Australia moves to ban unfair non-competes, no-poach agreements, and wage-fixing arrangements

The bill builds on the government’s competition review that kicked off in August 2023. It proposes amendments to Australia’s competition law and its workplace relations law. 

No-poach and wage-fixing agreements treated as cartel conduct

The bill extends Australia’s cartel framework to two new categories: no-poach provisions (which prevent or restrict the hiring of another party’s staff) and wage-fixing provisions (which fix, control, or cap remuneration or employment conditions). 

Notably, unlike the existing cartel prohibitions, the new provisions do not require the parties to be competitors—the no-poach and wage-fixing prohibitions can apply to arrangements between any two or more employers. This raises questions about the far-reaching nature of the regime and is likely to face criticism from respondents to the consultation. 

The Australian Competition and Consumer Commission (ACCC) will enforce the new prohibitions. These will attract the same civil and criminal penalties as existing cartel conduct, with the law’s general industrial relations exemption expressly disapplied. 

Exemptions are provided for joint ventures, employee secondments, labor hire arrangements, and professional sporting leagues, each subject to strict statutory conditions (including durational limits, transparency requirements, and staff consent). But they are narrow, and the burden of proof rests on the party claiming the exemption.

Ultimately, breach of the new provisions could mean heavy fines for businesses, as well as fines and even jail time for individuals.

Certain non-compete and co-worker non-solicitation clauses banned

The bill amends the Fair Work Act to ban non-compete terms outright for employees whose annualized full-time equivalent earnings are at or below the high income threshold (currently AUD190,100, or around USD135,000), and for all casual employees and pieceworkers. 

Co-worker non-solicitation terms—which restrict an employee from recruiting former colleagues—are banned for all employees irrespective of income. 

Prohibited terms are void and unenforceable. Their mere inclusion in an employment arrangement (defined broadly to capture contracts, deeds, workplace policies, and unwritten arrangements) attracts up to 600 penalty units (currently AUD218,400, or around USD155,000) for serious contraventions. This is multiplied by five for corporates.

Permitted restraints face tighter enforceability rules

Where a non-compete term is permitted (because the employee’s earnings exceed the threshold), it must be necessary to protect a legitimate business interest—now exhaustively defined as confidential information or client and professional relationships—and must be reasonable. 

The bill expressly overturns Cactus Imaging Pty Ltd v. Glenn Peters [2006] NSWSC 717, meaning that maintaining a stable workforce is no longer a legitimate ground. 

“Cascading” clauses containing multiple alternative geographical or temporal restrictions are prohibited outright; a non-compliant term is void in its entirety without judicial severance. Targeted exceptions apply for certain government bodies where non-compete terms serve defense, national security, or public sector integrity purposes.

What businesses should do now

The public consultation runs until October 2, 2026. Once the bill receives Royal Assent, there will be a six-month grace period before civil penalties for the new prohibitions take effect. 

Under the Fair Work Act amendments, existing restraints will survive commencement but become subject to the new regime if the underlying arrangement is varied, even where the variation is unrelated to the restraint itself. 

The position under the cartel rules is stricter: while existing no-poach and wage-fixing arrangements will not be retrospectively invalidated, giving effect to such arrangements after commencement will constitute a contravention. 

Businesses should begin reviewing template employment agreements, workplace policies, and inter-business commercial arrangements (including joint venture, secondment, and labor hire agreements) now. 

For multinational employers, the reforms underscore a growing global trend—following similar moves in the U.S. and across Europe—toward enforcing labor market restrictions as antitrust violations.