Australian Industry Group made a submission to the Treasury consultation on the proposed Reform to non-compete clauses and other restraints – draft legislation, including the Exposure Draft Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 (Bill) and the Exposure Draft Explanatory Materials.

Australian Industry Group's primary position is that the proposed statutory prohibition on non-compete clauses and related restraint terms is unwarranted and will have problematic impacts on employers, employees and the broader community.

There is no fair or justifiable basis for prohibiting a restraint of trade term that would otherwise be capable of enforcement under established restraint-of-trade principles. Under those principles, developed and applied by courts for more than a century, enforceability is determined by reference to the evidence and circumstances of the particular case, including whether the restraint goes no further than reasonably necessary to protect a legitimate business interest, is reasonable as between the parties and is not contrary to the public interest.

The Bill would replace that evidence-based judicial assessment with simplistic blanket statutory rules. Certain non-compete and co-worker non-solicitation terms would be prohibited or have no effect irrespective of whether they would otherwise be reasonable and enforceable under existing law. A post-employment restraint not caught by those prohibitions would be enforceable only if it satisfies proposed section 333Z, including by being reasonably necessary to protect an interest specified in that section. The Bill may therefore invalidate a narrowly confined restraint either because it falls within a categorical prohibition or because it protects a legitimate business interest recognised under existing law but not by section 333Z. This is arbitrary and disproportionate. It substitutes inflexible statutory categories and a confined range of protectable interests for an assessment of the evidence and circumstances of the particular case.

For most employers, the result would be the loss of meaningful prospective protection for confidential and commercially sensitive information, commercial connections, business continuity and workplace stability, even where a narrowly confined restraint is demonstrably justified. Confidentiality, intellectual property and equitable obligations are not adequate substitutes as they generally provide remedies only after damage has occurred, are difficult to enforce against indirect misuse and do not prevent targeted solicitation of an integrated workforce. The Bill provides no effective alternative protections for employers.

Employers cannot reasonably be expected to bear these risks without changing their conduct. They are likely to restrict access to sensitive work, reduce investment in training and development, and limit opportunities for employees to acquire valuable know-how. Those commercially rational responses would diminish opportunity, innovation and productive investment, the very outcomes the reforms are intended to promote.

The Bill’s separate cartel reforms raise a related concern of overreach. Australian Industry Group opposes extending cartel liability beyond anti-competitive collusion to bona fide commercial arrangements. The proposed no-poach and wage-fixing provisions must be precisely confined to anti-competitive conduct, and the statutory exceptions must operate sufficiently broadly to ensure that legitimate labour hire, recruitment, group training, secondment, joint venture and other commercial arrangements are not exposed to criminal or civil cartel liability.

As expressed in its previous submissions and separate engagement with Government, Australian Industry Group is deeply concerned that unduly broad prohibitions will impair employers’ capacity to protect confidential information, trade secrets, customer and supplier connections, workforce stability, business continuity and other legitimate commercial interests. The Bill does not resolve those concerns. A more nuanced approach should be adopted.