On 7 September 2026, the Australian Government released exposure draft legislation proposing significant changes to the regulation of competition in labour markets and post-employment restraints. The proposed reforms would amend both the Competition and Consumer Act 2010 (Cth) (CCA) and the Fair Work Act 2009 (Cth) (FW Act), introducing cartel prohibitions for certain no-poach and wage-fixing arrangements between businesses, as well as new restrictions on non-compete and co-worker non-solicitation terms affecting national system employees.

The key changes are as follows:

1. The cartel framework will be expanded to prohibit certain wage-fixing and no-poach contracts, arrangements and understandings between businesses
2. Non-compete clauses will be prohibited for employees earning at or below the FW Act high income threshold, currently $190,100 per annum
3. Co-worker non-solicitation terms will be prohibited regardless of an employee’s income
4. Significant penalties for non-compliance.

The proposed reforms would substantially alter the current legal framework governing post-employment restraints by introducing statutory rights and obligations under the FW Act. Key measures include a ban on non-compete clauses for employees earning at or below the FW Act high income threshold, a prohibition on co-worker non-solicitation clauses and new statutory rules governing the enforceability of post-employment restraints.

If enacted, Schedule 2 would establish a national statutory framework governing post-employment restraint of trade terms for national system employees. The explanatory materials state those restraints would be regulated by the FW Act rather than the common law and, for national system employees in New South Wales, the Restraints of Trade Act 1976 (NSW). The reforms would not extend to restraints outside the employment relationship, including conventional restraints associated with the sale of a business.

In a joint media release, the Australian Government and Minister for Employment and Workplace Relations Amanda Rishworth stated the widespread use of non-compete and other restraint clauses affects more than three million Australian workers and can suppress wages, limit labour mobility and adversely affect productivity. The Government has indicated the proposed reforms are intended to strengthen competition in labour markets, increase worker mobility and provide employees with greater freedom to pursue employment opportunities that align with their skills and experience.

The exposure draft also proposes amendments to the CCA that would treat certain no-poach and wage-fixing provisions between businesses as cartel provisions. Those reforms would expose businesses and individuals involved in making or giving effect to such arrangements to the existing civil and criminal cartel regime, subject to targeted exceptions.

The proposed reforms have attracted criticism from some employer groups, including the Australian Industry Group (Ai Group). Ai Group Chief Executive Innes Willox questioned the need for the reforms, noting that courts already assess the enforceability of restraint clauses under established legal principles. Willox also expressed concerns that restricting the use of non-compete clauses may reduce employer investment in employee training and development and could have unintended consequences for productivity. Ai Group indicated it will advocate for a more targeted approach throughout the consultation process.

Public submissions on the proposed reforms may be made through the Treasury consultation process until 2 October 2026.

No-poach and wage-fixing arrangements between businesses

Schedule 1 to the Bill would extend the cartel provisions in Part IV of the CCA to certain agreements between businesses concerning employees.

The CCA prohibits a range of restrictive trade practices, including cartel conduct, anti-competitive contracts, arrangements or understandings, concerted practices, misuse of market power and exclusive dealing. However, at present, the existing cartel prohibitions generally do not apply to work performed under a contract of employment. In addition, statutory exceptions generally require conduct concerning the remuneration, conditions of employment, hours of work or working conditions of employees to be disregarded when determining whether specified provisions of Part IV have been contravened. These features mean agreements between businesses concerning employees, including no-poach and wage-fixing arrangements, may fall outside the existing cartel prohibitions. The position differs for independent contractors.

Under the Bill, no-poach provisions and wage-fixing provisions would be treated as cartel provisions.

• A no-poach provision would include a provision of a contract, arrangement or understanding that has the purpose, effect or likely effect of directly or indirectly preventing one party from recruiting, soliciting or hiring another party’s current, former or future employees. It would also extend to notification or other requirements imposed before recruitment or hiring can occur, including requirements to obtain permission or pay a fee.
• A wage-fixing provision would include a provision that has the purpose, effect or likely effect of directly or indirectly fixing, maintaining, decreasing or controlling the remuneration or other terms and conditions of employment of the current or future employees of two or more parties.

