Are employee non-competes enforceable in Victoria?
Only so far as they are reasonable. A post-employment non-compete is treated as a restraint of trade, which the courts presume is void as contrary to public policy unless the employer shows it goes no further than is reasonably necessary to protect a legitimate business interest . The starting point is presumptive invalidity, and the burden sits with the employer to justify the clause .
Victoria is not a per se ban jurisdiction, and it has no statute that sets fixed numeric limits on duration or area. It is a reasonableness jurisdiction built entirely on the common-law restraint-of-trade doctrine. Every post-employment covenant is presumptively unenforceable, and the employer must prove that the restriction on the employee's freedom to work is reasonable .
Courts apply the doctrine more strictly to employment covenants than to covenants in commercial deals, because an employer is not entitled to be protected from ordinary competition by a former employee . The foundational High Court authorities — Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co and Buckley v Tutty — establish the same framework that Victorian courts continue to apply. The sections that follow work through whether a court can narrow an overbroad clause, why cascading clauses do not guarantee enforcement, what counts as a legitimate interest, how reasonableness of scope is judged, what happens when the employer is the party in breach, and the open question of whether a breach can extend the restraint.
Sources for this answer
Case law · 2016-12-20
A.1 Just Group Ltd v PeckJust Group Ltd v Peck supports the rule that a contractual restraint of trade is presumed void as contrary to public policy unless special circumstances rebut the presumption.
A term in a contract, which is a restraint of trade ('a restraint clause'), is presumed to be void as contrary to public policy.
See Just Group Ltd v Peck [2016] VSCA 334 (the Court).
Case law · 1950-09-29
A.2 Lindner v Murdock's GaragePDFAll restraints of trade are presumptively invalid and may be upheld only if the party enforcing them shows they are reasonably necessary to protect a legitimate interest and not contrary to the public interest.
Any contractual restraint of trade is prima facie unlawful and invalid.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Kitto J).
Case law · 1950-09-29
A.3 Lindner v Murdock's GaragePDFThe employer bears the onus of proving circumstances showing the restriction on the employee's freedom to work is reasonable.
The onus was on the plaintiff firm to prove circumstances showing that the restriction on the defendant's freedom to work was reasonable.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Case law · 1950-09-29
A.4 Lindner v Murdock's GaragePDFAn employer has no protectable interest in freedom from competition by a former employee as such and must be prepared to face that competition; only a recognised interest can support a restraint.
An employer must be prepared to face the competition of a former employee if it comes.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Can a Victorian court narrow an overbroad non-compete?
Only by deleting severable words — not by reading the clause down or rewriting it. Victoria has no statute giving a court power to enforce an overbroad restraint to a reasonable extent. The only narrowing tool is the common-law blue-pencil rule: a court can strike out grammatically severable words, but it cannot read an unduly wide clause down to preserve its validity . Adding words to confine a restraint would remake the clause rather than enforce it, which a court will not do .
The practical consequence is that severance is not a safety net. If the words that make a restraint unreasonable cannot simply be crossed out without changing the meaning of what remains, the whole restraint fails. A court will not reconstruct the bargain to save a clause the employer drafted too widely .
Just Group Ltd v Peck is the cautionary example. The restraint was an elaborate, multi-limb clause, yet the Court of Appeal held that the first limb went further than the employer's legitimate interests required and was therefore invalid . The Court refused to read that limb down, because doing so would impermissibly rewrite the restraint rather than give effect to its meaning , and it declined to sever the offending parts; the covenant and words were not severed and the appeal was dismissed . The lesson is that careful, layered drafting does not substitute for drafting each restraint no wider than the interest actually requires.
Because a Victorian court will not read an overbroad covenant down and may refuse to sever it, an unreasonable restraint is more likely to fall entirely than to be trimmed by the court. Draft scope, geographic area, and duration to the minimum the legitimate business interest actually requires, so the clause is defensible exactly as written rather than dependent on the court excising words .
