Non-Compete Clause Enforceability Check
Will your non-compete hold up? Check it against the current common-law reasonableness test (duration, geography, legitimate interest) and the proposed 2027 ban for workers under $190,100.
Last verified: 2 August 2026Are non-compete clauses enforceable in Australia?
Often they are not. Under Australian common law a post-employment restraint is presumed void as contrary to public policy. It only binds you if the employer can prove it is reasonable — both between the parties and in the public interest — and goes no further than is reasonably necessary to protect a legitimate business interest. The onus sits with the employer, not the worker. A non-compete that overreaches on what it stops you doing, how long it runs, or where it applies is unenforceable. New South Wales is the one statutory exception: the Restraints of Trade Act 1976 (NSW) lets a court enforce a restraint to the extent it is not against public policy.
That common-law test is what applies today, whatever you earn. The widely reported “ban” is a proposed reform for 2027 — it is not yet law. Both are explained below.
The reasonableness test: what courts actually weigh
Reasonableness is assessed as at the date you signed the contract. Three questions decide it:
- Is there a legitimate business interest? Trade secrets, confidential information, customer connection/goodwill, or a stable trained workforce can be protected. Your general skills, experience and know-how cannot — you take those with you to any job.
- Is the scope no wider than necessary? The activities restrained, the duration, and the geographic area must each be tailored to that interest. A clause stopping you from any work in a whole industry, Australia-wide, for years is the classic over-reach.
- Is it in the public interest? Restraints that simply stop ordinary workers earning a living fail here.
Where part of a clause is unreasonable, a court may sever (“blue-pencil”) the offending words, which is why employers draft cascading restraints — e.g. 12/9/6 months, or Australia/NSW/Sydney — hoping the smallest tier survives. A court will not, however, rewrite a clause to make it reasonable.
What duration is usually reasonable?
There is no fixed limit — it depends on the interest protected and how long it stays valuable. As a rough guide drawn from decided cases:
| Role / industry | Typical defensible duration |
|---|---|
| Retail / hospitality | Rarely beyond 3 months |
| Tech / trades | Around 6 months |
| Professional services / sales | Up to 12 months |
| Senior executives (genuine confidential access) | Sometimes up to 24 months |
Indicative norms only — every clause turns on its own facts. Beyond the norm for the role, courts read the clause down or strike it out.
Non-compete vs non-solicitation vs confidentiality
These are different clauses with different odds of holding up. They are often bundled together in a contract, and a court can strike one while keeping the others.
| Clause | What it restrains | Enforceability |
|---|---|---|
| Non-compete | Working for a competitor at all | Broadest — hardest to enforce |
| Non-solicitation / non-poach | Approaching the employer’s clients or recruiting its staff | Narrower — easier to enforce |
| Confidentiality / NDA | Using or disclosing specific confidential information | Most enforceable |
The proposed 2027 ban targets non-competes only; non-solicitation and no-poach arrangements are being considered separately by Treasury. Check the confidentiality side of your contract with the NDA Enforceability Check.
The proposed 2027 non-compete ban (announced, not yet law)
On 25 March 2025, as part of the 2025-26 Federal Budget, the Government announced it intends to ban non-compete clauses for workers earning under the Fair Work Act high income threshold — currently $190,100 (the threshold from 1 July 2026, indexed each year). It is proposed to commence in 2027. Treasury released a consultation paper on the reforms in 2025; legislation would amend the Fair Work Act 2009 (Cth).
- Who it would cover: the Government estimates around 3 million workers earning under the high income threshold — roughly the lower- and middle-paid majority of the workforce.
- What is excluded: non-competes tied to the genuine sale of a business are not part of the announced ban.
- Related reforms: the same package flags closing loopholes that allow no-poach and wage-fixing arrangements between businesses.
Until a Bill passes, treat the ban as a flagged future change rather than a current right. If you earn under the threshold today, your non-compete is still judged on the reasonableness test, not the proposed ban.
Frequently asked questions
Are non-compete clauses enforceable in Australia right now?
Sometimes. At common law, post-employment restraints are presumed void as contrary to public policy. The employer carries the onus of proving the clause is reasonable — both between the parties and in the public interest — to protect a legitimate business interest. A non-compete wider than reasonably necessary in what it stops you doing, how long it lasts, or where it applies is unenforceable. (NSW is the exception: the Restraints of Trade Act 1976 (NSW) lets a court enforce a restraint to the extent it is not against public policy.)
What is the proposed 2027 non-compete ban?
On 25 March 2025, as part of the 2025-26 Federal Budget, the Government announced it intends to ban non-compete clauses for workers earning under the Fair Work Act high income threshold ($190,100 from 1 July 2026, indexed annually). It is proposed to commence in 2027. This is an announced policy, not yet law — Treasury ran a consultation paper in 2025 and legislation has not been introduced or passed. The ban would not extend to non-competes tied to the genuine sale of a business.
Is my non-compete valid if I earn under $190,100?
Today it is still assessed under the common-law reasonableness test, regardless of your salary. The proposed 2027 ban, if legislated as announced, would void non-competes for workers under the high income threshold ($190,100 in 2026-27) — but until it passes, a reasonable, narrowly-drafted restraint can still bind a lower-paid worker. Treat the ban as a flagged future change, not a current protection.
What does the common-law reasonableness test look at?
Courts weigh three things: (1) whether the clause protects a legitimate business interest — trade secrets, confidential information, customer connection/goodwill, or a stable workforce; general skills, experience and know-how are NOT a protectable interest; (2) whether the scope, duration and geographic area are no wider than reasonably necessary to protect that interest; and (3) whether the restraint is in the public interest. Reasonableness is judged as at the date the contract was signed.
What duration of non-compete is enforceable?
There is no fixed rule — it must be reasonable for the interest being protected. As a rough guide drawn from decided cases: retail and hospitality rarely beyond 3 months; tech and trades around 6 months; professional services and sales up to 12 months; senior executives with genuine access to confidential information sometimes up to 24 months. Beyond the norm for the role, courts will read the clause down or strike it out.
What's the difference between a non-compete, a non-solicitation and a confidentiality clause?
A non-compete stops you working for a competitor at all — the broadest and hardest to enforce. A non-solicitation (or non-poach) clause only stops you approaching the employer's clients or recruiting its staff — narrower and easier to enforce. A confidentiality/NDA clause protects specific confidential information and is generally the most enforceable. The proposed 2027 ban targets non-competes; non-solicitation and no-poach arrangements are being looked at separately by Treasury. Courts can sever an unenforceable non-compete while leaving non-solicitation and confidentiality terms standing.
What should I do if my employer threatens to enforce a non-compete?
Get legal advice before you act. Because the employer must prove the clause is reasonable and many are over-drafted, a letter from an employment lawyer often resolves the matter without litigation. To actually stop you working, the employer has to seek an injunction in the relevant court — costly and uncertain for them. This tool gives an indication only; it is not legal advice.
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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.