Fed­er­al Bud­get 2025: Lim­i­ta­tion on Non-Com­pete Clauses

As part of the 2025 Federal Budget, the government has announced a prohibition on non-compete clauses for employees earning less than the high income threshold (presently $175,000perannum).

It is planned that the change will take effect in2027. There is nothing for employers to do at the moment, although both business and employees should keep awatching brief on the implementation of this announcement. Further detail will presumably be provided during the implementationprocess.

A few initial observations:

1. Much of the commentary from proponents of prohibitions on non-compete clauses (and other forms of post-employment restraint) comes from economists who pay little regard to the decades of nuanced case law developed in superior courts that has sought to carefully balance the legitimate business interests of employers with the right of employees to earn aliving. Instead, the commentary focuses on anecdotes about outlier employers who seek to impose absurdly