Sources for this answer
Case law · 2016-12-20
B.1 Just Group Ltd v PeckA court has no power to read an unduly wide restraint down to preserve its validity; the common-law tool is excision of severable words, not narrowing the clause.
However, it is not permissible for a court to read down an unduly wide clause in order to preserve its validity.
See Just Group Ltd v Peck [2016] VSCA 334 (the Court).
Case law · 2016-12-20
B.2 Just Group Ltd v PeckReading an overbroad restraint down in the way the employer proposed would impermissibly rewrite the clause to preserve its validity rather than give effect to its meaning.
to read down the first limb, in the manner suggested, would be to, impermissibly, rewrite the restraint clause in order to preserve its validity
See Just Group Ltd v Peck [2016] VSCA 334 (the Court).
Case law · 2016-12-20
B.4 Just Group Ltd v PeckThe first limb of the restraint exceeded what was necessary to protect the employer's legitimate interests and was therefore invalid.
The first limb of the restraint clause exceeds what is necessary for the protection of the legitimate interests of Just Group and is therefore invalid.
See Just Group Ltd v Peck [2016] VSCA 334 (the Court).
Case law · 2016-12-20
B.3 Just Group Ltd v PeckA court will not sever an overbroad restraint where doing so would amount to making a new agreement for the parties.
It is not for the Court to make a new agreement for the parties.
See Just Group Ltd v Peck [2016] VSCA 334 (the Court).
Case law · 2016-12-20
B.5 Just Group Ltd v PeckThe Court of Appeal granted leave to appeal but dismissed the appeal, leaving the unreasonable restraint unenforced and unsevered.
We will grant leave to appeal and dismiss the appeal.
See Just Group Ltd v Peck [2016] VSCA 334 (the Court).
Are cascading or ladder restraint clauses valid in Victoria?
They are a common drafting device, but they are not a guarantee. A cascading clause sets out a menu of progressively narrower combinations of period and area, each expressed as a separate, severable restraint, so that if the widest is unreasonable a narrower one can still stand. Describing that device, the Court of Appeal in Wallis Nominees (Computing) Pty Ltd v Pickett explained the commonly used cascading form precisely in order to point out that the clause before it was NOT drafted that way — its supposed alternative was not a stand-alone option but referred back to the first option, so the clause was not severable . The device works only if each rung is genuinely independent and capable of being struck out without rewriting the rest, and only if each rung is itself reasonable. Where the words that make a restraint unreasonable cannot simply be crossed out without changing the meaning of what remains, severance fails and the restraint falls.
Two parts have to be satisfied before a court will sever. The impugned part must be capable of being removed as if crossed out with a blue pen — a court can remove words from a restraint clause but not rewrite it — and the part removed must be an independent covenant whose excision does not change the meaning of what is left . A clause that reads as a single covenant, even if drafted with apparent alternatives, will not satisfy that test.
“a court can remove words from a restraint clause but not rewrite it.”
Just Group Ltd v Peck shows that even a multi-limb restraint can fail this analysis: the Court of Appeal declined to sever the offending parts and dismissed the appeal, because severing the clause down to what the employer wanted would have amounted to making a new agreement for the parties .
A cascading clause is not a safety net. Each rung should be drafted as a genuinely independent covenant that is reasonable on its own, not as a mechanical ladder of every possible permutation, because a court can only delete severable words and will not rewrite or read the clause down to rescue an overbroad rung .
Sources for this answer
Case law · 2013-02-20
C.1 Wallis Nominees (Computing) Pty Ltd v PickettIn describing what a cascading clause is — the commonly used form that starts with the broadest possible restraint and then provides increasingly narrow alternatives, each one standing alone — the Court of Appeal observed that the clause before it was NOT in that form, because its alternative option was not stand-alone but referred back to the first option.
the commonly used form of a cascading clause where it starts with the broadest possible restraint then provides increasingly narrow alternatives, each one standing alone.
See Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 (Warren CJ and Davies AJA).