Targeted exceptions are proposed for specified joint ventures, secondments, labour hire arrangements, professional sporting leagues, certain conduct permitted or approved under industrial laws, government wage-setting and specified minimum labour standards. These are conditional exceptions rather than general safe harbours. Some exceptions impose additional conditions before an otherwise prohibited provision may be given effect, including written notice to affected employees and their consent.

Subject to the proposed exceptions, the existing civil and criminal cartel prohibitions would apply to making a contract or arrangement, or arriving at an understanding, containing a no-poach or wage-fixing cartel provision and to giving effect to such a provision. Attempted contraventions may also attract liability.

The proposed prohibitions are concerned with coordination between businesses. A unilateral decision by one employer not to recruit from another business would not, without an agreement or understanding, constitute a no-poach arrangement. The legal character of an arrangement would turn on its substance and operation, rather than the terminology adopted by the parties. Related provisions may also be considered together when determining whether the requisite purpose or likely effect exists.

Overview of the proposed Fair Work reforms

The Bill’s amendments to the Fair Work legislation would apply to:

• new employment agreements and other arrangements (such as deeds and workplace policies) entered into on or after the commencement of Schedule 2 to the Bill
• existing employment agreements and arrangements varied on or after the commencement of Schedule 2 to the Bill
• new fair work instruments, including modern awards and enterprise agreements, made on or after the commencement of Schedule 2 to the Bill.

Non-compete terms

A non-compete term is a term or condition of employment that restricts, prohibits or prevents an employee from seeking other employment or being involved in a business or undertaking following the cessation of employment. Non-compete terms include provisions that:

• prohibit an employee from working for a competitor within a specified geographic area
• prevent an employee from accepting employment with a competing business for a prescribed period
• restrict an employee from establishing a competing business for a specified period following the cessation of employment.

The Bill would prohibit non-compete terms for employees whose annual earnings are equal to or less than the FW Act high income threshold, currently $190,100 per annum. The prohibition would also apply to casual employees and pieceworkers regardless of their income.

The Bill would also prohibit permitted post-employment restraint terms from using cascading alternatives designed to ensure that at least one restraint period or geographic area is valid. If a restraint contravenes this requirement, the entire restraint term would have no effect. The prohibition is not limited to non-compete terms. It applies to post-employment restraint of trade terms generally. However, the explanatory materials indicate that incidentally overlapping geographic restrictions centred on different business locations would not necessarily constitute a prohibited cascade.

Importantly, the mere existence of a prohibited non-compete term in an employment arrangement may constitute a contravention, even where the employer does not seek to enforce the term.

Not every provision that regulates an employee’s conduct following termination will constitute a prohibited non-compete term. The statutory definition would not capture a term merely because it protects confidential information obtained through employment, provides additional remuneration or another benefit to encourage retention, or relates to an agreed notice period. The explanatory materials indicate this may include gardening leave where employment continues and the employee remains fully remunerated. Terms that give effect to, or are authorised or imposed by, Commonwealth, State or Territory legislation would also be excluded.

These exclusions are intended to preserve employers' ability to protect legitimate business interests through mechanisms that do not prevent employees from obtaining future employment. Those exclusions are not determined solely by a clause’s label. For example, a broadly drafted confidentiality, repayment or remuneration provision that in substance prevents an employee from taking subsequent employment may still fall within the definition of a non-compete term.

The ban on non-compete terms does not apply where a term may serve a defence, national security or public sector integrity purpose, or where a Ministerial declaration excludes the operation of the prohibition.

Where a post-employment restraint is permitted, it must be necessary to protect a specified statutory interest and must be reasonable. For private sector employers, the specified interests are confined to protecting confidential information obtained through employment and protecting relevant customer, client or professional relationships gained through employment. Maintaining a stable workforce would no longer constitute a standalone legitimate interest for this purpose.

