Imagine being a health worker earning under $80,000, only to find that if you quit, you can't work in the same occupation for an indefinite period. The geographic scope? Not just your neighbourhood, but the whole of Australia and New Zealand.
Or think of the graduate engineer on $63,000. His contract said that if he moved on, he couldn't work for a competitor anywhere in Victoria for 12 months. For a young worker just starting out, that felt less like a career ladder, more like a trapdoor.
These aren't the contracts of CEOs plotting corporate raids. They're the contracts of ordinary Australians: people trying to pay the bills, build a career and use the skills they've worked hard to earn. Instead, they find themselves shackled by non‑compete clauses that say: 'Don't even think about moving'.
These aren't isolated cases. Non‑competes now cover around 1 in 5 Australian employees: more than 3 million people. They stifle wages, block mobility and bottle up ideas. For workers, they punish initiative. For the economy, they act like sand in the gears.
Treasury's recent consultation on non‑competes showed just how corrosive these clauses have become. Many contracts use so‑called cascading clauses: multiple overlapping restraints, such as 10 years, 5 years, 2 years, or one year; covering all of Australia, a state, a city, or a 5 km radius. Even if the broadest version is struck down, a narrower one may survive. The effect is intimidation. Workers see a contract that looks like it was drafted with a dartboard and decide not to risk moving at all.
The harm goes beyond the individual. When a nurse is discouraged from changing employers, patients lose out too. Continuity of care suffers, waiting lists grow longer and shortages in aged care and disability services become more acute. Non‑competes that block electricians from moving to clean‑energy projects slow down the transition to net zero. A pharmacist in a regional town barred from working within 5 km of their former employer means fewer local options to fill prescriptions. What begins as a private contract ends up as a public problem.
Economists have long seen job mobility as one of the clearest indicators of a healthy labour market. Many readers will have experienced it themselves: the biggest pay rises often come not from the annual review, but from switching employers. Research by the e61 Institute finds that job switching typically delivers a wage boost of around $5,700 a year, and more for younger workers. But non‑competes significantly reduce the likelihood of switching. Australian workers bound by them earn about 4 per cent less than those without - around $2,500 a year gone.
United States research points in the same direction. A new study in the Journal of Political Economy finds that non‑competes drag down wages and job mobility and that they also widen gender and racial pay gaps. Far from being a neutral tool, non‑competes magnify existing inequities.
Supporters of non‑competes sometimes argue that they protect business secrets. But Australia already has the tools for that: intellectual property law, confidentiality agreements, non‑disclosure clauses. You don't need a non‑compete to keep the Coca‑Cola recipe safe. Others claim that workers freely 'agree' to these clauses. Yet overseas studies show only around 1 in 10 ever negotiate them. In reality, they're buried in the fine print of take‑it‑or‑leave‑it contracts.
Another defence is that non‑competes encourage firms to invest in training. But the best way to retain staff isn't to lock the door, it's to create a workplace where people want to stay. If training makes someone a better worker, then perhaps they deserve a pay rise. Loyalty is earned, not shackled.
That's why reform matters. Non‑competes dampen wages, slow innovation and widen inequality. They cut against values Australians hold dear: freedom and fairness. The freedom to put your skills to use, to move when a better job beckons, to start something new. And the fairness of being paid what you're worth, without artificial restraints holding you back.
The Albanese government is acting. From 2027, non‑competes will no longer be allowed in contracts for workers earning under the Fair Work Act's high‑income threshold (currently $183,100). At the same time, we will outlaw wage‑fixing and no‑poach agreements: the backroom deals that quietly turn labour markets into cosy cartels. These reforms sit alongside our broader competition agenda: tougher merger laws to rein in market concentration and a new phase of National Competition Policy to lower barriers for new entrants and new ideas.
Our vision is an economy that looks less like Monopoly, where one player wins the lot, and more like Lego, where everyone can build and create. By unbinding workers from non‑competes, we can restore freedom, fairness and dynamism - and give Australians the chance to move forward, not stand still.
