--- title: "Non-Compete and Restraint Clauses in Australia | Astris Law" url: https://www.astrislaw.com/article/non-compete-restraint-of-trade-clauses description: "Are non-compete and restraint of trade clauses enforceable in Australia? The common law test, the September 2026 exposure draft ban and what employers should do now." lang: en-AU --- Skip to main content ← Back to Articles: https://www.astrislaw.com/articles | Employment →: https://www.astrislaw.com/practice/employment-workplace-relations Publication 30 December 2025 • 16 min read # Non-Compete and Restraint of Trade Clauses in Australian Employment ## Summary Restraint of trade clauses in employment contracts are only enforceable in Australia if they go no further than reasonably necessary to protect a legitimate business interest. This article explains the legal framework, the enforceability tests, the exposure draft Bill released on 7 September 2026 and practical strategies for employers and employees. Last reviewed 27 September 2026 · Reviewed by Jamie Nuich (https://www.astrislaw.com/attorney/jamie-nuich), Legal Practitioner Director · Published 30 December 2025 ## Key Takeaways - All restraints of trade are presumed void at common law, and the burden falls on the employer to show the restraint is reasonably necessary to protect a legitimate business interest. Client relationships and confidential information are the safe categories. Workforce stability is recognised today but is the interest most at risk under the proposed reforms. - Courts assess reasonableness by reference to duration, geographic scope and the activities restrained. A restraint that is disproportionate in any dimension is likely to be struck down, and outside New South Wales the court will not rewrite it, as Perpetual Limited v Maglis [2025] QSC 71 shows. - Cascading or ladder restraints remain a lawful drafting technique today (Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267), but the exposure draft Bill released on 7 September 2026 would prohibit them and void the whole restraint. New templates should not depend on them. - The exposure draft Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 would ban non-competes for employees earning at or below the Fair Work Act high income threshold ($190,100 for the year to 30 June 2027) and for all casuals and pieceworkers, ban co-worker non-solicitation clauses for everyone, narrow the legitimate interest test and make no-poach and wage-fixing agreements cartel conduct. It is a draft, not law. Consultation closed on 2 October 2026. - Employers seeking to enforce restraints must act quickly through interlocutory injunctions, as the restraint period may expire before a full hearing, and the wishes of clients who want to follow the employee can weigh against relief. Image: An employment contract with a restraint clause, illustrating non-compete and restraint of trade law (https://www.astrislaw.com/images/articles/non-compete.jpg) In This Article 1. 1. The Common Law Position on Restraint of Trade 2. 2. What Are Legitimate Business Interests? 3. 3. The Reasonableness Test: Duration, Geography and Scope 4. 4. Cascading or Ladder Restraints 5. 5. Interlocutory Injunctions 6. 6. The Exposure Draft Bill: Where the Statutory Ban Stands at 27 September 2026 7. 7. Conclusion Restraint of trade clauses, commonly called non-compete clauses, are a standard feature of Australian employment contracts, particularly for senior employees, sales professionals and anyone with access to confidential information or key client relationships. However, a restraint clause is only enforceable if it goes no further than is reasonably necessary to protect a legitimate business interest. At Astris Law, we advise both employers seeking to enforce restraints and employees challenging them. **Is a former employee breaching a restraint, or are you facing one?** We advise on enforcement and defence of restraint clauses. Call (07) 3519 5616 (+61735195616). ## The Common Law Position on Restraint of Trade The starting point in Australian law is that all restraints of trade are void and unenforceable as a matter of public policy. The burden then falls on the party seeking to enforce the restraint, typically the employer, to demonstrate that the restraint is reasonable in the circumstances. A restraint will be considered reasonable if: - It protects a legitimate business interest (not merely competition in general) - It goes no further than is reasonably necessary to protect that interest in terms of duration, geographic scope and the activities restrained - It is not contrary to the public interest The foundational authority is the House of Lords decision in _Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd_ [1894] AC 535, as applied in numerous subsequent Australian decisions