The Hon Andrew Leigh MP
Assistant Minister for Competition, Charities, and Treasury
Assistant Minister for Employment
Opinion Piece
Want to quit your job? Your contract may be keeping you prisoner
Published in Australian Financial Review
29 March 2025
When Othelia decided to leave her job in property management, she thought she was just changing employers. Instead, she found herself cornered. Her boss told her that if she wanted to stay in the industry, she’d have to leave town. Othelia was 21, living in a regional community, and had no family support. Her choice? Stay in a job that made her miserable, or risk having no income at all.
Jasper was in a similar bind. He’d been coaching kids’ sport part-time for three years. He wasn’t in charge of marketing or finances – just teaching kids how to kick a ball. But buried in his contract was a clause banning him from working for a competitor for six months after he left. When he resigned, his boss made it clear: try to coach anywhere else, and there’d be consequences.
I’ve changed the names to protect their privacy, but these are real cases. They are among more than three million Australian workers – one in five employees – caught in the grip of non-compete clauses. Once reserved for senior executives with access to sensitive information, they’re now everywhere: in the contracts of construction workers, hairdressers, personal trainers, security guards.
They’re clauses that quietly lock people out of their own careers.
Non-compete clauses don’t just stop people moving to a better job – they stop people moving, full stop. They trap workers in jobs they’ve outgrown, or force them out of their own industries. For many, it means shelving skills, starting again, or staying stuck. They make quitting a job feel like breaching parole.
And the impact goes well beyond frustration. Research shows that workers with non-compete clauses earn around 4% less than those without them. That’s $2,500 a year less for someone on the average wage. That’s not a rounding error – that’s a drag on paypackets and a choke on economic momentum.
There’s another cost, too: lost ideas. When people can’t move between firms, knowledge gets trapped. Innovation slows. New businesses don’t start. Aspiration fades. For an economy built on know-how and adaptability, that’s dead weight.
Some of the stories are outrageous. A teenager on minimum wage threatened with legal action for working across the road. A migrant worker pressured into signing a 12-month non-compete without translation, and told he’d be sued if he worked elsewhere. These are clauses used not to protect secrets, but to scare people.
That’s why the Australian Government is stepping in. In the 2025 Budget, Treasurer Jim Chalmers announced a ban on non-compete clauses for workers earning under $175,000, beginning in 2027. Economic analysis shows it will boost productivity, raise wages and reduce inflation.
The change is about fairness. Non-compete clauses punish ambition. They punish initiative. They tell people they can’t put their skills to work unless they get permission. In a modern economy, that’s indefensible.
The reform will also put a stop to another quiet distortion: firms using contracts to dodge competition. The Government will also crack down on wage-fixing and no-poach agreements – covert deals between companies not to hire each other’s staff. These practices turn labour markets into closed shops. The reforms will prise them open.
To be clear, employers still have tools to protect what matters. Intellectual property law. Confidentiality clauses. Non-disclosure clauses. Non-solicitation clauses. Clauses that stop people from simultaneously working for two companies. What’s being cut away is not legitimate protection – but overreach.
We have already engaged with stakeholders though an issues paper. We will continue to consult as we draft the legislative change.
Several years ago, when I first began talking about the problem of non-competes, some critics said the clauses were rare, applying only to top executives. But the research shows that isn’t true. Non-competes are a wet blanket across the economy, affecting millions, including fast-food workers, retail employees and nurses. They don’t just apply in the boardroom, they apply in the mailroom too.
Work is how Australians contribute, create, and get ahead. The freedom to leave a job – without being locked out of your industry – isn’t a luxury. It’s a basic condition of dignity. For years, non-compete clauses have operated in the shadows: legally dense, brutally enforced, rarely challenged. That time is over.
This reform clears the path for millions of workers to step into new roles, start new ventures, or simply take back control over their working lives. It doesn’t just free individuals – it unlocks energy across the economy.
In short: if you want a more dynamic, fair and forward-moving country, let people move. The era of silent shackles is ending.
Andrew Leigh is the Assistant Minister for Competition.