Upcoming Ban on Non-Compete Clauses in Australia: What Business Owners Need to Know
🚫 Are Non-Compete Clauses Holding Your Business Back?
What every business owner needs to know about the upcoming ban—and how it could change the hiring game.
What’s Changing—and Why It Matters for You
Non-compete clauses have long been a standard feature in employment contracts, but for many businesses, these clauses are about to become a thing of the past. The 2025–26 Federal Budget has signaled a major shift—proposing a ban on non-compete clauses and “no-poach” agreements for low- and middle-income employees, with further consultation underway for high-income earners.
Here’s what you need to know:
🚨 The Current Landscape
- Nearly 47% of Australian businesses use some form of restraint clause.
- 20.8% apply non-compete clauses to at least some employees.
- A staggering 68.2% of businesses use them for more than three-quarters of their staff.
- In most states, non-competes are unenforceable unless reasonably necessary to protect legitimate business interests.
💡 Why This Matters
- These clauses limit job mobility, stifle innovation, and reduce access to skilled talent.
- According to the Treasury, they can block the growth of both new and existing businesses.
- The Productivity Commission estimates wage increases of up to 2.4% in industries heavily reliant on non-competes if they’re limited.
What It Means for Your Business Strategy
Whether you’re a growing business or an established employer, this policy shift is a wake-up call to revisit your hiring, onboarding, and retention practices.
Let’s break it down:
🛠 Real-World Scenario
A hospitality business looking to grow its leadership team was previously held back by competitors using non-compete clauses. Once these are removed, access to experienced talent improves, allowing the business to scale faster and more strategically.
🧠 What Courts Consider “Legitimate” Restraint:
Protection of trade secrets or confidential data.
Preventing the solicitation of clients with direct personal relationships.
Guarding against the poaching of key staff.
What won’t hold up? Restricting former employees from simply competing in the market.
Stay Ahead of the Reform
With the ban expected to take effect from 2027, businesses have a window of opportunity to proactively adjust. Here’s how:
- Review employment contracts now to identify clauses that may soon be unenforceable.
- Focus on employee engagement and retention strategies that go beyond contractual restraints.
- Reassess your talent acquisition strategy—think long-term, not just protective.
Partner with Aero Accounting Group for Forward-Thinking Business Advice
Change can be challenging—but it’s also an opportunity. At Aero Accounting Group, we help business owners navigate evolving compliance landscapes with clarity and confidence.
Whether you’re revisiting contracts, planning for growth, or refining your recruitment strategy, we’re here to support you.
👉 Book a consultation with our team to future-proof your business today.
📞 Or call us to chat about how these changes could impact your industry.
Let’s make sure your business is ready for what’s next—together.
Need help?
Not sure if your current accountant is a good long-term fit? Contact us at Aero Accounting Group today and we’ll help you minimise your taxes and maximise your profits
