On 7 September 2026, the Federal Government released an exposure draft of the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 (‘Bill’) for public consultation, that would ban non-compete clauses for employees earning $190,100 a year or less (the Fair Work high income threshold), ban co-worker non-solicitation clauses for every employee, and separately ban businesses from agreeing with each other not to poach staff or fix wages.[1]
What is proposed?
Non-compete clauses
The ban on non-compete clauses would apply to employees whose earnings are at or below the high income threshold – currently $190,100 a year.[2] Casual employees and pieceworkers would be covered by the ban regardless of what they earn. For employees above the threshold, a non-compete clause would still be allowed, but only if it protects confidential information or client relationships, is reasonable, and doesn’t use ‘cascading’ fallback restraints.
The ban would apply to employment arrangements which is defined as not only contracts of employment, but deeds, workplace policies and any other arrangements, whether written or unwritten, that may regulate the employment relationship.[3]
The definition of a non-compete term is broad. It covers direct restraints such as stopping an employee working for a competitor within a set distance for a set period, as well as indirect restraints that limit an employee’s ability to use their skills or knowledge elsewhere.[4]
Genuinely targeted confidentiality clauses, retention bonuses and agreed notice periods would not be affected but a confidentiality clause drafted broadly enough to effectively stop someone working elsewhere would still be treated as a non-compete.
Co-worker non-solicitation clauses
Clauses that stop an employee recruiting a former colleague would be banned outright, for every employee regardless of income. ‘Co-worker’ is defined broadly, extending beyond employees to contractors, labour hire workers, apprentices and volunteers.[5]
No-poach and wage-fixing agreements between businesses
Separately, the changes would extend to competition law to ban agreements between businesses (not employment contracts), where businesses agree not to poach each other’s staff, or to fix, cap or control wages and conditions between them.
This would be enforced by the ACCC, with both civil and criminal penalties available. Targeted exemptions are proposed for joint ventures, secondments, labour hire arrangements and professional sporting leagues, subject to conditions.[6]
Penalties and Timing
For breaches of these changes, employers could face penalties up to $21,840 (or $218,400 for a serious breach), and up to five times that for a company.[7]
If passed as proposed, the changes would start after the Bill receives Royal Assent, with a 6-month transition period before civil penalties apply to new employment arrangements.[8]
What To Do Now
While the Bill remains in draft form, it is worth starting to prepare. In particular:
- review your employment contracts, deeds and policies for non-compete and co-worker non-solicitation clauses;
- check that any confidentiality or non-disclosure clauses are appropriately targeted, rather than broad enough to act as a disguised non-compete; and
- review any commercial terms with other businesses (such as suppliers and customers) to ensure there are no restrictions on poaching your employees.
Watch this space – we will send a further EMA Note once the Bill is formally introduced to Parliament.
Require further information/assistance?
This EMA Note is not comprehensive advice about your situation and does not cover all your obligations. If you require further information or advice, including a review of your casual engagement arrangements or assistance responding to an employee choice notification, please contact your Consultant.
[1]Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026, Exposure Draft (3 September 2026); Explanatory Materials.
[2] High income threshold for the year ending 30 June 2027.
[3] Explanatory Materials [2.48]; Bill s 23D.
[4]Explanatory Materials [2.25]; Bill sch 2 item 3 (proposed s 23E).
[5]Explanatory Materials [2.86]–[2.95], [2.109]–[2.124]; Draft Bill sch 2 item 3 (proposed s 23C).
[6]Explanatory Materials [1.1]–[1.26], [1.28]–[1.76], [1.77]; Bill sch 1 item 6 (proposed s 45ADA).
[7]Explanatory Materials [2.46]–[2.47], [2.94], [2.128]; Fair Work Act 2009 (Cth) s 546 (5x multiplier for bodies corporate); Crimes Act 1914 (Cth) s 4AA.
[8]Explanatory Materials [2.129]–[2.136]; Bill sch 2 item 9, inserting Fair Work Act 2009 (Cth) sch 1 pt 25, item 143.
