The Federal Government has now released an exposure draft of the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 (Cth). If passed in its current form, the draft exposure Bill will have significant implications including for the use of post-employment restraints of trade – particularly non-competes and prohibitions on soliciting staff to leave, but also restraints subject to New South Wales law.

Read the draft exposure Bill and the Explanatory Memorandum.

Under the exposure draft, broadly:

1. Employers will be prohibited from including, and seeking to enforce, a post-employment non-compete in 'employment arrangements' if the employee earns equal to or less than the high-income threshold – currently $190,100 pa (and provided they are not a casual employee or pieceworker). However, a non-compete term does not include:

• a prohibition on use or disclosure of confidential information;
• additional remuneration, or benefits, to encourage retention; and
• notice of termination.

The prohibition is intended though to capture indirect restraints – which could have implications for incentive schemes.

Breach of this non-compete prohibition will be a civil remedy provision meaning employers may be subject to penalties (up to a max for corporations of $1,092,000 for serious contraventions, or $109,200 in other cases; for individuals, penalties for serious contraventions will be $218,400 or otherwise $21,840).

2. The common law will be codified. The draft provides that a post-employment restraint for all national system employees must be:

• reasonable; and
• necessary either:
  • to protect against the use or disclosure of confidential information that has come to the knowledge or into the possession of the employee by reason of the employee being, or having been, an employee of the employer; or
  • to protect against the use of, or disclosure of the existence of, professional or personal relationships with customers, clients or professional networks that the employee has gained by reason of the employee being, or having been, an employee of the employer; or
  • broadly, where the term serves a defence, national security, or the integrity purpose for Commonwealth, State or Territory bodies as prescribed.

Effectively, the amendments are intended to mean that post-employment restraint of trade terms for all national system employees are regulated exclusively by the Fair Work Act, rather than the common law or, for national system employees in NSW, the Restraints of Trade Act 1976 (NSW).

3. Co-worker non-solicitation terms are prohibited from being included in employment arrangements for all national system employees. In other words, organisations will not be able to prohibit former employees from soliciting staff (including contractors) to leave.

• This applies regardless of remuneration level
• This will be a civil remedy provision

4. The use of a 'cascading' post-employment restraint of trade term is not permitted — that is, terms that contain multiple alternative geographical or temporal restrictions directed at ensuring the validity of at least one such restriction.

• This also applies regardless of remuneration level
• The entire term will have no effect and be unenforceable. There is no separate civil penalty

5. These changes will commence on the first 1 January, 1 April, 1 July or 1 October to occur after the day the Bill receives Royal Assent. Broadly, the amendments related to non-competes and non-solicitation clauses are intended to apply to new employment arrangements that are made, or existing ones that are varied, on or after commencement.

• There will also be a 6 month 'grace period' for the start, for example, of the civil penalty provisions.

6. Last, the reforms propose changes to the Competition and Consumer Act which will make it illegal to make or give effect to an arrangement preventing or restricting the recruitment of staff (no poach), or fixing, control or capping remuneration or other employment conditions (no wage fixing). Such arrangements would become subject to the criminal and civil cartel conduct provisions, which expose businesses to significant civil and criminal penalties and potential imprisonment for individuals.

The Bill includes a narrow range of exemptions to these bans. These exemptions apply in limited circumstances, for joint venture arrangements, conduct approved or permitted under the Fair Work Act and State or Territory industrial law; employee secondment and labour hire arrangements and for professional sporting leagues.

The exposure draft raises a number of issues for consideration including:

• Whether you would like to make submissions in relation to the exposure draft;
• What changes may be required assuming the exposure draft is enacted in the same form. This might include:
  • removing non-competes from employees' contracts and other 'employment arrangements' at or below the high-income threshold;
  • removing employee non-solicits from employees' employment arrangements;
  • reviewing your restraints in all employment arrangements, to maximise the prospects of enforceability without the benefit of the NSW Restraints of Trade Act 1976;
  • considering use of extended notice periods, particularly for key executives;
  • reviewing incentive clawbacks and forfeitures;
  • identifying whether any arrangements include provisions which might be at risk under the proposed no poach and wage fixing bans, and options for modifying or removing those provisions; and
  • whether it is worthwhile doing anything before the legislation commences.

Contact us if you would like to discuss how these proposed reforms may affect your organisation, or if you wish to make a submission as part of the Government's consultation process.