Non-Compete Reforms: What They Mean for Employers

The Government is reviewing the use of non-compete clauses and other restraints in employment contracts, following measures announced in the 2025/26 Federal Budget.

The consultation is looking at:

• A ban on non-compete clauses for employees earning below the Fair Work Act’s high-income threshold

• Closing loopholes around no-poach and wage-fixing agreements under competition law

• Whether restrictions should extend to high-income employees, non-solicitation clauses, or concurrent employment arrangements

• How the ban should be enforced, including penalties, defences, and regulator roles

• Transitional arrangements to help businesses adjust

The review does not propose changes to restraints outside of employment, such as business sale agreements, or to the use of confidentiality clauses.

For SMEs, these reforms are significant. Many small businesses rely on restraints to protect client relationships and intellectual property. A ban on non-competes for certain employees could require employers to rethink how they manage staff turnover and protect business value.

Employers should start reviewing contracts now to identify where non-compete or restraint clauses are used. Alternative protections — such as tailored confidentiality agreements and client relationship strategies — may become more important.

At Lockwood & Ward, we help SMEs understand regulatory changes and plan for workforce management. If you’re concerned about how these reforms may affect your contracts, now is the time to prepare.

Contact Lockwood & Ward on (02) 9299 7044 or stop by Level 9, 50 Clarence Street, Sydney NSW 2000.