4 April 2024

Consultation on non-compete clauses and other worker restraints

The Government is today releasing an issues paper on non‑compete and related restraint clauses that seeks feedback from workers, businesses and the broader community on the use and impact of these clauses across the economy.

Surveys of employers and employees suggest that around 1 in 5 workers are subject to a non-compete clause hampering their ability to move to a better job. Non-compete clauses have been found to apply not only to senior executives, but to many low-wage workers, including boilermakers, hairdressers, early childhood workers and yoga instructors.

This issues paper forms part of the Australian Government’s Competition Review, which is examining competition settings with a view to promoting a more dynamic and competitive economy.

Non‑compete clauses are contract terms that can restrict a worker’s ability to work for a competitor or start their own business. Along with related clauses such as non-disclosure and non‑solicitation agreements, they can hamper job mobility, making it harder for workers to move to better, higher-paying jobs or start a new business. This can have flow‑on effects to innovation, productivity and wages.

For workers, these clauses may be creating uncertainty and limiting the ability to move to a better job.

For employers, these clauses may have legitimate justifications in some instances, such as protecting proprietary knowledge and encouraging investment in their workforce.

It’s important to make sure we have the right balance, and that these clauses are not acting as a drag on competition, productivity and wages. The Government is therefore seeking feedback to determine whether reform may be needed in this area.

Stakeholders are encouraged to engage with the consultation process by making a submission. Businesses and workers with their own views and experiences on these clauses can also respond to a short questionnaire.

Submissions and responses to the questionnaire can be made online until 31 May 2024.