If your employment contracts include a clause stopping staff from working for a competitor after they leave, it is worth paying attention. The federal government has released an exposure draft of legislation to ban most of these clauses. It is a proposal only, but the direction is clear.

What the draft would do

  • Ban non-competes below an income line. The ban would apply to employees earning at or below the Fair Work Act high income threshold, which is $190,100 for 2026-27. Casual employees and pieceworkers would be covered regardless of income.
  • Ban co-worker non-solicitation clauses (clauses stopping a former employee from poaching colleagues) regardless of income.
  • Apply a moving income test. A non-compete signed when someone earned above the threshold would become unenforceable if their earnings later fall to or below it.
  • Index the threshold each year, so the dollar figure will change.

The draft would also treat certain wage fixing and no-poach arrangements between businesses as cartel conduct.

Where it is up to

Submissions on the exposure draft closed on 2 October 2026, and the legislation is expected to be introduced to Parliament in 2027. Employer groups have raised objections, so details could still change. Until a law passes, your existing clauses are governed by current law.

What to do now

  • Pull out your contract templates. Look for non-compete, non-solicitation and restraint of trade clauses, including ones buried in offer letters or old policies.
  • Match roles to the threshold. List who earns below $190,100, including casuals, and who sits close to the line.
  • Do not rely on a clause you could not enforce. If a restraint is the only thing protecting your client list, think about what else could do that job.
  • Look at the alternatives. Confidentiality clauses, clear rules on client data, and good retention practices such as fair pay and a decent workplace culture are tools law firms point to.
  • Get advice before changing contracts. Rewriting clauses for existing staff has its own issues, so ask an employment lawyer first.
  • Check your supplier and trade arrangements. Informal deals with other local businesses not to hire each other's staff could fall foul of the proposed cartel rules.

The bottom line

You do not need to tear up anything today. But a quick review now means you will know which of your staff are covered, what your template says, and where you rely on a restraint. That puts you in a better position when the final law lands.

This article is general information only and does not take your circumstances into account. Check the Fair Work Ombudsman website or speak to a registered professional about your situation.