including _Woolworths Ltd v Olson_ [2004] NSWCA 372 and _Just Group Ltd v Peck_ [2016] VSCA 334. ## What Are Legitimate Business Interests? Courts have recognised several categories of legitimate business interest that can support a restraint of trade clause: - Client and customer relationships, where an employee has developed personal relationships with clients that give them influence over those clients, so the employer has a legitimate interest in protecting them - Confidential information and trade secrets, such as proprietary business information, pricing strategies, client lists and technical know-how, which can justify a restraint - Stability of the workforce, because in some circumstances employers can protect against the risk of an employee soliciting or recruiting other staff members Importantly, an employer cannot use a restraint clause simply to prevent an employee from competing. The restraint must be tied to a specific, identifiable interest that needs protection. The third category is the one to watch. The exposure draft Bill would confine permitted restraints to two interests only: protecting confidential information the employee gained through the employment, and protecting relationships with customers, clients and professional networks gained through the employment. Maintaining a stable workforce would no longer justify a restraint, a change aimed squarely at _Cactus Imaging Pty Ltd v Peters_ [2006] NSWSC 717, and clauses stopping a former employee from recruiting colleagues would be banned outright. Until the Bill passes, the common law categories above continue to apply. ## The Reasonableness Test: Duration, Geography and Scope ### Duration: how courts evaluate the restraint period The restraint period is the dimension courts scrutinise most closely, and the analysis is more structured than "12 months sounds about right". The question is always: how long does the employer legitimately need to protect the specific interest, assessed as at the date the contract was entered into, not with hindsight? - **The interest sets the clock.** For client connection, the benchmark is the time it takes a replacement to consolidate relationships with the departing employee's clients - typically one to two client contact or renewal cycles. In _Hanna v OAMPS Insurance Brokers Ltd_ [2010] NSWCA 267, 12 months was upheld for an insurance broker precisely because annual policy renewals meant one full cycle was needed. For confidential information, the period is how long the information stays commercially current, which for pricing or pipeline data can be short. - **Seniority and access matter more than title.** A 12-month non-compete may be reasonable for an executive who was the face of the business to key clients (_Woolworths Ltd v Olson_ [2004] NSWCA 372), while six months may be the ceiling for a mid-level account manager and any non-compete may be unreasonable for a junior employee with no client influence. - **Paid restraints fare better.** Courts are more willing to uphold longer periods where the employee received real consideration for the restraint - gardening leave on full pay, a restraint payment or a premium negotiated into a senior package. Time spent on gardening leave also practically (and in well-drafted clauses, expressly) reduces the post-termination period the employer needs. The exposure draft Bill keeps this route open: gardening leave on full pay and remuneration arrangements to encourage retention are expressly excluded from the definition of a non-compete term. - **Non-solicitation runs longer than non-compete.** Because a non-solicitation clause restrains less, courts will tolerate a longer period for it than for a blanket non-compete over the same employee. A common enforceable structure is a short non-compete with a longer non-solicit. Under the exposure draft Bill, customer non-solicits would remain available for all employees, while co-worker non-solicits would be banned. - **Jurisdiction can change the outcome, for now.** In New South Wales, the Restraints of Trade Act 1976 (NSW) allows a court to read an excessive restraint down to the extent that is reasonable. Everywhere else in Australia, including Queensland, a court cannot rewrite the period. It can only sever what the drafting allows. That is why cascading clauses exist, and it is also why the definition of the protected interest has to be right on the page (see _Perpetual Limited v Maglis_ below). The exposure draft Bill would replace both the common law test and the NSW Act with a single Fair Work Act framework for national system employees, so the NSW advantage would disappear on commencement. ### Geographic Scope The geographic reach of the restraint must correspond to the area in which the employee actually operated or had influence. A nationwide