Non-Compete Clauses in Australia: What the Proposed Ban Means for Queensland Employers and Employees

If your employment contracts contain non-compete clauses, the Federal Government’s proposed ban will likely make many of them unenforceable from 2027. The draft Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026, released on 7 September 2026, proposes to prohibit non-compete clause use across Queensland and Australia for the vast majority of employees, representing the most significant reform to post-employment restraints in Australian history. This article explains what Queensland employers and employees need to know right now.

The exposure draft followed the Albanese Government’s March 2025 Federal Budget commitment to ban non-competes for low and middle-income workers as part of a broader competition-policy agenda designed to increase job mobility and wages. Submissions on the draft closed on 2 October 2026, and the legislation is expected to be introduced to Parliament in 2027.

What Is the Proposed Non-Compete Ban?

The draft Bill, formally titled the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026, proposes amendments to two existing federal laws: the Competition and Consumer Act 2010 (CCA) and the Fair Work Act 2009 (FW Act).

The reform targets post-employment restraint clauses that limit where a former employee can work, what business they can operate, or how they can compete after leaving a job. These clauses have long been used by Australian businesses to protect client relationships, trade secrets, and competitive advantages. Under the draft Bill, many will simply be prohibited outright.

The proposed prohibition covers “employment arrangements” broadly, not just formal employment contracts. The draft Bill expressly includes:

• Written employment contracts
• Unwritten or oral arrangements
• Workplace policies
• Deeds entered into alongside employment

This is a critical drafting point. Many Queensland employers have attempted to quarantine restraints in separate deeds to give them additional enforceability. Under the proposed reforms, that technique will no longer provide any protection if the restraint would otherwise be prohibited.

The income threshold at the centre of the ban is the Fair Work Act’s high income threshold, currently $190,100 per year for FY2026–27. Employees earning at or below that figure are covered by the ban. All casual employees and pieceworkers are covered regardless of their income level. The threshold is indexed on 1 July each year, so it will rise over time.

Importantly, the ban applies to the employee’s “annualised full-time equivalent earnings” calculated at the time the agreement is made or varied, not based on what the employee actually earns over the following 12 months. This has significant implications for part-time employees, those on irregular hours, and salaried employees whose remuneration fluctuates.

The draft Bill also contains a dynamic income rule: if an employee agreed to a non-compete when their income was above the threshold, but their earnings later fall to or below the threshold, the non-compete becomes unenforceable during that period. It would also be unlawful for the employer to threaten to enforce it during that window.

Which Clauses Are Banned?

The draft Bill takes a broad approach to what counts as a “non-compete term.” The definition deliberately sweeps in clauses that indirectly limit an employee’s ability to compete, not just clauses that explicitly say “you cannot work for a competitor.”

A non-compete term is defined to cover any term or condition of employment that limits an employee from being involved in any business or undertaking, or from commencing subsequent employment, whether it does so by:

• Directly restricting, for example, “you must not work for a competitor” or “you must not start a competing business”;
• Indirectly prohibiting or preventing, for example, a clause that restricts working for any business that shares the employer’s major customers; or
• Adversely affecting the employee, for example, a clause that requires the employee to repay bonuses, forfeit entitlements, or pay financial penalties if they leave for a competitor.

That third category is particularly important. A number of Queensland businesses use repayment or clawback clauses as a form of financial deterrent to leaving. Under the proposed reforms, these mechanisms could also be captured and prohibited if they function, in effect, as a restraint on post-employment activity.

Co-Worker Non-Solicitation Clauses, Banned for All Employees

One of the most surprising elements of the draft Bill is the proposal to ban co-worker non-solicitation clauses for all employees, regardless of income. This means even executives and high earners above the $190,100 threshold cannot be subject to clauses preventing them from recruiting or soliciting former colleagues after they leave.

The ban captures any term that restricts or prohibits an employee from recruiting, or attempting to recruit, a co-worker. The draft Bill defines “co-worker” broadly to include not just fellow employees but also contractors, subcontractors, and labour hire workers, both existing and former.

Activities caught by this prohibition include advertising, sending business proposals, conducting interviews, networking, referring candidates, negotiating terms, or offering roles to former colleagues.

