Attwood Marshall Lawyers has cautioned that the Federal Government's proposed ban on non-compete clauses for lower-income workers could create more problems than it solves—particularly for small to medium-sized businesses.
Announced in the 2025 Federal Budget, the proposed legislation would prohibit non-compete clauses for employees earning under $175,000, impacting industries such as childcare, hairdressing, and construction. The Government argues the change will increase wages and job mobility for millions of Australians, with projected economic benefits of up to $5 billion.
However, Charles Lethbridge, Attwood Marshall Lawyers' Commercial Litigation Partner and NSW Law Society Accredited Specialist in Dispute Resolution, warns that the reforms may weaken essential business protections.
"Non-compete clauses exist for good reason—they help protect client relationships, sensitive commercial information, and business goodwill. If removed without a proper alternative, employers risk having staff walk away with valuable contacts and trade secrets."
"Removing these protections could devalue goodwill in professional practices, impacting valuations and succession plans. We encourage the Government to consult further with legal and business experts to ensure the reforms don't unintentionally harm the very workers and businesses they aim to support."
Attwood Marshall Lawyers supports fairer, more transparent employment practices but urges a balanced approach, considering the broader implications for industries like financial services, where client relationships are often a key business asset.
