In addition to banning non-compete clauses, the government plans to tackle other anti-competitive practices that restrict worker pay and conditions.

In a significant move announced in the Federal Budget on March 25, 2025, Treasurer Jim Chalmers revealed plans to ban non-compete clauses for workers earning less than $175,000, impacting over 3 million Australians.

Chalmers highlighted that these clauses currently hinder many workers from pursuing better-paying opportunities or starting their own businesses, contributing to stagnant wages and limiting job mobility.

Currently, about 20% of Australian workers are bound by non-compete agreements, which may suppress their wages by an estimated $2,500 annually.

Research indicates that the proposed changes could raise wages for affected workers by up to 4%, translating to approximately $2,500 more per year for the median worker.

The proposed legislation is set to take effect in 2027 after consultations and will also ban agreements preventing companies from poaching each other's employees.

This ban will primarily affect lower-income workers, covering approximately 80% of the workforce, and aims to enhance job mobility and productivity.

The Productivity Commission estimates that abolishing these clauses could inject around $5 billion into the economy and significantly boost individual wages.

However, some industry leaders, including the Australian Chamber of Commerce and Industry, have criticized the ban as overly aggressive, suggesting it may misalign with the Budget's objectives.

The government intends to further review non-compete clauses for higher-income workers and other restrictive agreements that limit employee mobility.

A report from the e61 Institute found that workers bound by non-compete clauses earn four percent less and experience longer gaps between jobs due to weakened bargaining power.

Overall, the ban is expected to empower workers to pursue better job opportunities without legal hindrances, fostering a more dynamic labor market.