restraint for an employee who only serviced clients in Brisbane is unlikely to be upheld. Conversely, for a national sales director, a broader geographic restraint may be justified. ### Activities Restrained The clause must clearly define what the employee is prevented from doing. Broad prohibitions against working in an entire industry are more likely to be struck down than targeted restrictions against soliciting specific clients or performing a specific role for a direct competitor. ## Cascading or Ladder Restraints To address the risk of a restraint being struck down entirely, many Australian employment contracts now include cascading (or "ladder") restraint clauses. These clauses provide multiple alternative periods, geographic areas and activities, stepping down from the most restrictive to the least. If a court finds the broadest restraint unreasonable, it can enforce the next level down. The effectiveness of cascading clauses was confirmed in _Hanna v OAMPS Insurance Brokers Ltd_ [2010] NSWCA 267, where the New South Wales Court of Appeal upheld a cascading restraint as a legitimate drafting technique. However, the clauses must be properly drafted. Poorly structured cascading provisions can fail if the court cannot identify a severable, enforceable restraint within the cascade. ### A worked example of a cascading clause A typical cascade in a senior employment agreement (or a business sale agreement, where longer periods are tolerated) defines each element as a set of alternatives, with each combination operating as a separate severable restraint: - **Restraint period:** (a) 12 months; (b) 9 months; (c) 6 months; (d) 3 months after termination. - **Restraint area:** (a) Australia; (b) Queensland; (c) 50 km from the Brisbane CBD. - **Restrained conduct:** (a) engaging in any competing business; (b) providing services to any client of the employer; (c) soliciting any client with whom the employee dealt in the final 12 months of employment. That structure produces 36 combinations (4 periods x 3 areas x 3 activities), and the clause states that each operates independently and the invalidity of any does not affect the rest. If the court finds 12 months across Australia against any competing business unreasonable, it can still enforce, say, 6 months within Queensland against soliciting the employee's own former clients. In _Hanna_ itself, the cascade produced nine combinations and the court enforced the 12-month period from within it. Two drafting cautions. First, the alternatives must be genuinely severable, so each combination has to make sense standing alone; a cascade the court has to redraft to salvage will fail for uncertainty. Second, absurdly wide outer rungs (five years, worldwide) invite a finding that the clause is in terrorem - designed to intimidate rather than protect - which colours the court's view of the whole provision. ### Cascading clauses under the exposure draft Bill The technique described above is lawful today and _Hanna_ remains good law. The exposure draft Bill would change that. It prohibits post-employment restraints that contain multiple alternative geographic or time limits directed at ensuring that at least one survives, and a restraint drafted that way would have no effect in its entirety. There would be no severance and no reading down. The same consequence would follow for a permitted restraint that is not necessary for one of the two legislated interests or is not reasonable. Distinct limits that overlap only incidentally, such as five kilometres of each of three separate offices, would still be allowed. Multiple distances from the same point, such as 25, 15 and 5 kilometres of one office, would not. The prohibition applies to employment arrangements made or varied after commencement. Restraints in business sale agreements and shareholder agreements sit outside the employment provisions and would continue to be assessed under the common law, so cascades remain appropriate there. For new employment templates the practical answer is a single restraint period and a single area, chosen because they can be justified for that role, together with a tightly defined customer non-solicit and a standalone confidentiality clause. A cascade in a contract signed today will not be struck out by the Bill on commencement, but any later variation of that contract, including a pay rise, would bring the restraint under the new rules. ## Interlocutory Injunctions In practice, restraint of trade disputes often come to a head when an employee resigns to join a competitor. The employer must act quickly. If the restraint period expires before the matter is resolved, the issue becomes moot. Employers frequently seek interlocutory (urgent) injunctions to restrain the employee from commencing the new role pending a full hearing. To