Proposed reforms to Australian employment law that will void non-compete clauses for workers earning below the Fair Work Act high-income threshold could significantly change how businesses protect their client relationships and workforce, according to employment and workplace specialist Roger Lewis who is based with arch.law in Perth.
The Australian Government has announced plans to introduce legislation from 2027 that will prohibit non-compete clauses for workers earning below the high-income threshold under the Fair Work Act 2009, currently set at $175,000 excluding superannuation.
Once implemented, the reform is expected to apply retrospectively, meaning non-compete provisions in existing employment contracts for workers below the threshold would become unenforceable.
Roger Lewis said the reform could have far-reaching consequences for both employers and employment lawyers.
“Non-compete clauses have traditionally been included as a standard protection in many Australian employment contracts. If the proposed reform proceeds as indicated, those clauses will no longer be effective for a very large segment of the workforce.”
The Government has indicated that while non-compete clauses may be banned for workers below the threshold, other contractual protections such as confidentiality obligations and non-solicitation of client clauses are likely to remain available.
Lewis said this would fundamentally change how businesses structure employment protections.
“Employers will need to focus much more closely on recruitment, employee management and internal systems to ensure staff are not placed in a position where they can easily compete after leaving the business.”
He added that organisations should begin reviewing their employment contracts well ahead of the proposed 2027 commencement date.
“For lawyers advising employers, the emphasis will shift from broad non-compete provisions to ensuring the remaining permissible restraints – such as non-solicitation and confidentiality clauses – are drafted carefully and are genuinely enforceable.”
Lewis said businesses in relationship-driven sectors could be particularly affected.
“In industries where client relationships are central to the value of the business, employers will need to think strategically about how those relationships are protected if non-compete clauses are no longer available.”
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