For employees and employers
Non-compete and restraint of trade clauses: enforceable or not, and who to ask
A restraint of trade clause tries to stop you working for a competitor, poaching clients or recruiting former colleagues after you leave. Many are wider than the law allows and would fail in court. Some are tight, well-drafted and enforced. Telling the two apart before you resign, or before you sue as an employer, is the whole question, and it is one where the cost of guessing wrong runs to injunctions and legal bills.
Updated . General information, not legal advice.
Do you need a lawyer for this?
Advice usually pays for itself when
- You are about to accept a role with a competitor and your current contract has a restraint of any length, especially in sales, professional services, recruitment or any client-relationship role.
- You have received a letter from your former employer or its lawyers alleging breach.
- You are an employer with a departing employee who has taken clients or staff, and you are weighing an injunction.
- The restraint was attached to a share or bonus scheme, so breaching it may forfeit money as well.
The free route is usually enough when
- The clause is a short confidentiality obligation with no non-compete or non-solicit, which is generally enforceable and rarely a problem.
- You are moving to a different industry or a non-competing role and simply want to understand the clause.
When is a restraint enforceable?
The starting point is that a restraint of trade is void unless the employer can show it goes no further than is reasonably necessary to protect a legitimate business interest. Legitimate interests are things like confidential information, customer connections built at the employer's expense, and the stability of the workforce. Courts weigh the duration, the geographic area, the activities restrained, and the employee's seniority and access. A twelve-month nationwide non-compete on a junior employee is very unlikely to hold. A six-month restraint on soliciting the specific clients a senior adviser managed is much more likely to. Some contracts use cascading clauses that offer alternatives of decreasing scope so a court can pick the enforceable one.
What are the different kinds of restraint?
Non-compete clauses stop you working in a competing business at all. Non-solicitation clauses stop you approaching clients or customers. Non-dealing clauses go further and stop you acting for clients even if they approach you. Non-poaching clauses stop you recruiting former colleagues. Confidentiality clauses protect information rather than restrict work. Courts treat them differently: confidentiality and narrow non-solicitation are usually upheld, non-dealing is scrutinised, and non-competes carry the heaviest burden because they stop a person earning a living in their trade. A contract that stacks all of them is common, and the fact that one is unenforceable does not automatically bring down the others.
What is happening with the proposed ban?
The federal government announced in 2025 that it intends to ban non-compete clauses for workers earning under the high income threshold, currently $190,100, from 2027. As at the date on this page that is an announced intention rather than enacted law, and the detail, the timing and the carve-outs may change before anything commences. FairWork Mate's non-compete ban tracker is kept current with the status and the reader is directed there for the position today. Until a law commences, existing restraints are judged under the reasonableness test described above, and nothing about the announcement changes a contract you have already signed.
What happens if I breach one?
An employer's main remedy is an injunction from a court ordering you to stop, which can be sought quickly and can include an order against the new employer. Damages for losses caused by the breach are possible but harder to prove. In practice the first step is a letter putting you and the new employer on notice, and many disputes are resolved at that stage by an undertaking to stay away from named clients for a period. Employers who sue on an overreaching clause risk losing and paying costs, which is why a well-advised employer checks the clause before writing the letter, and a well-advised employee gets the clause read before responding.
When does a lawyer pay for itself?
Before you resign to join a competitor, because the advice shapes what you can safely do and say in the transition. On receipt of a breach letter, because the reply sets the tone and an admission is hard to withdraw. For employers, before the injunction application, because reasonableness is argued on the facts and a weak clause should not go to court. Liquid Employment Lawyers is FairWork Mate's paid legal partner for restraint matters. It is an Australian employment law firm, not free government help, and it discusses scope and fees before you commit. Compared with an injunction fight, a review is cheap.
What is the free route?
The Fair Work Ombudsman on 13 13 94 explains entitlements but does not advise on restraints, which are contract law rather than Fair Work Act matters. FairWork Mate's non-compete check runs a restraint through the usual factors, the restraint of trade guide covers the case law in more detail, and the ban tracker holds the status of the proposed change. Free general information, not legal advice. FairWork Mate is not affiliated with the Fair Work Commission or the Ombudsman.
Free FairWork Mate tools for this
Talk to Liquid Employment Lawyers about this
Share a few details and their team will be in touch to talk it through. No obligation, and you decide whether to go further after that first conversation.
Liquid Employment Lawyers is an Australian employment law firm and FairWork Mate's paid referral partner, not free Fair Work advice. They discuss scope and any fees with you directly. FairWork Mate is not affiliated with the Fair Work Commission or the Fair Work Ombudsman. For free general guidance, use the tools above or call the Fair Work Ombudsman on 13 13 94.
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Common questions
My contract has a 12-month non-compete. Is it enforceable?
It depends on your role, what the employer is protecting, and the area and activities covered. Long non-competes on junior or mid-level staff usually fail. Shorter, targeted restraints on senior client-facing staff often succeed. The clause has to be read against your actual job.
Does the non-compete ban already apply?
No. It is an announced intention for 2027 aimed at workers under the high income threshold. Check FairWork Mate's tracker for the current status. Existing clauses are judged under the ordinary reasonableness test until any law commences.
Can my new employer be sued?
An injunction can be sought against a new employer who knowingly induces a breach, and breach letters are often sent to both. That is one reason to get the clause reviewed before you accept the new role rather than after you start.
Is Liquid Employment Lawyers free?
No. It is an Australian employment law firm and FairWork Mate's paid referral partner. Enquiring is free and there is no obligation. The free tools on this site cover the basics; restraints are outside the Fair Work Ombudsman's remit.
Official sources
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General information and estimates only — not legal, financial or tax advice. Always check your specific award, agreement or contract, or a qualified professional, before you rely on the result.
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