obtain an interlocutory injunction, the employer must demonstrate: - There is a serious question to be tried (the restraint is at least arguably enforceable) - The balance of convenience favours granting the injunction - Damages would not be an adequate remedy ### A Queensland example: Perpetual Limited v Maglis The Supreme Court of Queensland's decision in _Perpetual Limited v Maglis_ [2025] QSC 71 (https://www.queenslandjudgments.com.au/caselaw/qsc/2025/71) shows how these principles play out. Perpetual sought an interlocutory injunction to enforce a 24 month customer non-solicit, with cascading substituted periods of 12, 6 and 3 months, against a financial adviser who had joined Ord Minnett. The clause defined a "Client" as anyone the adviser had worked with or had contact or dealings with in his last 12 months. Chief Justice Bowskill refused the application. The words "contact or dealings" were not confined to work-related dealings and could catch social contact, restraint clauses are construed strictly with ambiguity resolved in the employee's favour, and the court would not read in limiting words or sever the phrase from the definition. There was a prima facie case that the adviser had accepted approaches from former clients, but not that he had solicited them, and the wishes of 22 clients who wanted to keep working with him weighed against relief. A Victorian decision on similar facts, _Perpetual Limited v Epplett_ [2025] VSC 193, went the same way. The lesson is that the cascade did not matter, because the definition it hung off was too wide. Define the protected client by reference to a substantive commercial relationship in a defined period, not "contact". ## The Exposure Draft Bill: Where the Statutory Ban Stands at 27 September 2026 ### What has happened The common law position described above remains the law. What has changed is that the ban now exists in draft. In the March 2025 Federal Budget the Government announced it would ban non-compete clauses for workers earning below the Fair Work Act high income threshold and close competition law loopholes allowing no-poach and wage-fixing agreements. Treasury consulted on the design between 25 July and 5 September 2025. On 7 September 2026 the Government released the exposure draft Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 and explanatory materials for consultation, with submissions closing on 2 October 2026. The draft Bill and explanatory materials are on the Treasury consultation hub (https://consult.treasury.gov.au/c2026-801178). The Bill has not been introduced to Parliament and may change, so nothing in an existing contract changes on the strength of the draft alone. ### Who the ban would cover The Bill inserts into the Fair Work Act a right to be free from non-compete terms for employees whose annualised full-time equivalent earnings are at or below the high income threshold, and for all casual employees and pieceworkers whatever they earn. The threshold for the year to 30 June 2027 is $190,100, indexed each 1 July. Earnings are calculated on the existing Fair Work Act definition, so a part-time employee's hourly rate is grossed up to full-time hours, and commission-heavy sales roles with a low base are likely to fall under the threshold. The ban operates on national system employees only, so independent contractors are outside it, although agreements about contractors are already within competition law. ### What counts as a non-compete term The definition is wide. It captures any term that restricts, prohibits or prevents an employee from seeking other employment or being involved in a business after their employment, and terms that adversely affect the employee for doing so, including a requirement to repay bonuses, make a significant payment or forfeit a severance package on joining a competitor. It applies to contracts, deeds, workplace policies and unwritten arrangements. Four things are expressly not non-compete terms: properly targeted confidentiality clauses, remuneration arrangements to encourage retention, agreed reasonable notice periods and gardening leave on full pay. A "confidentiality" clause drafted so broadly that it stops the employee working for anyone else would be treated as a non-compete. Restraints in business sale agreements and shareholder agreements are outside the employment relationship and are not captured. ### Co-worker non-solicitation Clauses that stop a departing employee from recruiting or attempting to recruit current or former co-workers would be banned for every employee, regardless of income, and would have no effect. "Co-worker" would extend beyond employees to contractors, labour hire workers, apprentices and volunteers, and "recruit" would include advertising a role to them or referring them. Customer non-solicitation clauses