On 7 September 2026, the Albanese Government released the Exposure Draft of the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 (the Bill). The Bill proposes significant amendments to the Competition and Consumer Act 2010 (Cth) and the Fair Work Act 2009 (Cth) (FW Act).
The proposed FW Act amendments will apply to all current and future employees. If the Bill receives assent, any terms that breach the proposed amendments will have no effect.
FW Act Proposed Amendments
Restrictions on Non-compete Terms
The Bill proposes to amend the FW Act to give employees earning less than the high-income threshold (currently $190,100 per annum) the right to be free from non-compete terms. A non-compete term is defined as a term or condition of employment that restricts, prohibits or prevents an employee from, or adversely affects an employee’s ability to, or seek to:
- be involved in any business or undertaking after their employment; or
- commence subsequent employment.
Where a non-compete term is included in an employment agreement, the term will be taken to have no effect.
Prohibitions on Co-worker Non-solicitation Terms
The Bill also seeks to introduce amendments to the FW Act that would give all employees, regardless of salary, the right to be free from co-worker non-solicitation terms. A co-worker non-solicitation term is defined as a term or condition of employment that restricts or prohibits an employee from recruiting, or attempting to recruit, a person who carries out, or has previously carried out, work in any capacity for the employee’s employer, to:
- be involved in any business or undertaking after the employee’s employment; or
- commence subsequent employment.
Requirements for Restraint of Trade Terms
In addition to the above, the Bill proposes to amend the FW Act to enforce the requirement that restraint of trade terms for high-income employees must be reasonable and necessary for one or more of the following reasons:
- to protect against the use or disclosure of confidential information; or
- to protect against the use or disclosure of the existence of professional or personal relationships with customers, clients or professional networks.
Relevantly, the term must go no further than necessary, be reasonable having regard to the parties’ relationship and must not include cascading non-compete terms. This marks a pivotal change from the usual restraint of trade practices, in which cascading restraint areas/periods were inserted in an effort to increase enforceability.
What’s Next?
The proposed amendments have not yet been approved. If royal assent is granted, the new laws would take place on either 1 January, 1 April, 1 July or 1 October 2027 (whichever comes first).
If approved, restraint of trade terms would be exclusively regulated by the FW Act. The differences in Queensland versus New South Wales would cease, and historical common law would largely be irrelevant.
As the Bill is currently in the consultation period, amendments may be made. We will continue to monitor the Bill and provide updates if further developments arise.
