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Australia’s employment law landscape is about to shift in ways that many businesses are not prepared for. The Federal Government has announced plans to ban non-compete clauses for the vast majority of Australian employees, with the reform expected to take effect from 2027. For Queensland employers relying on broad post-employment restraint clauses, the message is unambiguous: the time to act is now, not when the legislation lands.
This article explains what is proposed, what it means in practice, and the concrete steps Queensland businesses should take before the law changes.
The Reform: What the Government Has Announced
In the 2025-26 Federal Budget, the Labor Government announced its intention to ban non-compete clauses for employees earning below the Fair Work Act high-income threshold. That threshold currently sits at $183,100 per annum for the 2025-26 financial year and is expected to increase from July 2026, as it does each year.
The reform was announced following a period of consultation that began in March 2025. As at May 2026, legislation has not yet been introduced into Parliament. The expected commencement date is 2027, though no specific date has been confirmed.
The policy rationale is competition and wage growth. Research cited in support of the reform indicates that workers bound by non-compete clauses earn approximately 4% less than unencumbered counterparts, equivalent to around $2,500 per year for the typical worker.
The scope of the proposed ban is broad. Approximately 91% of Australian workers earn below the current threshold. The ban is not confined to low-paid workers: it covers professional, technical, and managerial roles across most industries.
Once the law commences, existing non-compete clauses in contracts with covered employees are expected to become unenforceable, regardless of when those contracts were signed.
Who Is Covered and Who Is Not
The proposed ban applies to employees earning below the Fair Work Act high-income threshold. Employees above that threshold, roughly 9% of the workforce, are not covered. But employers should not take comfort from that carve-out: the threshold adjusts annually, and many professional and managerial roles sit close to the line.
The Government has also flagged that it is considering restrictions on client non-solicitation clauses. The August 2025 consultation paper sought views on whether non-solicitation provisions should also be limited. The final legislation may address more than pure non-competes.
What Remains Permissible: Your Remaining Protections
The proposed ban targets only non-compete clauses in the strict sense: restrictions on an employee working for a competitor or operating a competing business after their employment ends.
Three categories of protection remain available and, critically, remain enforceable:
Non-solicitation clauses: Restrictions on a former employee approaching former clients, customers, or colleagues are not proposed to be banned outright. However, as discussed below, the courts have already signalled that non-solicitation clauses must be drafted with precision.
Confidentiality obligations: Obligations to protect confidential information, trade secrets, and proprietary knowledge remain fully permissible. A well-drafted confidentiality provision often does more practical work than a broad non-compete.
Garden leave: Requiring an employee to serve out their notice period away from the workplace, creating a natural break in client relationships and operational access, remains available and is commonly enforceable for periods up to six months for key personnel.
The Courts Are Already Sending a Warning: Perpetual v Maglis
Even before the legislation arrives, the Queensland courts have delivered a clear message about what happens when restraint clauses are drafted carelessly.
In Perpetual Limited v Maglis [2025] QSC 71, the Supreme Court of Queensland (Chief Justice Bowskill) dismissed Perpetual’s application for an interlocutory injunction to enforce a non-solicitation clause against a former financial adviser. The clause was intended to prevent the respondent from contacting or accepting approaches from former clients. A number of those clients had already requested to transfer their business to the respondent.
The Court’s refusal to grant injunctive relief turned substantially on the breadth of the non-solicitation language. Perpetual’s clause captured clients with whom the respondent had “had contact” during a defined period. The phrase was too broad. It captured incidental contact that bore no meaningful relationship to the kind of client relationship the clause was designed to protect. A restriction drawn that widely could not be enforced.
The lesson is direct: even under the current law, before the non-compete ban takes effect, broadly drafted non-solicitation clauses are failing in court. If your standard employment contract was drafted years ago using generic templates and has never been reviewed, there is a real risk that your assumed protections do not exist.
But Restraints Can Be Enforced Where Properly Drafted: City Fertility v Reims
The picture is not uniformly pessimistic for employers. The Queensland Supreme Court has also affirmed, in appropriate circumstances, that properly drafted restraint clauses linked to genuine legitimate business interests will be enforced.