Case law · 2013-02-20
C.2 Wallis Nominees (Computing) Pty Ltd v PickettSeverance requires that the impugned words can simply be crossed out with a blue pen; a court can remove words from a restraint clause but cannot rewrite it.
a court can remove words from a restraint clause but not rewrite it.
See Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 (Warren CJ and Davies AJA).
Case law · 2016-12-20
C.3 Just Group Ltd v PeckA court will not sever an overbroad restraint where doing so would amount to making a new agreement for the parties, so a multi-limb clause is not a guaranteed safety net.
It is not for the Court to make a new agreement for the parties.
See Just Group Ltd v Peck [2016] VSCA 334 (the Court).
Case law · 2016-12-20
C.4 Just Group Ltd v PeckA court has no power to read an unduly wide restraint down to preserve its validity, so each rung of a cascade must be reasonable on its own.
However, it is not permissible for a court to read down an unduly wide clause in order to preserve its validity.
See Just Group Ltd v Peck [2016] VSCA 334 (the Court).
What legitimate interest must an employer show to enforce a Victorian non-compete?
A protectable business interest — not a mere wish to avoid competition. An employer cannot restrain a former employee simply because the new employer is a rival; it must be prepared to face that competition if it comes . The interests the law recognises are the employer's trade connection with its customers and the goodwill of the business — together with genuine trade secrets and confidential information. In Wallis Nominees (Computing) Pty Ltd v Pickett the Court of Appeal found that the employer did have a legitimate interest in its goodwill in its customers — its customer connections, which may include knowledge of and influence over its customers — even though it went on to hold the particular clause unreasonable. An employee's own general skill, experience, and know-how are the employee's to use.
Identifying the interest is not enough on its own; the restraint must do no more than is reasonably necessary to protect it . In Wallis Nominees (Computing) Pty Ltd v Pickett the Court of Appeal accepted that the employer did have a legitimate interest in protecting its customer connections, but still held the restraint void because it went further than that interest required and was unreasonable in both extent and duration . The practical point for drafters is that the protectable interest has to be real and the restraint has to be tied to it; a clause aimed at competition by itself, rather than at a recognised interest, is invalid.
A clause that simply bars a former employee from joining or starting a competing business, without tying the restraint to a specific protectable interest, is the weakest position. Identify the actual interest — the customer connection, the goodwill, or the genuine trade secrets — and draft the restraint no wider than is reasonably necessary to protect it, because a restraint that does more than that interest requires is unreasonable and void .
Sources for this answer
Case law · 1950-09-29
D.1 Lindner v Murdock's GaragePDFAn employer has no protectable interest in freedom from competition by a former employee as such and must be prepared to face that competition; only a recognised interest such as trade connection or confidential information can support a restraint.
An employer must be prepared to face the competition of a former employee if it comes.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Case law · 2013-02-20
D.2 Wallis Nominees (Computing) Pty Ltd v PickettThe interest the employer (DWS) advanced was its goodwill in its customers — its customer connections, which may include knowledge of and influence over its customers — and the Court of Appeal found DWS did have a legitimate interest of that kind, though it ultimately held the clause unreasonable in extent and duration.
The legitimate interest alleged by DWS is its goodwill in its customers, the essence of which is its customer connections which may include knowledge of, and influence over, its customers.
See Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 (Warren CJ and Davies AJA).
Case law · 2013-02-20
D.3 Wallis Nominees (Computing) Pty Ltd v PickettEven where a legitimate interest exists, the restraint must do no more than is reasonably necessary to protect that interest.
The test is whether the restraint does more than what is reasonably necessary to protect the employer's legitimate interest.
See Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 (Warren CJ and Davies AJA).
Case law · 2013-02-20
D.4 Wallis Nominees (Computing) Pty Ltd v PickettA restraint can be void even where a legitimate interest exists, if it goes further than necessary; here the clause was unreasonable in both extent and duration.
we conclude that while DWS did have a legitimate interest in restraining Mr Pickett, the clause was unreasonable having regard to both its extent and to its duration.
See Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 (Warren CJ and Davies AJA).
How long and how wide can a Victorian non-compete be?
There is no statutory limit; reasonableness is decided case by case on the activity restrained, the geographic area, the duration, and the employee's seniority and actual customer influence. The Court of Appeal has held that whether a legitimate interest exists is assessed as at the date the contract was entered into, not by hindsight , and as a general matter the restraint's reasonableness is likewise tested by reference to that date rather than to how things later turned out. A geographic area wider than the employer's business reasonably requires, or a period longer than is needed to protect the interest, is likely to be unreasonable .
Because the limits are judge-made, there is no fixed ceiling to anchor a covenant, and the analysis cuts in both directions. In Lindner v Murdock's Garage the High Court held an area covenant void because the area it covered was wider than the employer's business reasonably required . In Wallis Nominees (Computing) Pty Ltd v Pickett the Court of Appeal held the restraint unreasonable in both extent and duration even though the employer did have a legitimate interest, which shows that an over-long or over-wide clause fails on its own terms regardless of the interest behind it .
On duration, the question is what period is reasonably necessary to protect the interest — for a customer-connection interest, commonly how long it takes for the former employee's influence over clients to fade or for the employer to cement its own connection. As a general matter, longer periods and wider areas attract closer scrutiny, and the employer carries the onus of justifying whatever it has chosen .
Sources for this answer
Case law · 2013-02-20
E.1 Wallis Nominees (Computing) Pty Ltd v PickettThe assessment of whether a legitimate interest exists is made at the time the contract is entered into, not with hindsight.
The assessment of whether a legitimate interest exists is to be assessed at the time the contract is being entered into.
See Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 (Warren CJ and Davies AJA).
Case law · 1950-09-29
E.2 Lindner v Murdock's GaragePDFA restraint whose geographic area is wider than reasonably necessary to protect the employer's business is unreasonable and void; here the area covered was held unreasonably wide.
I think it must be held that the area was unreasonably wide.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Case law · 2013-02-20
E.3 Wallis Nominees (Computing) Pty Ltd v PickettA restraint can be unreasonable in both extent and duration even where a legitimate interest exists, so scope and length each have to be justified.
we conclude that while DWS did have a legitimate interest in restraining Mr Pickett, the clause was unreasonable having regard to both its extent and to its duration.
See Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 (Warren CJ and Davies AJA).
Case law · 1950-09-29
E.4 Lindner v Murdock's GaragePDFThe employer bears the onus of proving circumstances showing the restriction on the employee's freedom to work is reasonable, including its area and duration.
The onus was on the plaintiff firm to prove circumstances showing that the restriction on the defendant's freedom to work was reasonable.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Do paid restraints, garden leave, and fresh consideration help in Victoria?
They can strengthen an employer's position, but as a general matter they do not displace the reasonableness requirement. As a general principle of restraint-of-trade law, a restraint the employee is paid to observe can weigh against the argument that the clause stops the employee earning a living, and garden leave — where the employee stays employed and paid through the notice period while bound by duties of fidelity — is generally assessed more flexibly than a post-termination restraint. These are general principles rather than rules drawn from any on-point Victorian decision in the cases discussed here, and none of these features converts an overbroad covenant into a reasonable one: the restraint must still do no more than is reasonably necessary to protect a legitimate interest .
For mid-employment restraints — covenants introduced after the employee is already on foot — the practical concerns, as a general matter, are fresh consideration and reasonableness assessed at the time the new clause is agreed. Victorian courts test whether a legitimate interest exists as at the date the contract is entered into , and the restraint's reasonableness is generally tested by reference to that same date, so a restraint bolted on later is generally judged on the circumstances then, not on the original hiring. A generously remunerated, fixed-term garden-leave arrangement for a senior person can be enforceable as a general matter, but it remains subject to the same underlying reasonableness scrutiny rather than being automatically valid.
