If your employment contract has a non-compete clause in it, you are not alone — and the law is about to change in your favour. The Albanese Government has announced a ban on non-compete clauses for the vast majority of Australian workers, following a Treasury review that uncovered something extraordinary: hairdressers, baristas, and minimum wage retail workers were being threatened with legal action if they dared switch jobs. Non-competes — once a legitimate tool to protect genuine business interests — had crept far beyond their intended purpose. The federal government has decided enough is enough.
Whether you are an employer who relies on restraint clauses to protect your business, or an employee sitting under a clause that may be stopping you from earning more, this article explains the current law in Queensland, what the proposed ban actually means, and what you should be doing right now.
What Is a Non-Compete Clause?
A non-compete clause (also called a restraint of trade clause) is a contractual term in an employment agreement that restricts what an employee can do after they leave a job. Typically, they prohibit the former employee from:
- Working for a competitor within a defined geographic area;
- Starting a competing business for a defined period; or
- Soliciting former clients or colleagues.
In theory, these clauses protect legitimate business interests — trade secrets, confidential information, key client relationships. A senior executive who spent years managing a company’s most valuable client portfolio arguably should not be able to walk straight to a direct competitor and take those clients with them the following Monday.
In practice, however, non-compete clauses have proliferated far beyond that legitimate purpose. Treasury’s Competition Review documented cases of workers in hospitality, retail, hairdressing, and recruitment — people with no access to trade secrets, no client relationships to protect — being bound by sweeping non-competes. The economic effect is to trap workers in jobs, suppress wages, and stifle competition. Both the Productivity Commission and independent researchers at the e61 Institute have found that the rising prevalence of non-compete clauses has contributed to lower rates of job mobility and suppressed wages growth in Australia.
Why Is the Federal Government Banning Non-Competes?
The evidence that non-compete clauses harm workers and the broader economy has been mounting for years. Treasury’s own research, Non-competes: a case of missing wages in Australia, found that non-competes adversely affect worker mobility, innovation, and competition. The e61 Institute’s analysis concluded that the rising prevalence of non-compete clauses has been a direct factor contributing to lower rates of job mobility and wages growth in Australia.
The Treasury Competition Review heard troubling accounts of the misuse of non-compete clauses:
- Minimum wage workers being sued by former employers;
- Workers in hairdressing, hospitality, and retail being threatened with legal action if they changed jobs;
- Employers using the threat of litigation — even where the clause was legally unenforceable — to deter workers from moving to better-paying jobs.
This last point matters enormously. Even where a non-compete would fail in court, the threat of expensive litigation is enough to make many workers stay put. They cannot afford the legal fight — even if they would win it.
The reform is also about economic dynamism. Countries with weaker non-compete enforcement — most notably California, which has banned them for decades — show higher rates of innovation, business formation, and wages growth in comparable industries. The federal government’s position is clear: non-competes for most workers have no economic justification and simply transfer bargaining power from employees to employers.
What the Ban Actually Proposes
In March 2025, the Albanese Government announced in the 2025–26 Federal Budget a ban on non-compete clauses for workers earning below the high-income threshold under the Fair Work Act 2009 (Cth). The current high-income threshold for FY2025–26 is $183,100, meaning the ban will cover approximately 91% of all Australian workers.
In July 2025, Treasury released a Consultation Paper seeking feedback on the design of the ban, including:
- The precise scope of the prohibition — broadly targeting any restriction on a worker seeking or accepting work, or operating a competing business, after employment ends;
- Possible exemptions (for example, in connection with the sale of a business);
- Enforcement mechanisms; and
- Whether restrictions on non-solicitation of former clients should also be limited.
The package also includes reforms to close loopholes that allow no-poach agreements and wage-fixing arrangements under the Competition and Consumer Act 2010 (Cth).
Implementation is proposed from 2027. Legislation has not yet passed as at the date of this article.
For workers above the threshold — senior executives, highly paid professionals — non-compete clauses will remain subject to the existing common law. The consultation paper also asks whether additional restrictions should apply to high-income workers, so the reform landscape may extend further still.
What Is the Current Law in Queensland?
Until the federal ban passes, the existing law applies — and in Queensland, that law is harsher for employers than many realise.
