Non Compete Clause Australia: Is Yours Enforceable? (And What to Do Before You Sign or Leave)

You’re searching “non compete clause Australia” for one of two reasons. Either you’re about to sign a contract with a restraint in it and you want to know what you’re agreeing to, or you’re leaving a job and your old employer is waving the clause at you, threatening legal action if you go to a competitor or take clients with you.

Here is the position in plain English: most non-compete clauses in Australian employment contracts are wider than the law allows, and a large proportion are unenforceable. But you need to know which kind yours is before you act.

The legal test

Restraints of trade are void at common law unless the employer proves the restraint is reasonably necessary to protect a legitimate business interest. Legitimate interests include confidential information, trade secrets, customer connections and (to a limited degree) workforce stability. Simply preventing competition is not a legitimate interest.

Courts look at the restraint’s duration, geographic area and scope of activity. A 12-month, Australia-wide ban on working in an entire industry for a mid-level employee will almost always fail. A 3-month restraint on soliciting the specific clients you personally managed will usually succeed. In New South Wales, the Restraints of Trade Act 1976 lets courts read down an overreaching clause to the extent that is reasonable; elsewhere, “cascading” clauses (12 months, or if not then 6, or if not then 3) attempt the same thing.

The 2025 change

The Commonwealth Government announced a ban on non-compete clauses for employees earning under the high-income threshold ($190,100 from 1 July 2026, indexed each July), intended to commence from 2027. Check the current status before relying on it, but the direction is clear: courts and Parliament are increasingly hostile to broad restraints on ordinary employees. Non-solicitation and confidentiality clauses are not affected and remain enforceable if reasonable.

If you’re about to sign

Read the restraint clause, the confidentiality clause and the IP clause together. Ask: how long, how far, what am I barred from doing, and does it survive if I’m made redundant? Negotiate the period down, limit the scope to clients you actually dealt with, and get any concession in writing. Employers routinely agree to narrower restraints when asked; they just don’t offer.

If you’re leaving and being threatened

1. Don’t take documents, client lists or data. That converts a weak restraint case into a strong breach-of-confidence case.
2. Get the clause reviewed against the legal test. Know whether it’s a “probably enforceable” non-solicit or a “probably unenforceable” blanket non-compete.
3. Respond in writing. A calm, legally grounded response that explains why the clause is unreasonable, confirms you will honour your confidentiality obligations and invites them to identify the specific legitimate interest they’re protecting, is a sensible first step. They know the litigation costs and the odds.
4. Injunction proceedings move fast.

Why a proper review beats guessing

The difference between “this clause is unenforceable” and “this clause is probably unenforceable but the non-solicit inside it is fine” is the difference between a clean move and an injunction application. The cost of getting it wrong runs to tens of thousands. The cost of getting the clause read properly against the case law is $49.

DIY vs Claim Done vs lawyer

Know where you stand before you sign or resign. Get your contract reviewed for $49, or a legal response to your employer’s threat for $49. Done in about 5 minutes. You approve it before it is sent.