Sources for this answer
Case law · 2013-02-20
F.1 Wallis Nominees (Computing) Pty Ltd v PickettPaid restraints and garden leave do not displace the core test: the restraint must do no more than is reasonably necessary to protect the employer's legitimate interest.
The test is whether the restraint does more than what is reasonably necessary to protect the employer's legitimate interest.
See Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 (Warren CJ and Davies AJA).
Case law · 2013-02-20
F.2 Wallis Nominees (Computing) Pty Ltd v PickettWhether a legitimate interest exists is assessed at the time the contract is entered into, which matters for restraints introduced mid-employment.
The assessment of whether a legitimate interest exists is to be assessed at the time the contract is being entered into.
See Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 (Warren CJ and Davies AJA).
What if the employer repudiated the contract or wrongfully dismissed the employee?
The restraint may fall away. Where the employer's own wrongful conduct ends the employment, a court will generally not enforce a post-employment restraint against the employee. The Court of Appeal has stated that, over more than a century, courts have held a restraint clause unenforceable against an employee whose employment ends through the employer's wrongful conduct — including wrongful dismissal or the employee's acceptance of the employer's repudiatory conduct .
This is grounded in equity as well as contract. A party seeking an injunction to enforce a restraint must itself have performed its side of the bargain; he who comes to equity must do equity . An employer that has repudiated the contract and had that repudiation accepted by the employee is in no position to insist on the restraint. The Court of Appeal noted that no reported case in a superior court in Australia or England has enforced a restraint against a former employee in those circumstances .
The employer already bears the onus of proving the restraint reasonable before any question of its own breach arises . On top of that, an employer that terminates abruptly — without giving contractual notice or paying in lieu — or that otherwise repudiates the contract risks losing the very restraint it wants to rely on, because a restraint clause is not enforceable against an employee whose employment ends through the employer's wrongful conduct . Before suing to enforce a covenant, confirm that the termination itself complied with the contract.
Sources for this answer
Case law · 2017-07-07
G.1 Crowe Horwath (Aust) Pty Ltd v LooneA restraint clause is not enforceable against an employee whose employment ends through the employer's wrongful conduct, whether wrongful dismissal or the employee's acceptance of the employer's repudiatory conduct.
A series of decisions in the High Court, and in courts of high authority in England and Canada, have stated, over the course of more than a century, that a restraint clause is not enforceable against an employee whose employment ends by the employer's wrongful conduct — whether it be wrongful dismissal or the employee's acceptance of the employer's repudiatory conduct.
See Crowe Horwath (Aust) Pty Ltd v Loone [2017] VSCA 181 (Ashley, Priest and Beach JJA).
Case law · 2017-07-07
G.2 Crowe Horwath (Aust) Pty Ltd v LooneA party seeking equitable relief by injunction to enforce a restraint must itself have performed its part of the bargain — he who comes to equity must do equity.
He who comes to equity must do equity
See Crowe Horwath (Aust) Pty Ltd v Loone [2017] VSCA 181 (Ashley, Priest and Beach JJA), quoting Gibbs J in Geraghty v Minter (1979) 142 CLR 177.
Case law · 2017-07-07
G.3 Crowe Horwath (Aust) Pty Ltd v LooneNo reported case in a superior court in Australia or England has held a restraint clause enforceable against a former employee where the employment ended through the employer's wrongful conduct.
there is no reported case in a court of superior jurisdiction in Australia or England which has decided that a restraint clause is enforceable against a former employee in such circumstances.
See Crowe Horwath (Aust) Pty Ltd v Loone [2017] VSCA 181 (Ashley, Priest and Beach JJA).
Case law · 1950-09-29
G.4 Lindner v Murdock's GaragePDFThe employer bears the onus of proving the restriction on the employee's freedom to work is reasonable, before any question of the employer's own breach arises.
The onus was on the plaintiff firm to prove circumstances showing that the restriction on the defendant's freedom to work was reasonable.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Does a Victorian non-compete pause or extend if the employee breaches?