Unlike New South Wales, which has the Restraints of Trade Act 1976 (NSW) — a statute that allows courts to read down and enforce a restraint “to the extent it is not against public policy” — Queensland has no equivalent legislation. Queensland operates purely on common law principles, which means:
- A restraint of trade is void as a matter of public policy unless the employer can prove it is reasonable. The onus is on the employer — not the employee — to justify the clause.
- Reasonableness requires both legitimate interest and proportionality. The employer must identify a genuine protectable interest (trade secrets, confidential information, substantial client relationships) and show that the restraint goes no further than necessary to protect it.
- Courts in Queensland are reluctant to rewrite a bad clause. Without a statutory reading-down mechanism, if a restraint is drafted too broadly — covering too large a geography, too long a duration, or too wide a range of activities — a Queensland court may simply strike the entire clause rather than enforcing a reduced version of it. In New South Wales, courts can salvage an overly broad restraint. In Queensland, you may get nothing.
This distinction is commercially significant. Employers who copy restraint clauses from other jurisdictions, or use template contracts drafted for a NSW context, may find their Queensland restraints entirely unenforceable.
What Queensland Courts Are Doing Right Now
Queensland courts continue to enforce well-drafted restraints where a genuine protectable interest exists. In City Fertility Sydney CBD Pty Ltd v Reims Investments Pty Ltd and Anor [2025] QCA 243, the Queensland Court of Appeal upheld a restraint preventing an experienced IVF clinician from competing within a 50km radius of the clinic’s locations and from soliciting former patients. The court found that the clinic’s patient relationships and the goodwill built around its services constituted a legitimate business interest — and the restraint was proportionate to protect it.
By contrast, in Pennytel Australia Pty Ltd v Engelke [2025] FCA 1384, the Federal Court struck down an overly broad restraint clause, dismissing the employer’s claim entirely. The case is a sharp reminder that courts will not rewrite poorly drafted restraints — they will simply strike them.
We are currently acting in restraint of trade matters in the District Court of Queensland and are seeing firsthand the issues the reform is designed to address — employers imposing broad restraints on employees where there is no genuine protectable interest, then selectively enforcing against certain former employees. The pattern is consistent: a sweeping clause that would never survive scrutiny, deployed as a litigation threat to intimidate rather than to protect a legitimate business interest.
What Does This Mean for Employers?
If your contracts contain non-compete clauses, the time to act is now — not 2027.
Before the ban: audit your restraints
Even under current law, broad or poorly drafted restraint clauses are at significant risk of being unenforceable in Queensland. If you are relying on a template clause or one that has not been reviewed recently, you may have less protection than you think.
A court-ready restraint clause in Queensland must:
- Identify a genuine protectable interest — what specifically are you protecting? Confidential client lists? Proprietary systems? Deep client relationships developed over years? A generalised desire to prevent competition is not enough.
- Be proportionate in scope — the geographic radius, activity restriction, and duration must be tailored to the actual risk. A six-month restriction on soliciting key clients is very different from a twelve-month ban on working anywhere in the industry across all of Queensland.
- Be role-specific — a senior executive with client relationships warrants a different, and typically broader, restraint than a junior support employee who had no client contact.
After the ban: non-competes for most workers become void by law
When the federal legislation passes (proposed for 2027), any non-compete clause in an employment contract where the worker earns below the high-income threshold will be void — not merely unenforceable, void. No court application required. The protection simply disappears by operation of law.
Employers should start now:
- Audit all employment contracts to identify which non-compete clauses will be affected;
- Identify which employees represent genuine protectable interest risks — typically senior roles with access to trade secrets or deep client relationships;
- Consider whether non-solicitation clauses can do more targeted work than a broad non-compete (noting these may also face further reform);
- Invest in contractual mechanisms that hold up: properly drafted confidentiality agreements, IP assignment clauses, and garden leave provisions.
For company directors and senior executives, restraints will remain subject to common law — but they must still be reasonable, properly documented, and supported by adequate consideration.
What Does This Mean for Employees?
If you are currently subject to a non-compete clause, the most important thing to understand is this: the clause may already be unenforceable under existing Queensland law, and the federal ban will extend that protection to the vast majority of workers by 2027.