Co-worker non-solicitation terms

A co-worker non-solicitation term refers to a term or condition of employment that restricts or prohibits an employee from recruiting, or attempting to recruit, a co-worker or former co-worker to commence employment or be involved in any business or undertaking following the cessation of the co-worker’s employment.

Schedule 2 to the Bill proposes to ban the use of co-worker non-solicitation clauses in employment arrangements for all national system employees, regardless of income.

The prohibition would extend to restrictions on recruiting or attempting to recruit any person who carries out, or previously carried out, work in any capacity for the employer. This includes employees, contractors and subcontractors, employees of contractors or subcontractors, assigned labour hire workers, outworkers, apprentices, trainees, work-experience students and volunteers. It is not necessary that the former employee and the person being recruited worked directly together.

The proposed ban would not prohibit client non-solicitation terms outright, although those terms may be subject to the broader necessity and reasonableness requirements applying to permitted post-employment restraints.

If a person enters into or varies an employment arrangement to include a prohibited co-worker non-solicitation term after commencement, the term is taken to have no effect.

The definition of co-worker non-solicitation term does not capture any terms authorised under another Australian statute.

Penalties and enforcement

The proposed reforms would create materially significant liability regimes under the FW Act and the CCA.

Under the FW Act reforms, an employer may contravene a civil remedy provision by entering into or establishing an employment arrangement containing a prohibited non-compete term or co-worker non-solicitation term. A civil penalty may also apply where an employer seeks, or threatens, to enforce a non-compete term that has no effect under the proposed regime.

The maximum FW Act penalty for an individual would be:

• 600 penalty units for a serious contravention
• 60 penalty units for any other contravention.

Under the existing FW Act penalty framework, the corresponding maximum penalties for a body corporate would be five times those amounts.

Prospective employees, employees, employee organisations and Fair Work Inspectors would have standing to commence proceedings in the Federal Court, the Federal Circuit and Family Court of Australia (Division 2), or an eligible State or Territory court. Prohibited terms included in modern awards, enterprise agreements or workplace determinations would have no effect, but their inclusion would not attract the proposed civil penalties.

The consequences under the proposed CCA amendments would be more significant. No-poach and wage-fixing provisions would be incorporated into the existing cartel regime, with the civil and criminal prohibitions applying to making, attempting to make, or giving effect to a contract, arrangement or understanding containing such a provision.

For a corporation, the maximum pecuniary penalty for each civil contravention, or fine for a criminal offence, would be the greater of:

• $100m
• three times the value of any benefit obtained that is reasonably attributable to the contravention, where that benefit can be determined
• if the benefit cannot be determined, 30% of the corporation’s adjusted turnover during the relevant breach turnover period.

For an individual, the maximum civil pecuniary penalty for a cartel contravention is $2.5m. An individual convicted of a criminal cartel offence may also face imprisonment for up to 10 years and/or a fine of up to 2,000 penalty units.

The ACCC would be responsible for investigating and enforcing the new CCA prohibitions, while private parties adversely affected by contravening conduct may pursue available remedies, including injunctions and damages, in appropriate circumstances.

Timing of the new laws

The commencement and transitional provisions are detailed. The new laws would commence on 1 January, 1 April, 1 July or 1 October 2027 following Royal Assent.

However, the new civil remedy provisions in the FW Act concerning the inclusion of prohibited non-compete and co-worker non-solicitation terms would apply to employment arrangements entered into or established after the end of the six-month period beginning on commencement.

Existing arrangements require separate consideration. Variation of an existing employment arrangement after commencement may cause the new substantive rights and enforceability rules to apply to an existing restraint, even if the variation does not concern that restraint.

The proposed CCA amendments would apply to contracts, arrangements and understandings made after commencement of the Act. Importantly, the prohibitions on giving effect to a no-poach or wage-fixing cartel provision would also apply after commencement where the underlying contract, arrangement or understanding was made before commencement. Businesses should therefore review existing commercial arrangements and practices rather than assuming they will be grandfathered.

Key takeaways

For assistance in assessing the proposed reforms or reviewing affected employment and commercial arrangements, please contact the Employment, labour and safety team or Competition and market regulation team.