Andrew Leigh

MEDIA RELEASE

NEW DATA SHOWS 1 IN 5 AUSTRALIAN EMPLOYERS USED NON-COMPETE CLAUSES

The Australian Bureau of Statistics (ABS) has today released results from a survey of employers on the use of restraint clauses, revealing that 1 in 5 Australian businesses (21 per cent) used non-compete clauses for at least some of their employees in 2023.

Non-compete clauses are conditions of employment that restrict an employee’s future ability to work for a competitor or start their own business. There is growing concern internationally that these clauses are increasingly restricting workers from shifting to better paying jobs and may be hampering business innovation and productivity.

During the Coalition’s nine years in office, productivity growth stagnated and real wages flatlined. Employment terms that make it harder for workers to move to a better job may be acting as a drag on wages and economic dynamism.

Key findings from the new ABS survey include:

• Around 70 per cent of businesses that used non-compete clauses applied them to more than three-quarters of their employees. The use of these clauses was not limited to upper-level managers or executives but included all workers.
• Non-compete clauses were most common in financial services (40 per cent of employers), and rental, hiring and real estate services (33 per cent of employers).
• Businesses with more than 1000 employees were twice as likely (40 per cent) to have employees with non-compete clauses than those with fewer than 20 employees.
• Almost half (47 per cent) of employers used some kind of restraint on employees, such as a non‑disclosure clause or a clause restricting solicitation of customers or co-workers.
• More businesses reported increasing their use of restraint clauses than decreasing their use of restraint clauses.

These findings are in line with 2023 research by the e61 Institute, which surveyed employees (rather than employers). That research found that 1 in 5 Australian workers had a non-compete clause, including many low wage workers. Non-compete clauses have been found to apply to hairdressers, early childhood workers, security guards and yoga instructors.

Reinforcing the earlier surveys and anecdotal evidence, today’s results confirm that non-compete clauses are prevalent across the Australian economy, and looking into the use of these clauses is a top priority of the Albanese Government’s Competition Taskforce.

To continue to build the evidence base, Treasury will release an issues paper for public consultation in April. In addition, the ABS will be linking today’s data with broader ABS business-side microdata, enabling a deeper understanding of how non-compete clauses are affecting job mobility, wages and business dynamism.

The 2023 data on Restraint Clauses is available on the ABS website.