What the proposed non-compete ban means for you | The 2025 Federal Budget

The Australian Government has announced plans to introduce legislation that will effectively ban non-compete clauses for workers earning under the high-income threshold of the Fair Work Act, currently set at $175,000. This move is part of a broader effort to increase competition in the labour market and drive economic growth.

Understanding the proposed changes

Non-compete clauses have long been a tool used by businesses to prevent employees from immediately joining competitors or establishing rival businesses after leaving their current role. However, the Government’s Competition Review found that these clauses are often excessively restrictive, leading to reduced worker mobility and suppressed wages, particularly for lower-income employees.

With over three million workers currently covered by such clauses, this change is expected to have a far-reaching impact across various industries. The reforms are expected to take effect from 2027, with ongoing consultations to determine the finer policy details, including potential exemptions and penalties.

Implications for PKF clients

For businesses, the proposed ban on non-compete clauses presents both opportunities and challenges. While the Government argues that increased competition in the labour market will enhance productivity and economic growth, many businesses rely on these clauses to protect intellectual property (IP), confidential information, and client relationships.

Employers in industries where trade secrets and proprietary knowledge are critical, such as professional services, technology, and finance, may need to reassess their employment contracts and workforce strategies. The Australian Chamber of Commerce and Industry has highlighted concerns that removing these clauses could leave businesses vulnerable to IP theft and loss of key talent to competitors.

How PKF can help

At PKF, we understand that these proposed changes could create uncertainty for business owners, particularly those concerned about talent retention and protecting business-sensitive information. Our expert advisory team is prepared to help businesses navigate these reforms through strategic workforce planning and legal safeguards.

Here’s how PKF can support your business:

1. Business model and strategy adaptation – We can help businesses reassess their operating models and market positioning to remain competitive in a landscape with increased employee mobility. Strategic planning will be key to mitigating potential risks and capitalizing on new opportunities.
2. Financial risk management – Without non-compete clauses, businesses may face challenges in protecting proprietary knowledge and maintaining market share. PKF can assist in financial forecasting, risk assessments, and implementing financial controls to safeguard profitability.
3. Investment in workforce development – Businesses will need to focus on talent retention through robust incentive structures and professional development programs. PKF can help clients design sustainable financial strategies to support training, innovation, and leadership development initiatives.
4. Mergers, acquisitions, and growth strategies – Increased workforce mobility may impact business valuations and expansion plans. PKF’s corporate finance and advisory services can guide businesses through mergers, acquisitions, or diversification strategies to strengthen their market position in response to regulatory changes.

Preparing for the future

Although these reforms are not set to take effect until 2027, it is crucial for businesses to act early and proactively adapt their strategies. PKF is committed to helping our clients navigate these regulatory changes and position themselves for continued success in an evolving labour market.

If you have concerns about how the proposed non-compete ban may affect your business, contact PKF today for tailored guidance and expert support.