The consultation seeks feedback on wage-fixing bans and restrictions that prevent workers from holding multiple jobs.
Small businesses could face new restrictions on employment contracts as government consults on banning non-compete clauses for most workers
The Australian government has opened a crucial consultation period from July 25 to September 5, 2025, seeking public input on sweeping reforms to workplace restrictions that affect millions of workers across the country. The initiative builds on Budget 2025-26 announcements aimed at dismantling barriers that prevent workers from pursuing better-paying opportunities.
The consultation paper addresses several key areas where current workplace agreements may be stifling worker mobility and economic growth. At the center of these reforms is a proposed ban on non-compete clauses for low and middle-income workers, alongside restrictions on no-poach agreements between employers and wage-fixing arrangements that operate without worker knowledge or consent.
Treasury’s Competition Review has documented concerning practices in the current system. The review “heard troubling accounts about the misuse of non‑compete clauses, including minimum wage workers being sued by former employers and workers being threatened with legal action if they switched jobs,” according to the March 2025 government announcement.
The scope of the problem is substantial. “Right now, more than three million Australian workers are covered by these clauses, including childcare workers, construction workers, and hairdressers,” the government noted when first announcing the reforms.
Reforms could boost wages and reduce inflation
The economic argument for reform is compelling. Treasury research indicates that “the reforms could lift the wages of affected workers by up to four per cent, or about $2,500 per year for a worker on median wages.” Beyond individual benefits, Productivity Commission modeling suggests broader economic gains, with “changes could improve productivity and add $5 billion or 0.2 per cent to GDP annually, as well as reduce inflation.”
Treasurer Jim Chalmers framed the reforms in terms of worker empowerment and economic dynamism. “Workers should not be handcuffed to their current job when there are better opportunities available for them,” he stated. The reforms are designed to address situations where “Australians shouldn’t need a lawyer to go to a higher paying job.”
Key Areas for Consultation
The current consultation seeks detailed feedback on several specific reform areas:
Definitive Bans: The government is finalizing policy details for banning non-compete clauses affecting workers earning below the Fair Work Act’s high-income threshold of $175,000, alongside prohibitions on no-poach agreements and wage-fixing arrangements.
Areas Under Review: The consultation also examines whether reforms are needed for non-compete clauses affecting high-income workers, non-solicitation clauses that restrict contact with former clients or colleagues, and employment restrictions that prevent workers from holding multiple jobs.
Changes won’t take effect until 2027
The reforms are designed with a measured approach to implementation. “Following consultation and passage of legislation, the reforms will take effect from 2027, operating prospectively to give businesses and workers time to adjust,” according to the government’s timeline.
This extended lead time reflects recognition of the significant changes required across Australian workplaces. The government has committed to consulting “on policy details, including exemptions, penalties, and transition arrangements” to ensure the reforms achieve their intended goals without creating unintended disruptions.
Broader competition oplicy context
These workplace reforms form part of a larger competition policy framework. The government is simultaneously “progressing a national licensing scheme for electrical trades people” that will “enable people in electrical trades to work seamlessly across state and territory borders without reapplying for a separate licence or paying additional fees.”
Both initiatives represent what officials describe as “a second tranche of reforms under the Government’s revitalised National Competition Policy,” guided by an expert advisory panel that includes prominent figures such as Dr Kerry Schott AO, Mr David Gonski AC, and other leading economists and competition specialists.
As the consultation period progresses, stakeholders across the economy—from individual workers to major employers—have the opportunity to shape the final form of these significant workplace reforms. The government has emphasized that feedback will directly influence policy details, making this consultation a critical moment for Australia’s labor market evolution.
The reforms represent what officials describe as part of “the Albanese Government’s economic plan which is focused on helping workers earn more and keep more of what they earn, and building a stronger and more productive economy.” With implementation set for 2027, the coming months of consultation will determine how these ambitiou
Submoit your feedback here.
The government announced the reforms in the 2025–26 Budget. Read the media release on the ban.
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