I work in Australia earning below the high income threshold and my employment contract contains a 12-month non-compete clause that stops me working fo?

The situation

I work in Australia earning below the high income threshold and my employment contract contains a 12-month non-compete clause that stops me working for any competitor after I leave, with a cascading clause that shortens the period if a court finds 12 months too long. I understand the federal government released draft legislation in October 2026 that would prohibit non-compete clauses for employees earning below $190,100 and ban cascading restraints. Would my clause become unenforceable if the draft passes as proposed, could my employer face a penalty merely for including it, and what lawful alternatives, such as confidentiality or non-solicitation clauses, could an employer use instead?

Detailed Analysis

Based on the statutes provided, there is no current law that prohibits non-compete clauses or cascading restraints for employees earning below the high income threshold. The current high income threshold is a mechanism used to determine certain protections, such as whether an employee is protected from unfair dismissal^[2].

Regarding your specific situation, the draft legislation you mentioned from October 2026 is not reflected in the provided text of the Fair Work Act 2009. Therefore, under the current provided law, I cannot confirm if your clause would become unenforceable or if your employer would face penalties. The provided sections focus on other areas, such as the 'high income threshold' which is 'the amount prescribed by, or worked out in the manner prescribed by, the regulations'^[1]. This threshold is used to define certain categories of workers, but the provided text does not mention penalties for including non-compete clauses.

If the draft legislation is passed, it would represent a significant change to the legal framework. Currently, the law aims to provide a 'balanced framework for cooperative and productive workplace relations'. If the new laws are enacted, they would likely shift this balance by removing the ability of employers to restrict your movement to competitors based on your income level.

Regarding lawful alternatives, the provided statutes do not list specific permitted alternatives like confidentiality or non-solicitation clauses. However, the law does allow for various 'other terms and conditions of employment'^[3] to be included in contracts, provided they comply with the Act.

Because the outcome depends entirely on the future passage of draft legislation that is not yet part of the provided statutory text, the current legal status of your clause remains unsettled under these specific sections.

Statutory Citations

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