Non-Compete Clauses in Australia: Are They Enforceable & How to Navigate Them?

You’ve just been offered your dream job. Better pay, shorter commute, actual career progression. There’s just one problem—that non-compete clause buried in your current contract.

Can they actually stop you? Do you need to tell them where you’re going? What happens if you just… ignore it?

This guide cuts through the legal jargon to give you a practical framework for assessing your risk and, if needed, negotiating your way out.

Are Non-Compete Clauses Actually Legal in Australia?

Yes, they’re legal. But here’s the critical part most people miss: Australian courts presume non-compete clauses are invalid unless your employer can prove they’re “reasonably necessary” to protect a legitimate business interest.

That’s not a technicality. It’s the foundation of how these clauses work in practice.

Your employer wrote the contract. They benefit from it. So the burden falls on them to justify every restriction—the time period, the geographic scope, the activities covered. If they can’t demonstrate a genuine business reason (not just “we don’t want competitors hiring our people”), the clause fails.

This is why so many non-competes never get enforced. Employers know their clauses wouldn’t survive court scrutiny, so they rely on employees not knowing their rights.

The Enforceability Self-Check

Before you spiral into worst-case scenarios, run your clause through this quick assessment.

Geographic Scope

• Worldwide or “Australia-wide” restriction → Red flag (likely unenforceable)
• State-wide for a local role → Red flag
• Reasonable radius matching your actual client base → More likely enforceable

Time Period

• More than 12 months → Red flag (courts rarely uphold these)
• 6-12 months → Depends heavily on your seniority
• 3-6 months → Standard, more likely enforceable

Your Role

• Junior or administrative position → Red flag (hard to justify any restriction)
• Mid-level with no client ownership → Questionable
• Senior role with direct client relationships or trade secrets → More likely enforceable
• C-suite, partner, or key sales role → Most likely enforceable

What You Actually Know

• General industry knowledge only → Hard to enforce
• Specific client lists, pricing strategies, or proprietary methods → Strengthens their case

If you’ve ticked two or more red flags, there’s a reasonable chance your clause wouldn’t hold up if challenged. That doesn’t mean you should ignore it—but it does change how you approach the situation.

How to Legally Challenge or Negotiate a Restraint of Trade

Let’s be clear: this isn’t about “getting around” the law. It’s about understanding that many non-compete clauses are unenforceable as written, and your former employer often knows this.

The goal is to negotiate a clean exit, ideally with written confirmation that they won’t pursue the restriction.

Step 1: Secure Your New Offer First

Get the job offer in writing, ideally with a condition that you’ll need to resolve any restraint issues. Don’t resign until you have this locked in.

Step 2: Assess Your Specific Clause

Pull out your contract and identify exactly what’s restricted. Is it working for any competitor, or soliciting specific clients? The narrower the restriction, the more enforceable it is.

Step 3: Request a Waiver

Most employers, when approached professionally, will either waive the restriction entirely or confirm they won’t enforce it. They know litigation is expensive and uncertain.

Template: The Waiver Request

Subject: Request for Confirmation – Post-Employment Restrictions

Dear [Manager/HR Contact],

As I prepare to transition from my role at [Company], I wanted to discuss the restraint of trade provisions in my employment contract.

I’ve accepted a position with [New Company/or “another organisation”] in a [brief description of role]. Having reviewed my obligations, I believe this new role does not directly compete with [Company]’s core business, nor would it involve any use of confidential information or contact with [Company]’s clients.

I’d appreciate written confirmation that [Company] does not intend to enforce the non-compete provisions in relation to this specific opportunity. I’m happy to discuss any concerns you may have.

I’ve valued my time at [Company] and want to ensure a professional departure for everyone involved.

Kind regards, [Your name]

Template: The Reasonableness Challenge

If the clause is clearly overreaching, you can take a more direct approach.

Subject: Discussion – Restraint of Trade Provisions

Dear [Manager/HR Contact],

I’m writing regarding the restraint of trade clause in my employment contract, specifically the [12-month/nationwide/etc.] restriction on [describe restriction].

Having sought advice, I understand that Australian courts require such restrictions to be reasonable and necessary to protect legitimate business interests. Given my role as [your position] and the nature of my work, I have concerns about whether this restriction would be considered enforceable.

Rather than create uncertainty for either party, I’d welcome a discussion about modifying or waiving this provision. I’m committed to honouring my confidentiality obligations and have no intention of soliciting [Company]’s clients.

Would you be available to discuss this week?

Kind regards, [Your name]

The “Do I Have to Tell Them Where I’m Going?” Question

Generally, no. Unless your contract specifically requires you to disclose your next employer (some do), you’re under no obligation to share this information.

However, you must not:

• Take confidential information with you
• Solicit clients or employees while still employed
• Lie if directly asked (silence is fine; deception creates problems)

If you’re unsure whether your new role creates a genuine conflict, it’s often better to have the conversation upfront rather than have your former employer find out through LinkedIn three weeks later.

