Non-Compete Clause Enforceability Check

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.)

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.

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.

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.

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.

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.

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.