Employment contract non-compete clauses to be abolished (March 2025 Federal Budget Update)

Published on 26 March 2025 by Drew Pflaum
Categories: Government Budgets

The Government will ban non-compete clauses for more than three million Australian workers in industries including childcare, construction and hairdressing. This has been spurred by the Treasury’s Competition Review which heard troubling accounts regarding the misuse of non-compete clauses, including minimum wage workers being sued by former employers.

The ban on non-compete clauses will apply to workers earning less than the high-income threshold in the Fair Work Act 2009 (currently $175,000).

The Government will also close loopholes in competition law that currently allow businesses to:

• fix wages by making anti-competitive arrangements that cap workers’ pay and conditions, without the knowledge and agreement of affected workers; and
• use “no-poach”‘ agreements to block staff from being hired by competitors.

The Government will consult on policy details, including exemptions, penalties, and transition arrangements. Following consultation and passage of legislation, the reforms will take effect from 2027, operating prospectively to give businesses and workers time to adjust.