Opening the Conversation
I acknowledge the Ngunnawal people, traditional custodians of the land on which we meet, and extend that respect to all First Nations people here today.
Thank you to the Recruitment and Consulting Services Association for hosting this summit and for your leadership across Australia's labour market. The recruitment and staffing industry helps connect Australians to opportunity. You know the pulse of the workforce. You see the frustration of people who feel stuck and the satisfaction when the right person finds the right job.
The work you do matters. When people find meaningful work, they not only improve their own lives, they strengthen their communities and our economy. You help make that happen every day.
You know better than anyone that timing is everything. A good recruiter can smell a resignation before the manager has even noticed the new haircut.
Today, I want to talk about how we can make your job a little easier by tackling a quiet but powerful barrier to mobility: non‑compete clauses.
When people move, the economy moves
A dynamic economy relies on movement. Every thriving business depends on the steady flow of ideas and experience between firms. Job mobility spreads innovation, raises productivity and keeps wages growing.
When a worker changes jobs, they take with them knowledge about better systems, more efficient methods or creative approaches to old problems. When a nurse moves to a new hospital, the techniques she learned in her old ward can improve patient care in her new one. When a software engineer joins a rival firm, she might bring with her a smarter way to code or a better understanding of user behaviour.
Economists have a fancy term for this: allocative efficiency. Most people just call it getting a better job.
Australian data tell a consistent story. Workers who change jobs typically receive pay rises around 9 percentage points higher than those who stay put. For the median worker that means job‑switching is worth about $5,700. Younger workers, who are often in the steepest part of their career trajectory, gain even more, around $7,500.
These wage gains reflect the simple fact that mobility helps talent find its best fit. When people are able to move to roles that use their abilities fully, they create more value, and that value is shared.
But movement only happens when the doors are open. In too many cases, those doors have quietly been closing.
When fine print becomes a straitjacket
Over the past decade, there has been a quiet proliferation of clauses that restrict workers from moving to new jobs. Non‑compete clauses, once confined to senior executives with access to sensitive commercial information, are now appearing in contracts for teachers, tradespeople, technicians and carers.
Non‑competes used to be for senior executives plotting mergers. Now they're turning up in contracts for baristas and babysitters. I've half‑expected to see one in a paper‑round agreement.
A survey from the e61 Institute found that around 1 in 5 Australian workers - or about 3 million people - are now covered by a non‑compete clause. These are not confined to high‑paying industries. They are widespread in health, care services, hospitality and retail.
In some workplaces, the clause is inserted automatically, copied and pasted from an old contract without much thought. It may never have been discussed during hiring. Yet it can have lasting consequences for a person's career.
For many workers, the first time they notice the clause is when they try to change jobs and are told they cannot. The effect is to trap them in roles that may no longer fit their skills or family circumstances.
What began as a narrow legal instrument has become a broad restraint on labour mobility.
Real people, paper chains
During Treasury's consultation this year, many stories emerged from people whose careers were shaped by these clauses.
Nick, a disability support worker on the New South Wales South Coast, had a contract that prevented him from working within 50 kilometres of his employer's base. For Nick, that clause meant he could not take another job in his own community. He would have needed to move towns to stay in his field, even though the local region desperately needed skilled care workers.
Aahan, a temporary visa holder in the care industry, was required to sign a contract in English only. Hidden in that contract was a clause prohibiting him from working for a competitor for 12 months after leaving. When he tried to find new clients through an online platform, his former employer threatened legal action. He had neither the resources nor the language support to defend himself, and as a result, he spent months without steady work.
Holly, a small‑business owner from Queensland, had set up her own business as an NDIS provider after several years in the sector. Some of her former clients followed her to the new business. Her previous employer hired lawyers who demanded that she sign a declaration preventing her from operating within 50 kilometres of several sites. The restraint effectively stopped her from working anywhere in the region.
Then there was Jessica, a 20‑year‑old dance teacher whose contract banned her from working within 15 kilometres of her former studio for 3 years. After leaving her job due to workplace harassment, she tried to find another teaching position nearby. Her previous employer sent letters to her new workplace threatening legal action. Jessica was forced to give up a role she loved, not because she had done anything wrong, but because of a clause in fine print she had never thought would matter.
Across these cases, the pattern is clear. Non‑competes are no longer about protecting trade secrets. In fact, Treasury analysis points to indiscriminate usage across the labour market, even among relatively low‑productivity industries and firms where the intellectual property justification seems absent. They are about controlling people's choices. They prevent workers from using their skills and experience where they are most valuable, and they hold back sectors that already face staff shortages.
The chilling effect on opportunity
Even when a restraint would never survive a court challenge, it often achieves its purpose through fear. Most workers cannot afford to test its validity. Defending an injunction can cost tens of thousands of dollars, and a full court case can easily exceed $300,000. The imbalance of resources between employer and employee means that few disputes ever reach judgment.
For most workers, the idea of spending that on legal fees is as realistic as buying a private island, and less fun.
The result is what economists call a chilling effect. The mere presence of a clause discourages workers from changing jobs, even when they have every legal right to do so. Recruiters see it too: candidates who hesitate to apply because their contracts contain ambiguous restrictions. Businesses that are reluctant to hire someone with experience at a competitor, for fear of being drawn into litigation.
Every unnecessary clause is one more reason a good candidate ghosts your client.
The entire labour market becomes less fluid. Workers stay in jobs that no longer suit them. New firms struggle to recruit the talent they need. Innovation slows. Everyone loses.
In short, non‑compete clauses act like sand in the gears of the labour market. They do not have to be enforceable to be effective. Their power lies in intimidation, not legality.