In City Fertility Sydney CBD Pty Ltd v Reims Investments Pty Ltd, the Court granted relief enforcing post-termination restraints against an experienced IVF clinician. The restraints prevented the clinician from soliciting or treating former patients and from competing within a 50-kilometre radius of the clinic’s operations. The Court rejected arguments that the restraints were contrary to public interest, noting that IVF services require collaboration with licensed facilities, that patients could access other specialists, and that investment in specialised medical infrastructure depends on enforceable contractual protections.
The contrast with Perpetual v Maglis is instructive. In City Fertility, the restraints were calibrated to the actual risk (specific patients, specific geography, defined time), linked to a genuine business interest, and proportionate to the role. Restraints that meet these criteria can still be enforced. The lesson is not that restraints are dead: it is that lazy drafting is.
Practical Steps for Queensland Employers to Take Now
The 2027 commencement date creates a misleading sense of comfort. Contracts need to be renegotiated and existing arrangements assessed before the law changes. Here is what to do now.
Step 1: Audit every employment contract containing restraint provisions. Identify which employees are subject to non-compete clauses. Assess which of those employees earn below the threshold. Understand what you will lose when the ban takes effect.
Step 2: Redraft non-solicitation and confidentiality provisions. Precision is the key. Non-solicitation clauses must target only the specific client relationships that genuinely matter: key accounts, clients the employee personally managed, relationships built on the employer’s resources and goodwill. Broad provisions will fail. Precise ones can succeed.
Step 3: Introduce garden leave clauses for key personnel. For roles where client transition risk is high, garden leave is an underused but effective tool. A six-month paid garden leave clause, combined with a well-crafted confidentiality and non-solicitation provision, often provides better practical protection than a broad non-compete that may be unenforceable.
Step 4: Conduct a legitimate interests analysis for each senior role. Enforceability depends on identifying the specific legitimate business interest the restraint protects. That analysis must be done role-by-role, not applied generically.
Step 5: Review your confidential information framework. With non-competes removed from the toolkit, confidentiality architecture becomes more important. Define confidential information precisely, ensure employees understand their obligations, and confirm that your information systems support enforcement.
What This Means for Queensland Businesses
Queensland’s workforce spans professional services, health, construction, and resources, many with restraint clauses drafted in a different regulatory era. As Perpetual v Maglis illustrates, Queensland courts are already refusing to enforce broad, imprecise provisions. Queensland employers cannot rely on historical assumptions.
The reform also has implications for business sales and acquisitions. Post-acquisition restraints on key personnel are frequently negotiated as part of business sale transactions. The interaction between the proposed legislative ban and commercial contractual restraints is a live question that will need careful attention as the legislation is finalised.
Conclusion: The Time to Act Is Before the Law Changes
The non-compete ban is coming. The precise form of the legislation is still being determined, and there may be further consultation before the final text is settled. But the direction of travel is clear, and employers who wait for the legislation to arrive before reviewing their employment contracts will find themselves exposed.
The opportunity the reform creates is not merely about compliance. It is about building a smarter, more durable approach to protecting legitimate business interests through confidentiality, non-solicitation, and garden leave arrangements that will survive both the new legislation and scrutiny in the Queensland courts.
Boss Lawyers acts for Queensland employers and businesses in all aspects of employment restraint disputes, contract drafting, and workforce protection strategy. For advice on reviewing your employment contracts or enforcing post-employment obligations, contact:
Mark Harley, Principal Boss Lawyers Pty Ltd Phone: 1300 267 711 Web: bosslawyers.com.au Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
Facing a commercial dispute? Early legal advice is essential. Our commercial litigation lawyers Brisbane provide strategic advice from initial dispute assessment through to trial or negotiated resolution. Call Boss Lawyers on 1300 267 711.
Disclaimer: This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances before taking any action. For advice on your specific situation, contact Boss Lawyers on 1300 267 711.
