2025 Budget introduces reforms to non-compete clauses

The government says that over “three million Australian workers are covered by these clauses, including childcare workers, construction workers, and hairdressers.”

The government is taking steps to prevent what it describes as “unfair non-compete clauses that are holding back Australian workers from switching to better, higher-paying jobs.”

In announcing the reforms, the government says that “[r]eforming non-compete clauses is about encouraging aspiration, unlocking opportunity, lifting wages and making Australia’s economy more dynamic and competitive.”

The prohibition on non-compete clauses will apply to employees earning less than the ‘high-income threshold’ which is currently $175,000.

The Redfern Legal Centre (RLC) has welcomed the government’s announcement and says that “the use of non-compete clauses to restrict workers’ mobility is an inappropriate and unjust clause for lower paid industries and workers.”

“When non-compete clauses were first introduced, they were meant to protect legitimate business interests. However, their widespread use and onerous restrictions are deeply inappropriate,” says Seri Feldman-Gubbay, senior solicitor at the Redfern Legal Centre’s Employment Rights Legal Service.

“I frequently assist workers earning under $70,000 who have clauses in their contract that prevent them from working in the same industry anywhere in Australia for up to 12 months.

“In one case, a worker was banned from working in the same industry for 12 months after being employed for just two weeks with the employer,” she says.

The RLC says that while the reforms are welcomed, more work is needed to ensure that all employees are treated fairly.