are not banned, but must satisfy the test below. ### The restraints that survive For restraints that remain permitted, including non-competes for employees above the threshold and customer non-solicits for everyone, the Bill codifies and narrows the common law. The restraint must be necessary to protect confidential information or customer, client and professional network relationships gained through the employment, and must be reasonable. Workforce stability is removed as a legitimate interest. Cascading drafting is prohibited. A restraint that fails any of these requirements has no effect in its entirety, and post-employment restraints on national system employees would be regulated by the Fair Work Act alone rather than the common law or the NSW Act. ### No-poach and wage-fixing agreements The Bill also amends the Competition and Consumer Act 2010 (Cth) so that agreements between businesses not to recruit or hire each other's staff, and agreements that fix, control or cap remuneration or conditions, become cartel provisions with civil and criminal consequences. The existing industrial relations exemption would not apply to them. There are narrow exemptions for joint ventures, secondments, labour hire and professional sporting leagues, each subject to duration limits and to the affected staff being given notice and consenting before the provision is given effect. Giving effect to an existing no-poach or wage-fixing provision after commencement would be caught even if the contract was made earlier. Mutual "no poaching of staff" clauses in service, agency and recruitment contracts should be audited now. ### Penalties Including a banned non-compete or co-worker non-solicit in an employment arrangement would be a civil remedy provision. The mere presence of the term contravenes it, even if never enforced. Maximum penalties for corporations would be $1,092,000 for a serious contravention or $109,200 otherwise, and for individuals $218,400 or $21,840. Employees, prospective employees, unions and Fair Work Inspectors would have standing. Where a non-compete was valid because the employee's earnings exceeded the threshold and their earnings later fall to or below it, the term stops having effect, and enforcing or threatening to enforce it would attract a penalty. ### Commencement and existing contracts The Bill would commence on the first 1 January, 1 April, 1 July or 1 October after Royal Assent. The penalties for including banned terms would apply only after six months from commencement, and only to arrangements entered into on or after commencement. Existing restraints in contracts made before commencement would continue to operate unless the contract is varied. Any variation, whether or not it touches the restraint, would bring the restraint under the new rules. A salary review letter would be enough. ### What this means now Two things follow. First, until the Bill passes, restraints are enforceable on the common law test and an employee who treats a restraint as dead because of the draft is taking a real risk. Second, contracts being drafted now should be built to survive the draft: no cascades, one period and one area, a customer definition tied to a real commercial relationship, a standalone confidentiality clause, no co-worker non-solicit and notice periods and paid gardening leave for the roles that matter. Existing contracts should not be re-papered in haste, because the draft can still change and any post-commencement variation triggers the new regime anyway. ## Conclusion Restraint of trade clauses are enforceable in Australia today, but only to the extent they are reasonably necessary to protect a legitimate business interest, and outside New South Wales a court will not rescue a clause that is drafted too widely. That is the law that applies to every contract signed before the Bill commences and to every dispute running now. The exposure draft released on 7 September 2026 would ban non-competes for most employees, ban co-worker non-solicits for all of them and void any cascading restraint in full. Employers should draft new contracts on the assumption that those rules will arrive in 2027, without weakening existing protections in the meantime. Poor drafting is among the most common restraint clause mistakes (https://www.astrislaw.com/article/employment-law-employer-mistakes) we see employers make. Employees who receive a cease and desist letter or face injunction proceedings should seek immediate advice on the clause as drafted, not on the reform as reported. Astris Law's employment practice advises on drafting, negotiating and enforcing restraint of trade clauses for businesses and individuals across Australia. ## Update log - September 2026Updated for the exposure draft Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 released on 7 September 2026, the $190,100 high income threshold, the proposed prohibition on cascading restraints and co-worker non-solicits and Perpetual Limited v Maglis [2025] QSC 71. - August 2026Expanded the analysis of how courts assess the restraint period and added a worked example of a cascading restraint clause. 