Millions of Australian workers will find it easier to move into a better job or even start their own business under a reform proposed in the 2025 federal budget.
The government has committed to abolishing non-compete clauses in job contracts for low- and mid-wage workers.
These are clauses which forbid people from going to a work for a competitor to their current employer, or from running a competing business of their own.
The government’s Competition Review found non-compete clauses had become a “common and growing feature of Australia’s labour market”.
They also contribute to stifled wages, especially for lower-paid workers.
“People shouldn’t need to hire a lawyer to take the next step in their career,” Treasurer Jim Chalmers said.
“Or permission from their old boss if they want to be their own boss, and turn an idea into a small business.”
The review found the clauses were in “indiscriminate” use across multiple industries, including childcare, construction, and hair-dressing.
The government will ban these clauses for workers earning less than $175,000 – the current high-income threshold listed in the Fair Work Act.
Businesses that work together to keep wages down, or who establish “no poach” agreements regarding hiring one another’s workers, are also in the firing line.
Banning non-compete clauses for high-income earners at a later date will also be a matter of consultation.
The government claimed the bans would affect about three million workers, and could lift wages by between two and four per cent, or an average of $2500.
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It could also increase annual GDP by $5 billion, boost productivity, and help reduce inflation, the government claimed.
The reforms will take effect from 2027, giving businesses and workers time to adjust.
