The Albanese Government is taking action to stop unfair non‑compete clauses that are holding back Australian workers from switching to better, higher‑paying jobs.
We will ban non‑compete clauses for most workers that have no justification and drag down wages.
This Budget is backing workers, boosting wages and building a stronger economy.
Reforming non‑compete clauses is about encouraging aspiration, unlocking opportunity, lifting wages, and making Australia’s economy more dynamic and competitive.
Workers should not be handcuffed to their current job when there are better opportunities available for them.
Right now, more than three million Australian workers are covered by these clauses, including childcare workers, construction workers, and hairdressers.
Treasury’s Competition Review heard troubling accounts about the misuse of non‑compete clauses, including minimum wage workers being sued by former employers and workers being threatened with legal action if they switched jobs.
Australians shouldn’t need a lawyer to go to a higher paying job.
Even where non‑compete clauses are legally unenforceable, they can lower worker mobility.
Our changes will make it easier for workers to switch to a better job will boost wages.
Research suggests the reforms could lift the wages of affected workers by up to four per cent, or about $2,500 per year for a worker on median wages.
Productivity Commission modelling suggests the changes could improve productivity and add $5 billion or 0.2 per cent to GDP annually, as well as reduce inflation.
These changes will spur new business entry and competition.
Non‑compete clauses are a handbrake on business creation and a speed bump on aspiration.
The restrictions prevent workers from setting up their own shop and pursuing entrepreneurial ambition.
The ban on non‑compete clauses will apply to workers earning less than the high‑income threshold in the Fair Work Act (currently $175,000).
We 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.
- Use ‘no‑poach’ agreements to block staff from being hired by competitors.
Reforming such anti‑competitive business agreements will bring Australia into line with many other advanced nations and ensure a fairer, more competitive job market.
The Government will consult on policy details, including exemptions, penalties, and transition arrangements.
We will also consider and consult further on non‑solicitation clauses for clients and co‑workers, and non‑compete clauses for high‑income workers.
Following consultation and passage of legislation, the reforms will take effect from 2027, operating prospectively to give businesses and workers time to adjust.
Banning non‑competes for most workers is part of a broader package of reforms in this Budget to strengthen competition and back workers.
As part of our competition reforms, we are progressing a national licensing scheme for electrical trades people.
National licensing will enable people in electrical trades to work seamlessly across state and territory borders without reapplying for a separate licence or paying additional fees.
Both changes form part of a second tranche of reforms under the Government’s revitalised National Competition Policy.
They reflect the expert advice of the Competition Review Expert Advisory Panel, which includes Dr Kerry Schott AO, Mr David Gonski AC, Professor John Asker, Ms Sharon Henrick, Dr John Fingleton CBE, Ms Danielle Wood, and Mr Rod Sims AO.
They are part of the Albanese Government’s economic plan which is focused on helping workers earn more and keep more of what they earn, and building a stronger and more productive economy.