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You should always seek professional advice tailored to your specific circumstances before acting on any information in this article. Liability limited by a scheme approved under Professional Standards Legislation. Related Practice Area Employment https://www.astrislaw.com/practice/employment-workplace-relations ## Dealing with a employment issue? Astris Law advises directors and business owners on employment matters. Tell us what has happened and we will set out the options that are open to you. (07) 3519 5616: +61735195616 Send an enquiry: https://www.astrislaw.com/contact ## Related Articles Insights ### Christmas Shutdown Notice and Leave Directions for Queensland Employers in 2026 Read more https://www.astrislaw.com/article/christmas-shutdown-queensland-employers-2026 Insights ### Is Australia Finally Getting a Bill of Rights in 2026? Not So Fast Read more https://www.astrislaw.com/article/australia-human-rights-bill-2026-what-it-means-for-business Insights ### Non-Compete Clauses in Australia: What the Law Actually Says (Not What the Headlines Say) Read more https://www.astrislaw.com/article/non-compete-clauses-australia-2026-status Book a call back (+61735195616) ## Structured data ```json [ { "@context": "https://schema.org", "@type": [ "LegalService", "LocalBusiness" ], "@id": "https://www.astrislaw.com/#organization", "name": "Astris Law", "legalName": "Astris Law Pty Ltd", "alternateName": [ "Astrons General Counsel", "Phronesis Litigation", "HeadStart Counsel" ], "url": "https://www.astrislaw.com", "logo": { "@type": "ImageObject", "url": "https://www.astrislaw.com/android-chrome-512x512.png", "width": 512, "height": 512 }, "image": "https://www.astrislaw.com/android-chrome-512x512.png", "description": "The Astris Law group gives directors and business owners the right legal capability for whatever their business needs, across corporate, disputes and regulatory. 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This article explains the legal framework, the enforceability tests, the exposure draft Bill released on 7 September 2026 and practical strategies for employers and employees.", "image": "https://www.astrislaw.com/images/articles/non-compete.jpg", "datePublished": "2025-12-30", "dateModified": "2026-09-27", "author": { "@type": "Person", "@id": "https://www.astrislaw.com/attorney/jamie-nuich#person", "name": "Jamie Nuich", "jobTitle": "Legal Practitioner Director", "url": "https://www.astrislaw.com/attorney/jamie-nuich", "sameAs": [ "https://www.linkedin.com/in/jamienuich/", "https://www.qls.com.au/register-of-solicitors/jamie-leanne-nuich", "https://www.youandthelaw.com.au/organisation/98611/astris-law-pty-ltd" ], "hasCredential": [ { "@type": "EducationalOccupationalCredential", "credentialCategory": "Professional License", "name": "Admission to Practice", "recognizedBy": { "@type": "Organization", "name": "Supreme Court of Queensland" } } ], "affiliation": { "@type": "LegalService", "@id": "https://www.astrislaw.com/#organization", "name": "Astris Law", "url": "https://www.astrislaw.com" } }, "publisher": { "@id": "https://www.astrislaw.com/#organization" }, "about": { "@type": "LegalService", "name": "Employment", "serviceType": "Employment" }, "mainEntityOfPage": { "@id": "https://www.astrislaw.com/article/non-compete-restraint-of-trade-clauses#webpage" }, "isPartOf": { "@id": "https://www.astrislaw.com/#website" }, "speakable": { "@type": "SpeakableSpecification", "cssSelector": [ ".article-summary", ".article-description" ] }, "inLanguage": "en-AU", "wordCount": 3138, "timeRequired": "PT16M", "articleSection": [ "Publication", "Employment" ], "keywords": "Employment, Publication, employment, workplace, relations" }, { "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://www.astrislaw.com" }, { "@type": "ListItem", "position": 2, "name": "Articles", "item": "https://www.astrislaw.com/articles" }, { "@type": "ListItem", "position": 3, "name": "Non-Compete and Restraint of Trade Clauses in Australian Employment", "item": "https://www.astrislaw.com/article/non-compete-restraint-of-trade-clauses" } ] }, { "@type": "FAQPage", "@id": "https://www.astrislaw.com/article/non-compete-restraint-of-trade-clauses#faq", "mainEntity": [ { "@type": "Question", "@id": "https://www.astrislaw.com/article/non-compete-restraint-of-trade-clauses#faq-1", "name": "What has happened", "acceptedAnswer": { "@type": "Answer", "text": "The common law position described