No-Poach Agreements and Wage Fixing

The draft Bill also extends prohibition into agreements between employers. No-poach agreements, where competing businesses agree not to recruit each other’s staff, would be prohibited and treated as cartel conduct under the expanded CCA framework. Similarly, wage-fixing agreements between competing employers would be prohibited.

These prohibitions carry civil and potentially criminal penalties consistent with the existing cartel regime. The consequences of non-compliance are serious.

Cascading Clauses Rendered Unenforceable

For decades, Queensland and Australian businesses have protected themselves against judicial invalidation of restraint clauses by using “cascading” provisions, a series of alternative restrictions of decreasing scope, so that if a court found the widest restriction unenforceable, a narrower version would still stand.

The draft Bill proposes to make post-employment restraint terms with cascading clauses unenforceable entirely. If your employment contracts contain these mechanisms, they will not save an otherwise invalid restraint. Employers will need to decide which single, reasonable restraint they rely on, and ensure it can stand on its own merits.

What Clauses Survive? Confidentiality, Client Non-Solicitation and IP Protections

The proposed ban is targeted at restrictions on post-employment competition. A number of important protective mechanisms remain available to Queensland employers, provided they are drafted carefully and go no further than is reasonable and necessary.

Confidentiality Obligations

Confidentiality clauses are expressly excluded from the definition of “non-compete term”, provided they do not go so far as to effectively operate as a non-compete. A confidentiality clause that prevents an employee from working in an industry where they could not avoid using the employer’s trade secrets may be recharacterised as a non-compete, so drafting precision matters enormously.

Properly drafted confidentiality provisions protecting genuine trade secrets, client databases, pricing information, business strategies, and proprietary processes will remain enforceable. They are a legitimate business interest that courts have long recognised.

Client Non-Solicitation Clauses

Clauses preventing a departing employee from actively soliciting the employer’s clients remain permitted. This is distinct from a broad prohibition on working in the same industry or for a competitor, what survives is the more targeted restriction on the employee going out of their way to take business from their former employer.

Client non-solicitation clauses must still satisfy the common law test: they must be necessary to protect a legitimate business interest, and reasonable in scope. The draft Bill proposes to codify that test, which is largely consistent with existing Queensland case law on restraint of trade. The legitimate interests recognised are protection of confidential information and protection of professional or personal business relationships.

Notably, the draft Bill would remove “maintaining a stable workforce” as a recognised legitimate business interest, a basis on which some courts had previously upheld certain restraints.

Intellectual Property Protections

IP assignment clauses and protections for inventions, creative works, and business-critical developments created during employment remain outside the prohibition. Employers can continue to use IP protection mechanisms to ensure that work product created by employees belongs to the business.

Garden Leave and Notice Periods

Notice periods and garden leave clauses are expressly excluded from the prohibition. An employer can still require an employee to work out, or be paid in lieu of, a notice period. During that period, the employee remains employed and subject to their employment obligations, including loyalty and confidentiality. Garden leave clauses, where the employee remains employed and paid while not attending work, remain a legitimate and effective tool for managing sensitive departures.

Retention Incentives

Monetary or non-monetary incentives designed to encourage employees to remain with the business are also expressly excluded. Signing bonuses with repayment terms, vesting equity arrangements, deferred remuneration, and similar retention tools remain available, provided they genuinely serve a retention purpose and do not function as a financial deterrent to post-employment competition.

High Income Earners, Codified Common Law Test

Employees earning above the $190,100 threshold can still be subject to non-compete clauses, but those clauses must now satisfy a codified test. The draft Bill proposes to expressly state that restraints must be necessary to protect a legitimate business interest and be reasonable in scope. The draft Bill would also render cascading clauses unenforceable for high earners, meaning each restraint must stand alone.

For more context on how Queensland courts have approached restraint of trade clauses, see our earlier article: Restraint of Trade Clauses in Queensland: What Employers and Employees Must Know Before the 2027 Non-Compete Ban.

What Should Queensland Employers Do Before Commencement?

The proposed commencement date of 2027 provides a window of opportunity, but it is not as wide as it might appear. Employment contracts are not typically redrafted overnight, and the changes required by the draft Bill are substantive. Here is what Queensland businesses should be doing now.

1. Audit Your Employment Contracts

Start with a comprehensive review of your existing employment contracts. Identify every clause that could be characterised as a non-compete, co-worker non-solicitation, or financial deterrent to post-employment competition. Flag any cascading clauses. Identify which employees are above and below the income threshold.

