One of the more unexpected announcements in the Federal Budget was the Albanese government's plans to ban non-compete clauses in employment contracts. What are non-compete clauses and what does this mean?

In the context of employment, a restraint of trade usually occurs where an employment contract includes a clause that would prevent an employee from engaging in other work.

For example, a contract might restrain an employee from working for a competitor organisation for a defined period of time after resigning or prevent that worker from finding a new job in the same city or region.

Workers search for new jobs for any number of reasons: better pay, better hours, or sometimes to escape a toxic work environment. A restraint can trap a worker from seeking greener pastures.

Last year, the Federal Treasury held a public review into the use of non-competes and other restraints in employment. Feedback from ANMF members was that these clauses were rife and being misused, such as aged care workers who were told that they could not jump ship to another aged care provider in the same state. The ANMF provided a submission to this review, calling for a total prohibition for all worker restraints, with very narrow exceptions.

On Budget night this year, Federal Treasurer Jim Chalmers announced that the Albanese Labor Government would legislate to ban worker restraints, other than for high income earners. With the dust settled on the election, the ANMF looks forward to reviewing new laws that would consign worker restraints to the history books.

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