above remains the law. What has changed is that the ban now exists in draft. In the March 2025 Federal Budget the Government announced it would ban non-compete clauses for workers earning below the Fair Work Act high income threshold and close competition law loopholes allowing no-poach and wage-fixing agreements. Treasury consulted on the design between 25 July and 5 September 2025. On 7 September 2026 the Government released the exposure draft Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 and explanatory materials for consultation, with submissions closing on 2 October 2026. The draft Bill and explanatory materials are on the Treasury consultation hub . The Bill has not been introduced to Parliament and may change, so nothing in an existing contract changes on the strength of the draft alone." } }, { "@type": "Question", "@id": "https://www.astrislaw.com/article/non-compete-restraint-of-trade-clauses#faq-2", "name": "Who the ban would cover", "acceptedAnswer": { "@type": "Answer", "text": "The Bill inserts into the Fair Work Act a right to be free from non-compete terms for employees whose annualised full-time equivalent earnings are at or below the high income threshold, and for all casual employees and pieceworkers whatever they earn. The threshold for the year to 30 June 2027 is $190,100, indexed each 1 July. Earnings are calculated on the existing Fair Work Act definition, so a part-time employee's hourly rate is grossed up to full-time hours, and commission-heavy sales roles with a low base are likely to fall under the threshold. The ban operates on national system employees only, so independent contractors are outside it, although agreements about contractors are already within competition law." } }, { "@type": "Question", "@id": "https://www.astrislaw.com/article/non-compete-restraint-of-trade-clauses#faq-3", "name": "What counts as a non-compete term", "acceptedAnswer": { "@type": "Answer", "text": "The definition is wide. It captures any term that restricts, prohibits or prevents an employee from seeking other employment or being involved in a business after their employment, and terms that adversely affect the employee for doing so, including a requirement to repay bonuses, make a significant payment or forfeit a severance package on joining a competitor. It applies to contracts, deeds, workplace policies and unwritten arrangements. Four things are expressly not non-compete terms: properly targeted confidentiality clauses, remuneration arrangements to encourage retention, agreed reasonable notice periods and gardening leave on full pay. A \"confidentiality\" clause drafted so broadly that it stops the employee working for anyone else would be treated as a non-compete. Restraints in business sale agreements and shareholder agreements are outside the employment relationship and are not captured." } }, { "@type": "Question", "@id": "https://www.astrislaw.com/article/non-compete-restraint-of-trade-clauses#faq-4", "name": "What this means now", "acceptedAnswer": { "@type": "Answer", "text": "Two things follow. First, until the Bill passes, restraints are enforceable on the common law test and an employee who treats a restraint as dead because of the draft is taking a real risk. Second, contracts being drafted now should be built to survive the draft: no cascades, one period and one area, a customer definition tied to a real commercial relationship, a standalone confidentiality clause, no co-worker non-solicit and notice periods and paid gardening leave for the roles that matter. Existing contracts should not be re-papered in haste, because the draft can still change and any post-commencement variation triggers the new regime anyway. Restraint of trade clauses are enforceable in Australia today, but only to the extent they are reasonably necessary to protect a legitimate business interest, and outside New South Wales a court will not rescue a clause that is drafted too widely. That is the law that applies to every contract signed before the Bill commences and to every dispute running now. The exposure draft released on 7 September 2026 would ban non-competes for most employees, ban co-worker non-solicits for all of them and void any cascading restraint in full. Employers should draft new contracts on the assumption that those rules will arrive in 2027, without weakening existing protections in the meantime. Poor drafting is among the most common restraint clause mistakes we see employers make. Employees who receive a cease and desist letter or face injunction proceedings should seek immediate advice on the clause as drafted, not on the reform as reported. Astris Law's employment practice advises on drafting, negotiating and enforcing restraint of trade clauses for businesses and individuals across Australia." } } ] } ] } ] ```