The price of standing still
The economic cost of non‑competes is now well documented.
Research from the e61 Institute finds that workers with non‑compete clauses earn about 4 per cent less than comparable workers without them, roughly $2,500 a year on a typical salary. Treasury's analysis shows that employees leaving firms that use non‑competes heavily are less likely to switch industries, suggesting that these clauses limit both mobility and career development.
International evidence is even starker. A major study published this year in the Journal of Political Economy found that states in the United States that tightened non‑compete enforcement saw slower wage growth and reduced job mobility. The researchers estimated that making non‑compete clauses unenforceable nationwide would lift average wages by between 3.5 and 13.7 per cent.
Another US study found that greater enforceability reduced patenting and innovation, while bans in Hawaii and Oregon led to measurable increases in both mobility and wages. The lesson is consistent across the evidence. When workers are free to move, pay rises and new ideas spread faster.
Setting talent free
The government's response is clear and carefully targeted. From 2027, non‑compete clauses will be banned for employees earning under the Fair Work Act's high‑income threshold, which currently sits at $183,100.
We are also closing loopholes that allow wage‑fixing and no‑poach agreements between firms, practices that quietly suppress pay and limit opportunity.
Our approach strikes a balance. Businesses will still be able to protect legitimate interests such as intellectual property, confidential information and client relationships. What will no longer be acceptable are clauses that prevent people from using their own skills to earn a living.
We are introducing the reform with a long lead time so that employers can adjust their practices and update their contracts. The ban will apply only to new or varied contracts after 2027. Treasury's consultation drew 67 submissions from across business groups, unions, legal experts and workers. These submissions are shaping the legislation that will come before parliament.
The goal is a labour market that works for both sides. Workers will have more freedom to move. Employers will have access to a larger and more motivated pool of talent.
Good for workers, great for recruiters
Some businesses worry that banning non‑competes will make it harder to retain staff. The evidence suggests otherwise. When employers cannot rely on legal restraints, they invest in what really matters: building good workplaces, providing training and career development, and rewarding loyalty.
That shift is good for business. Employees who stay because they are valued will always be more committed than those who stay because they are trapped.
For the recruitment and staffing industry, the benefits are obvious. Non‑compete clauses create friction in a system that depends on movement. Removing them makes your work smoother and your results stronger.
Every unnecessary clause is one more reason a good candidate ghosts your client. Removing those clauses means fewer ghosts, faster matches and better outcomes for employers and jobseekers alike.
You are the bridge between opportunity and talent. This reform strengthens that bridge. It ensures that workers can move to roles where they are most productive, and that employers can recruit the best person for the job without fear of legal obstacles.
When people move, ideas fly
The reform is not just about fairness, but about the future shape of our economy. Many of Australia's productivity challenges stem from slow diffusion of new technology and best practice. When people are stuck in place, ideas are too.
Ideas don't respect office walls. They hitch a ride with whoever knows them best and turn up in the next workplace wearing a new lanyard.
Freeing workers to move between firms helps spread innovation. It allows the lessons of one business to inform the next. That is how industries evolve. It is how knowledge clusters grow. When workers circulate, they become conduits for improvement.
We see it in the care sector, where moving between providers helps staff share new methods of patient engagement. We see it in construction, where workers take lessons about safety and efficiency from one site to another. We see it in professional services, where mobility spreads digital know‑how and management expertise.
When movement is easy, learning accelerates. Non‑competes slow that process. By reforming them, we are not just freeing individuals; we are creating the conditions for an economy that learns faster.
Putting mobility into motion
We recognise that businesses need time to adapt. Between now and 2027, the government will work closely with industry to ensure a smooth transition.
Treasury will provide clear guidance about what is and is not covered by the ban. Employers will have time to review templates and adjust practices. Recruitment professionals will play a crucial role in explaining the new system to clients and candidates.
The reform will not add unnecessary regulation. It will, in fact, reduce uncertainty. A straightforward rule that says ordinary workers cannot be bound by non‑competes is simpler and fairer than the current patchwork of clauses of varying length, geography and enforceability.
Freedom at work
Behind all the statistics and policy design are people.
Nick, the care worker who wanted to stay near his family.
Holly, the small‑business owner who wanted to serve her clients.
Aahan, who simply wanted a fair chance to earn a living.
Jessica, who wanted to keep teaching dance.
None of them were trying to take secrets or poach clients. They just wanted to work.
When we remove unfair restraints, we give those Australians back their freedom to choose. That freedom is not just a matter of principle; it is the foundation of a fair and efficient economy.
Mobility is how potential becomes progress. It is how the Australian economy grows not just larger, but smarter.
Letting Australia go further
Your organisation's mission statement captures the essence of what we are striving for. The RCSA's purpose is to 'enhance lives, organisations and the economy through the world of work'.
That is exactly what this reform will do.
It will enhance lives by giving workers the confidence to seek better jobs and fairer pay. It will enhance organisations by helping them recruit the people who best fit their needs. And it will enhance the economy by allowing ideas and innovation to circulate freely.
Recruiters have always known what economists are only now rediscovering: the best way to grow a business is to let people move. Our job is simply to make sure the paperwork catches up with common sense.
Australia's prosperity has always come from openness and mobility. Our communities have been built by people willing to move towards opportunity. The same spirit should guide our labour market.
When the freedom to move becomes the norm, talent finds its place, creativity spreads and the whole nation benefits.
Remove the restraints, and we'll all go further together.
Note: My thanks to Treasury officials for valuable assistance in preparing these remarks. To protect privacy, the four names in the case studies have been changed.
