26 March 2025
2 min read
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On 25 March 2025, the federal government released its budget for the 2025/26 fiscal year. Following the release of its Issues Paper in April 2024, which considered the impact of non-competes and other employment restraints, it is clear that promoting job mobility in the labour market remains a focus for the government.
If re-elected, the government has committed to banning non-compete clauses in employment contracts for workers earning less than the high-income threshold (currently $175,000 per year). At present, around 3 million employment contracts in Australia contain non-compete clauses which restrict these workers from moving to work for a competitor or setting up a competing business within a certain geographical area for a set time period after ceasing employment with their former employer.
The government has also committed to close further loopholes on the use of “wage-fixing” and “no-poach” agreements. Under a wage-fixing agreement, two or more businesses agree to fix wages or employment conditions to discourage workers from moving to a higher paying role with a competitor. Similarly, under a no-poach agreement, businesses agree not to hire workers from certain other businesses, thereby reducing job opportunities for workers. It is not uncommon that workers are not aware of these agreements.
It is projected that the proposed reforms will increase job mobility within the labour market, leading to higher wages for workers and greater economic productivity. The government has also foreshadowed consultation on the use of non-solicitation clauses, which prevent former workers from soliciting clients or workers from their former employer. Should a ban be implemented on non-solicitation clauses, this is likely to be of significant concern for employers seeking to protect their valuable confidential and sensitive information.
While it remains to be seen whether the proposed reforms will pass through Parliament and become law, there are several steps employers can take in the interim to ensure they are prepared for the changing competition landscape:
We will continue to provide updates about the proposal and whether the ban becomes law. If you have any questions or would like more information, please get in touch with our team below or contact us here.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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