Millions of Australian workers will find it easier to move into a better job or even start their own business under a reform proposed in the 2025 federal budget.
The government has committed to abolishing non-compete clauses in job contracts for low- and mid-wage workers.
These are clauses which forbid people from going to a work for a competitor to their current employer, or from running a competing business of their own.
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The government’s Competition Review found non-compete clauses had become a “common and growing feature of Australia’s labour market”.
They also contribute to stifled wages, especially for lower-paid workers.
“People shouldn’t need to hire a lawyer to take the next step in their career,” Treasurer Jim Chalmers said.
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“Or permission from their old boss if they want to be their own boss, and turn an idea into a small business.”
The review found the clauses were in “indiscriminate” use across multiple industries, including childcare, construction, and hair-dressing.
The government will ban these clauses for workers earning less than $175,000 – the current high-income threshold listed in the Fair Work Act.
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Businesses that work together to keep wages down, or who establish “no poach” agreements regarding hiring one another’s workers, are also in the firing line.
Banning non-compete clauses for high-income earners at a later date will also be a matter of consultation.
The government claimed the bans would affect about three million workers, and could lift wages by between two and four per cent, or an average of $2500.
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It could also increase annual GDP by $5 billion, boost productivity, and help reduce inflation, the government claimed.
The reforms will take effect from 2027, giving businesses and workers time to adjust.
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