Do not assume the clause binds you
Many employees receive a letter from a former employer’s lawyer threatening to enforce a restraint and simply comply — without ever getting advice on whether the clause is actually enforceable. In Queensland, the employer bears the burden of proving the restraint is reasonable. A significant proportion of restraint clauses in standard employment contracts would not survive that scrutiny.
Key questions to ask:
- Does the employer have a genuine protectable interest, or is this simply an attempt to prevent competition?
- Is the geographic scope, duration, and activity restriction proportionate to that interest?
- Was adequate consideration provided for the restraint — particularly if it was introduced mid-employment?
Injunctions: tactics matter
Even where a restraint is likely to be struck down at a final hearing, employers sometimes apply for an interim injunction to prevent you from starting the new role while the case proceeds. An injunction application requires the employer to show only a serious question to be tried and that the balance of convenience favours restraint — a lower threshold than winning at trial.
This means employers sometimes use litigation as a tactical threat, even with a weak case. Early advice is critical. Understanding your position before you leave a role — not after you have received the demand letter — is the difference between a smooth transition and an expensive dispute.
Our commercial litigation team regularly acts for both employers and employees in restraint of trade disputes across Queensland. We can assess whether a restraint is enforceable, advise on the risk of injunction proceedings, and represent you at all stages of the dispute.
Key Takeaways
- The federal government has announced a ban on non-compete clauses for workers earning below $183,100 (FY25-26 threshold), covering approximately 91% of Australian workers.
- Treasury is consulting on the design of the ban; legislation is proposed to take effect from 2027.
- In Queensland, restraint of trade clauses are governed by common law only — there is no statutory reading-down mechanism like NSW’s Restraints of Trade Act 1976.
- A restraint in Queensland is void unless the employer proves it is reasonable and protects a legitimate business interest.
- Broad, generic, or template restraint clauses are at serious risk of being entirely unenforceable in Queensland right now — even before the federal ban.
- Employers should audit their contracts now to protect themselves under current law and prepare for the 2027 reform.
- Employees should not assume a non-compete binds them without getting advice — many clauses would fail in court.
- Timing matters: get advice early, before the dispute escalates.
Frequently Asked Questions
Are non-compete clauses enforceable in Queensland right now?
Yes — but only if the employer can prove the clause is reasonable. In Queensland, a restraint of trade clause is presumed void unless the employer demonstrates: (1) a genuine protectable interest, and (2) that the scope of the restraint is no more than reasonably necessary to protect it. Broad or disproportionate restraints regularly fail this test. Unlike New South Wales, there is no statute allowing Queensland courts to read down an overly broad clause — if it fails, it typically fails entirely.
When will the federal ban on non-competes take effect?
The Albanese Government announced the ban in the 2025-26 Federal Budget (March 2025) and released a Treasury Consultation Paper in July 2025. The ban is proposed to take effect from 2027, subject to the passage of legislation. As at the date of this article, draft legislation has not yet been introduced to Parliament.
What counts as a protectable interest that justifies a restraint?
Courts will recognise a protectable interest in circumstances such as: access to genuinely confidential information or trade secrets; deep client relationships developed through the employer’s resources; and the goodwill of the business in specific, identifiable respects. A generalised desire to prevent a former employee from competing is not a protectable interest. The scale and value of the interest must also be proportionate to the scope of the restraint imposed.
What should I do if my employer is threatening to enforce a non-compete against me?
Act quickly and get legal advice before you respond to any demand. Do not simply comply without first understanding whether the restraint is actually enforceable. In Queensland, the common law position may already be in your favour. If an injunction application is threatened, the timetable moves fast. Contact a commercial litigation lawyer experienced in restraint of trade matters as soon as you receive any correspondence from a former employer.
Speak to Boss Lawyers
Non-compete and restraint of trade disputes move quickly. Whether you are an employer looking to protect your business interests before the federal ban takes hold, or an employee who has received a threatening letter from a former employer, the time to act is now.
Mark Harley and the team at Boss Lawyers are experienced in restraint of trade disputes across Queensland, including urgent injunction matters. We regularly act for both employers and employees and provide frank, commercial advice about your real options.
Call Mark Harley on 1300 267 711 or visit bosslawyers.com.au to discuss your matter.
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This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Author: Mark Harley, Principal Solicitor, Boss Lawyers Pty Ltd
