauses, including childcare workers, construction workers, disability support workers, and hairdressers.

“Workers should not be handcuffed to their current job when there are better opportunities available for them, and that’s what these reforms address.”

The announcement to ban non-compete clauses for the nearly 3 million workers who fall under the current bracket was intertwined with Chalmers’ budget release back in March.

At the time, Chalmers claimed that the clauses “have no justification and drag down wages” and that “the reforms could lift the wages of affected workers by up to 4 per cent, or about $2,500 per year for a worker on median wages”.

Charles Lethbridge, a commercial litigation partner at Attwood Marshall Lawyers, previously called on the government to undergo consultation, claiming that without doing so, the legislation could hurt both employees and businesses.

“Non-compete clauses exist for good reason – they help protect client relationships, sensitive commercial information, and business goodwill,” said Lethbridge.

“If removed without a proper alternative, employers risk having staff walk away with valuable contacts and trade secrets.”

“Removing these protections could devalue goodwill in professional practices, impacting valuations and succession plans. We encourage the government to consult further with legal and business experts to ensure the reforms don’t unintentionally harm the very workers and businesses they aim to support.”

During a recent HR Leader Podcast episode, law partner Fay Calderone from national law firm Hall & Wilcox also hoped that the consultations would alleviate some of the uncertainty that has arisen since Chalmers first announced the potential changes.

“[With consultations,] we might be able to get the nuance we need. I understand the cost-of-living pressures, but looking behind the curtain, there is a lot of economic uncertainty, and this is not a plane we want to be building while it’s in the air in terms of business protection,” Calderone said.

“If this is going to get through, and they do have the numbers to get this through Parliament, I do think we need to really build out a framework that is better than what has been proposed, or definitely the detail has to address some of the concerns that have been raised because they are valid concerns.”

Rishworth and Chalmers reiterated that the Labor government is “committed” to this consultation, opening the door to also seeking views on “whether further changes are required to other worker restraints” and on “complementary reforms to close loopholes”.

“The feedback we receive from this consultation will be used to inform legislation for these important reforms.”

Submissions for consultation are open until 5 September 2025.