In last night’s budget (25 March 2025), the Australian government has revealed plans to ban non-compete clauses nationwide.
Non-compete clauses are frequently used by businesses to prevent employees from working for competitors or starting similar businesses after employment ends. These clauses have long been common practice, and we at Sprintlaw see these clauses every day in the contracts that our clients use.
At this stage, there is little detail on how the policy will be implemented. We know so far that the policy will be designed to come into effect from 2027, and that it would apply to workers earning less than the high-income threshold (currently $175,000 a year). More than 3 million workers are covered by such clauses, according to the government.
However, businesses currently using non-compete clauses should note that the government has not yet released detailed legislation. As the proposed ban won’t take effect until 2027, this timeline provides a valuable window for businesses to carefully monitor developments, review their employment and contractor arrangements, and prepare for potential regulatory changes.
Adding further uncertainty, Australia’s political landscape may influence the implementation of this policy. At this stage, the opposition has not yet clarified its position on this issue, and how this plays out in the context of the upcoming federal election is anyone’s guess.
In any event, it is essential for businesses to remain informed and prepared. At minimum, businesses that have these clauses in their template contracts should be aware that they may need to be reviewed in the near future. We at Sprintlaw will continue monitoring the situation closely and provide timely updates as more details emerge.
If you would like a consultation on the ban on non-compete clauses, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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