Can I Work for a Competitor? What a Restraint Clause Can and Can’t Stop You Doing

The offer is better: more money, a shorter commute, a role you actually want. The catch is clause 14.2 of your current contract, which says that for 12 months after you leave you won’t “be engaged in any business that competes with the Company” anywhere in Australia, won’t “solicit or deal with” any client, and won’t “induce” any employee to leave. Your prospective employer has asked whether you’re “clean”. You don’t know.

The honest answer is that a restraint clause is a bundle of separate promises, and they are not equally enforceable. Confidentiality nearly always holds. A targeted non-solicit of clients you personally dealt with often holds. A blanket non-compete rarely does. Understanding which is which lets you accept the job, honour what’s real, and answer any threat with a clear written position.

Your rights

• A restraint is void unless proven reasonable. The employer must show the clause protects a legitimate interest (confidential information, customer connections, workforce stability) and goes no further than necessary in time, area and scope. Preventing competition as such is not a legitimate interest, and your general skill, knowledge and experience belong to you.
• Non-compete. The hardest to enforce. Courts ask whether a non-solicit and confidentiality clause would have protected the interest adequately; if so, the non-compete is wider than necessary. It fares best for senior people with deep client relationships or genuine trade secrets, and for short periods.
• Non-solicitation of clients. More likely to be enforced for clients you dealt with, for a period reflecting how long it would take a replacement to build the relationship (commonly 6 to 12 months). Clauses covering all clients of the business, including ones you never met, are vulnerable.
• Non-solicitation of staff (non-poach). Enforceable where the employer can show a real interest in workforce stability; usually limited to people you worked with.
• Confidentiality. Enforceable without any clause: an equitable duty not to misuse genuinely confidential information (client lists, pricing, margins, strategy, source code), plus ss 182–183 of the Corporations Act 2001 for employees and officers of companies. It does not cover what you carry in your head as general know-how.
• The coming federal ban. The Commonwealth’s announced ban on non-competes for workers under the high-income threshold is slated for 2027 and prospective. It’s not in force for your current clause, but it reflects where the law is heading and how much weight a broad non-compete now carries.

By state

• New South Wales. Restraints of Trade Act 1976 s 4: a court can enforce an over-broad restraint to the extent it is reasonable, reading it down rather than voiding it. An unreasonable 12-month Australia-wide clause might be enforced as, say, 3 months in your city, so plan for the narrowed version.
• Victoria. Common law only: reasonable as written or unenforceable. Cascading alternatives (12/6/3 months) can be severed so the reasonable option survives.
• Queensland. Common law only; cascading alternatives severable.
• Western Australia. Common law only; cascading alternatives severable.
• South Australia. Common law only; cascading alternatives severable.
• Tasmania. Common law only; cascading alternatives severable.
• Australian Capital Territory. Common law only; cascading alternatives severable.
• Northern Territory. Common law only; cascading alternatives severable.

Check the governing-law clause; a contract can select New South Wales law for an employee working in Queensland. The Claim Done document asks your state first and drafts to the New South Wales read-down rule or the common-law position that applies.

What to do right now

1. Separate the clause into its parts. Non-compete, client non-solicit, staff non-solicit, confidentiality. Note the duration and area for each, and whether they cascade.
2. Match your new role against each part. Different clients, different product, no client contact, a different region: each narrows what could realistically be restrained.
3. Leave clean. Return everything. Don’t forward files, contact lists or pricing to a personal account. Don’t download the CRM “for reference”. This is the difference between a letter and an injunction.
4. Decide what you’ll honour and write it down. Typically: confidentiality without limit; no solicitation of named clients you dealt with for a defined period, if that’s reasonable; no approaches to former colleagues. Offering these voluntarily undercuts any argument that the full non-compete is necessary.
5. Put your position first, or be ready to. A short letter to the old employer on departure, setting out the undertakings you give and why the non-compete is not enforceable against you, puts your position on record first. If the letter has already come, respond within its deadline.

What you can do from day one, and what to avoid

You can take the job. You can use your skills, your experience and your industry knowledge. You can respond if a former client contacts you unprompted, though a clause worded “solicit or deal with” tries to catch that too, and how far it can is exactly the kind of overreach courts cut back. You can tell people where you now work. What you should avoid, at least for the period a reasonable non-solicit would run, is initiating contact with clients you handled for the purpose of moving their business, and approaching former colleagues to join you. And you must not use confidential information, ever, whatever the clause says; that’s the one obligation that doesn’t depend on reasonableness. If your old employer sends a “cease and desist” that goes further than this, the response is not to stop working; it’s to state which obligations you accept, deny the rest, and put them to proof.

Who to complain to

There is no regulator for restraint clauses; it’s contract law. If the old employer is withholding final pay or commissions to pressure you, the Fair Work Ombudsman handles that and the withholding may itself be a breach that undermines the restraint. If the dispute goes to court, it’s the Supreme or District Court in your state; if the clause would be caught by the coming federal ban, that will be a matter for the Fair Work system once it commences.

Put your position in writing — $49

Claim Done drafts your Restraint of Trade Response: an analysis of each part of the clause against your new role, why the non-compete is unenforceable, the employer’s onus, your state’s read-down or common-law rule, the confidentiality and non-solicitation undertakings you will honour, and notice that interference with your new employment will be treated as actionable.

Draft My Restraint Response — $49 →

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