Australia to propose ban on non-compete clauses for workers

The Australian federal government is set to unveil proposed laws to ban non-compete clauses for workers earning less than $190,000 per year. The initiative aims to boost national productivity and increase wages by removing contractual restrictions that prevent employees from moving to better-paying or more suitable roles.

Assistant Productivity and Competition Minister Andrew Leigh stated that these clauses act like a “padlock on opportunity,” preventing workers from utilizing their skills where they are most valued. The move follows evidence that such clauses have a “chilling effect” on the labor market, impacting various sectors including nursing, childcare, and construction.

Data from the Australian Bureau of Statistics indicates that nearly 47 percent of businesses utilize some form of restrictive clause, including non-disclosure agreements, client non-solicitation, and bans on soliciting co-workers. Additionally, research from the e61 think tank suggests that banning these non-compete clauses could increase the annual wages of affected workers by up to $2,500.