Following a Treasury review, the Federal Government has announced it will amend the Fair Work Act 2009 (Cth) to restrict the enforceability of post-employment restraints in employment contracts.

What kind of restraints will be affected?

Restraint clauses that seek to prevent employees moving to a competitor or setting up a competitive business after they cease employment will be deemed unenforceable. At this stage, the changes will not affect restraints against post-employment dealings with clients or suppliers of their former employer, although this may change after consultation about the proposed new laws.

Competition laws will also be adjusted to prevent clauses that restrict poaching of staff.

When will it apply?

It will apply to new employment contracts entered into in 2027.

Will it apply to all employment contracts?

No, only those made with employees whose annual earnings under the contract will be below the high-income threshold (currently $175,000, but this will be a higher figure in 2027).

Will there be exceptions?

Most likely, exceptions will be developed in the course of consultation. Presumably, there will be an argument that in some cases, working for a competitor will be unfair if the first employer has entrusted the employee with valuable information or training, such as in the case of a trainee pilot.