The Federal Government has released proposed legislation, the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026, which would insert into the Fair Work Act 2009 (Cth) (FW Act) a right for employees to be free from non-compete clauses where their earnings are equal to or below the high-income threshold ($190,100 for 2026–2027).
The definition of a non-compete clause is broader than many employers may expect and may capture provisions that require employees to repay bonuses, forfeit benefits or face financial consequences if they commence employment with a competitor. Notice periods or retention bonuses would be excluded.
If enacted, the reforms would prohibit non-compete clauses in employment contracts, deeds, workplace policies, modern awards, enterprise agreements and workplace determinations. The prohibition would apply to casual employees and pieceworkers regardless of their earnings.
Restraints contained in contracts entered into before the legislation commences, which is expected to occur in 2027, would not be affected. Reasonable confidentiality obligations or non-disclosure agreements would also be excluded.
The proposed legislation could also affect restraints that were valid when originally agreed. A non-compete clause that is enforceable because the employee earns above the high-income threshold would become unenforceable if the employee’s earnings later fall to, or below, that threshold.
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