This process often reveals that businesses are using restraint templates that have not been reviewed in years, and that contain clauses which were already of questionable enforceability under existing law, let alone what is proposed.

2. Identify What You Actually Need to Protect

Not every business genuinely needs non-compete clauses. The businesses that most legitimately need post-employment protection are those where employees have access to highly sensitive information, key client relationships, or proprietary methodologies that could cause real competitive harm if taken to a competitor.

For those businesses, the suite of protections that survive, confidentiality, client non-solicitation, IP protection, garden leave, may be sufficient. In many cases, a well-drafted confidentiality clause achieves more, practically, than a broad non-compete that courts frequently decline to enforce anyway.

3. Redraft Proactively

Waiting until the Bill passes before redrafting is a high-risk strategy. If commencement arrives before contracts are updated, you may find that your existing non-compete clauses are void from the moment the law takes effect. Any attempt to rely on or enforce those clauses would itself be prohibited.

The better approach is to redraft now, transitioning to a contract suite that achieves your legitimate protective goals through mechanisms that will remain available after commencement. This gives you the benefit of enforceability both under current law and the proposed regime.

4. Review Agreements with Other Businesses

If you have arrangements, formal or informal, with other businesses in your industry that involve not poaching each other’s staff, those arrangements need urgent review. Under the draft Bill, no-poach agreements between competing employers could constitute cartel conduct, with serious civil and criminal consequences. Legal advice on any existing arrangements should be obtained immediately.

5. Train Management

Even after the Bill passes, some managers and HR personnel will not fully understand what is and is not permitted. Training HR, management, and anyone involved in hiring or contract negotiation is an important step to avoid inadvertent breaches, including the specific prohibition on attempting to enforce an unenforceable non-compete.

Businesses facing commercial contract disputes arising from employment transitions can explore their options with our commercial litigation team in Brisbane.

What Does This Mean for Employees?

For most Queensland employees, the proposed ban is good news. Non-compete clauses have historically operated as a significant constraint on job mobility, particularly in professional services, technology, and consulting industries where movement between firms is common.

Freedom to Move

Once the legislation commences, employees earning below $190,100 will be free to take up new positions with competitors, start competing businesses, or return to former clients, without fear that their previous employer can successfully enforce a restraint clause against them.

This does not mean employees can take whatever they like with them. Confidential information, client databases, trade secrets, and intellectual property that belongs to the employer remains protected. The reform is about removing barriers to where you can work, not about freeing employees to misappropriate their employer’s assets.

Existing Non-Competes

A critical question is what happens to non-compete clauses that are already in force when the Bill commences. The draft Bill proposes that non-compete terms in existing employment arrangements will become unenforceable from the commencement date. This means employees currently bound by non-competes, who earn at or below $190,100, may find themselves released from those obligations when the law takes effect.

However, the Bill has not yet passed. Until it does, existing restraints remain enforceable under current law, and employees who breach them before commencement remain at risk of injunctions and damages claims. If you are currently subject to a non-compete and are considering changing jobs, legal advice before acting is essential.

What Employees Should Watch For

Even after commencement, some employers may attempt to rely on non-compete clauses, either because they are unaware of the new law, or because they believe (rightly or wrongly) that the employee earns above the threshold. The draft Bill would make it unlawful to seek or threaten to enforce an unenforceable non-compete, meaning employees who receive such threats will have legal remedies available.

Employees who believe they are being wrongly restrained from taking up new employment may be able to seek urgent relief through the court system. The litigation lawyers at Boss Lawyers regularly advise employees and employers in commercial disputes arising from departures and alleged restraint breaches.

For a deeper understanding of how restraint of trade currently operates in Queensland and what employers can and cannot enforce right now, see: Restraint of Trade Clauses in Queensland: What Employers and Employees Must Know Before the 2027 Non-Compete Ban.

Frequently Asked Questions: Non-Compete Clauses Queensland 2026

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Disclaimer: This article is general information only and does not constitute legal advice. The proposed non-compete ban is exposure draft legislation only and is subject to change. The law applicable to your specific situation will depend on the terms of your employment contracts, your income, and the circumstances of your employment or departure. Mark Harley is a solicitor admitted to practice in Queensland. Liability limited by a scheme approved under Professional Standards Legislation.