The Real Risks: What Happens if You Breach?

Let’s talk about what actually happens—not the worst-case legal theory, but the practical reality.

The Consequence Tiers

Tier 1: The Angry Letter (Most Common)

You receive a strongly worded letter from their lawyers demanding you cease employment immediately. This is designed to scare you. For mid-level employees without access to sensitive information or key clients, this is often where it ends—especially if you respond professionally.

Tier 2: Financial Consequences

Your former employer withholds final payments: unused leave, unpaid commissions, bonuses. This is legally questionable (they can’t just refuse to pay what you’ve earned), but it happens. You may need to pursue these through Fair Work or civil claims.

Tier 3: Injunction (Rare but Serious)

The employer goes to court seeking an urgent order to stop you working. This is expensive, time-consuming, and employers only pursue it when:

• You’re genuinely senior (C-suite, partner, key account manager)
• You have access to trade secrets or strategic information
• You’re taking clients or staff with you
• The financial stakes justify the legal costs

Tier 4: Damages Claim (Very Rare)

They sue you for financial losses caused by your breach. This requires them to prove actual, quantifiable damage—not just that you left for a competitor.

If You Receive a Letter of Demand

Don’t ignore it. Don’t panic. Do respond—ideally with legal advice.

Template: Dispute Response

Dear [Lawyer’s name],

I acknowledge receipt of your letter dated [date] regarding my employment with [New Company].

I dispute that my new role constitutes a breach of the restraint provisions in my former contract with [Former Employer]. Specifically:

[Briefly outline why—different client base, different services, no use of confidential information, unreasonable scope of restriction, etc.]

I do not intend to breach any legitimate confidentiality obligations, nor do I intend to solicit [Former Employer]’s clients or staff.

Should [Former Employer] wish to pursue this matter, I am prepared to defend my position. However, I would welcome a practical resolution that avoids unnecessary legal costs for both parties.

Kind regards, [Your name]

The Future of Non-Competes in Australia (2026-2027 Outlook)

The Australian Government’s Competition Review has been examining non-compete clauses as part of broader reforms to promote labour mobility and competition. While there’s been discussion of following the US approach (where the FTC moved to ban most non-competes), no legislative changes have been confirmed.

The current trajectory suggests:

• Continued judicial scepticism of broad restrictions
• Possible legislative reform limiting non-competes for lower-income workers
• Increased focus on whether clauses genuinely protect business interests or just restrict competition

For now, the common law “reasonableness” test remains the framework. But employers relying on aggressive non-compete clauses should be aware the landscape may shift.

Can I Sue for Stress and Anxiety?

This question comes up often. The short answer: not for the non-compete clause itself.

If your former employer is using the threat of enforcement as harassment—repeated threatening letters, contacting your new employer with false claims, making public accusations—that may cross into different legal territory (potentially workplace bullying if it started before you left, or tortious interference).

But simply enforcing a contractual clause, even aggressively, isn’t grounds for a stress-based claim. If you’re finding the situation genuinely distressing, speak with a lawyer about your options and a GP about support.

For Employers: Protecting Your Business Without Blocking Talent

If you’re an employer reading this, you might be concerned about the apparent weakness of non-compete clauses. Here’s the reality: poorly drafted, overly broad restrictions don’t protect you—they just create false confidence.

Alternatives That Actually Work

The Cascading Clause Approach

Smart employment lawyers draft restraint clauses with cascading provisions. Instead of a single restriction, the clause includes multiple alternatives:

“The employee must not work for a competitor within 50km for 12 months, or alternatively within 25km for 6 months, or alternatively within 10km for 3 months.”

If a court finds the first restriction unreasonable, they can enforce the next tier down rather than striking out the entire clause. This significantly increases your chances of retaining some protection.

What Actually Protects Your Business

The honest answer? Good management, competitive compensation, and treating people well. Employees who feel valued rarely leave to join competitors, and when they do, they’re less likely to take clients or badmouth you.

Non-competes are a backstop, not a strategy. If you’re relying on contractual restrictions to keep your business safe, you’ve got bigger problems than your legal drafting.

Key Takeaways

For Employees:

• Non-compete clauses are presumed invalid unless your employer can prove they’re reasonable
• Most clauses are never enforced—employers rely on employees not knowing their rights
• You can often negotiate a waiver, especially if you approach it professionally
• Don’t ignore legal letters, but don’t panic either
• Get specific legal advice if significant money or career progression is at stake

For Employers:

• Overly broad clauses give you false confidence
• Non-solicitation and confidentiality clauses are often more effective
• Use cascading provisions to maximise enforceability
• Gardening leave is the most reliable protection for senior departures
• Retention starts with culture, not contracts

This guide provides general information about non-compete clauses in Australia. It’s not legal advice for your specific situation. If you’re facing enforcement action or need to draft enforceable restrictions, consult employment lawyers at Fair Workplace Solutions who can assess your particular circumstances.