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We have all seen the commentary. This briefing is built for Chief HR Officers, who have an executive or board to brief, and to answer the practical questions your executive will ask: what does it mean for us, and what needs to change?
On 7 September 2026, the government released exposure draft legislation to ban non-compete clauses for most Australian employees, alongside separate proposals to end cascading restraint drafting and extend cartel conduct rules to no-poach arrangements between businesses. Despite the government proposing the draft legislation and inviting feedback until 2 October 2026, Ben McKinley, Employment Law Partner at Pinsent Masons, predicts the Bill will pass largely unchanged.
The non-compete ban
The headline change bans non-compete clauses, meaning restraints on working for a competitor, for any employee earning below the Fair Work Act high-income threshold, currently $190,100 a year. For those employees, the restraint disappears regardless of what the contract says. Above that threshold, non-competes remain available in principle, though the government has been explicit that it expects them to be reserved for genuinely senior roles rather than backfilled into every contract to clear the line.
Cascading clauses, the ones that stack six months, twelve months and two years, or a suburb, a state and the world, into a single restraint and ask a court to read down to whichever combination survives, will no longer be available. McKinley expects this to have the greatest practical effect of anything in the draft, because it forces employers to make one considered choice about restraint length and geography at the time the contract is entered into. Employers will need to balance a restraint period that is long enough to protect themselves but not so long that the court finds it invalid. That will be a difficult and individualised consideration that employers need to undertake before offering employment.
In addition, the change extends cartel conduct provisions in the Competition and Consumer Act 2010 (Cth) to no-poach agreements between businesses, not to the co-worker non-solicitation clauses already in most employment contracts that stop a departing employee from soliciting former colleagues. An informal understanding between two CEOs not to hire from each other's workforce is exactly what the expanded provisions are built to catch, and it now carries exposure that used to sit only in competition law theory.
"A significant majority of the employment agreements we are asked to review contain restraints that are unlikely to be enforceable, either because they are drafted poorly or don’t protect a legitimate interest," McKinley said. “A court won’t protect against mere competition.”
However, it has long been accepted that a business’s confidential information is a legitimately protectable interest. In recognition of that, the draft legislation does not interfere with or water down the protection of confidential information.
With non-competes unavailable below the high-income threshold, and cascading drafting gone above it, McKinley expects "an increased reliance on employers commencing proceedings against former employees for alleged misuse of confidential information as a quasi restraint."
If the Bill is likely to pass in substantially the same form, here are McKinley’s four things to do before it passes:
Start with the names you already have
Rather than reviewing every contract, have your business partners review succession plans and 9-box grids to identify HiPos and critical roles.
For each name, review:
Ready your operations for the changes by:
The exposure draft, whatever form it takes by the time it reaches Parliament, is asking HR to do something closer to what McKinley's own practice does every day: define the actual interest worth protecting, then draft to it, rather than draft broadly and hope.
For your board
The exposure draft does not create new legal risk. It removes a control (which may or may not be reliable), and the four actions above are the difference between replacing that control on your own terms and discovering its absence in the middle of a dispute. Update your risk register accordingly.
While the risk profile may not materially change should you begin to act as suggested now, the complexity certainly does. Expect legal challenges to confidential information clauses to lift, “leading to increased litigation”, McKinley says.
Download your free Board Paper draft to notify your board here.
Special thanks
Ben McKinley is a Partner at Pinsent Masons, advising employers on Australian employment and workplace relations law, including restraints of trade, confidential information disputes, and the practical implications of the government's proposed competition and workplace reforms. Thank you to Ben for the time and the direct answers that shaped this briefing.
O-HR is an Australian human resources consulting and technology company led by Chief Human Resources Officer, Jessie Ivancic GAICD MAHRI.
Intelligent HR is Jessie's LinkedIn newsletter, reaching over 2,000 Australian HR and business leaders, exploring frontier technology for the advancement of Australian HR.
References and further reading