This is an open question, and an employer should not assume the clock stops. No settled Victorian authority holds that a restraint period tolls — pauses and then resumes — while a former employee is in breach or while litigation runs. Because the existence of a legitimate interest is assessed as at the date the contract was entered into , and reasonableness is generally tested by reference to that date, a clause that automatically lengthens the restraint depending on the employee's later conduct may sit uneasily with the way Victorian courts test validity.
A drafting device that extends the period by the length of any breach pushes the effective duration beyond what was assessed as reasonable at the outset, and there is no clear Victorian authority validating it. The safer assumption is that the stated period is the maximum the employer can rely on, and that a breach is generally better addressed through an injunction or a damages claim rather than by stretching the restraint — Australian courts generally prefer a damages or injunction remedy over a restraint that extends itself. The restraint-of-trade doctrine confines a covenant to what is reasonably necessary , which on one view sits awkwardly with open-ended or self-extending restraints, though that is commentary rather than a holding on tolling.
Do not rely on a clause that purports to extend the non-compete by the length of any breach. No clear Victorian authority validates tolling of the restraint period, and because the existence of the interest is tested as at the date of the contract — with reasonableness generally tested by reference to that date — an automatic extension may risk being treated as unreasonable . Treat the stated duration as the maximum, and address an actual breach through an injunction or a damages claim instead.
Sources for this answer
Case law · 2013-02-20
H.1 Wallis Nominees (Computing) Pty Ltd v PickettWhether a legitimate interest exists is assessed at the time the contract is entered into, which may sit in tension with a clause that automatically extends the restraint based on the employee's later breach.
The assessment of whether a legitimate interest exists is to be assessed at the time the contract is being entered into.
See Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 (Warren CJ and Davies AJA).
Case law · 2016-12-20
H.2 Just Group Ltd v PeckA court will not read an unduly wide restraint down to preserve its validity; on one view that confinement of a covenant to what is reasonably necessary sits awkwardly with open-ended or self-extending restraints, though Just Group did not decide the tolling question.
However, it is not permissible for a court to read down an unduly wide clause in order to preserve its validity.
See Just Group Ltd v Peck [2016] VSCA 334 (the Court).
Do Victorian restraint rules differ for contractors and business sales?
In some respects, yes. Restraints on independent contractors are assessed under the same restraint-of-trade reasonableness doctrine as employee covenants; what matters is the substance of the interest at stake rather than the label put on the relationship. Restraints given by the seller of a business are judged more leniently than employee restraints, because a buyer is entitled to protect the goodwill it paid for and the parties bargain on more equal terms .
The sale-of-business leniency is long-standing and uncontroversial doctrine: a restraint in a sale agreement is more easily upheld than the same restraint in an employment contract , because the policy concerns that make employment covenants suspect — unequal bargaining power and the risk of locking a person out of their livelihood — are weaker when a vendor sells a business for value and promises not to immediately compete the goodwill away. A multi-year restraint can be reasonable in that setting.
For contractors, the key question is the same one that governs employees: is there a legitimate interest, and is the scope no wider than reasonably necessary to protect it . The label matters less than the substance of the relationship and the interest at stake.
Sources for this answer
Case law · 1950-09-29
I.1 Lindner v Murdock's GaragePDFA distinction is drawn between a restraint in a sale-of-business agreement and a restraint in an employment agreement, with the former treated more favourably.
A distinction is drawn between a restraint upon trade included in an agreement for the sale of a business and a restraint included in an agreement with an employee.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Latham CJ, dissenting).
Case law · 1950-09-29
I.2 Lindner v Murdock's GaragePDFA restraint is more easily upheld in the sale-of-business context than in the employment context.
The restraint is more easily upheld in the former than in the latter case.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Latham CJ, dissenting).
Case law · 2013-02-20
I.3 Wallis Nominees (Computing) Pty Ltd v PickettThe same reasonableness test governs whatever the label of the relationship: the restraint must do no more than is reasonably necessary to protect the legitimate interest.
The test is whether the restraint does more than what is reasonably necessary to protect the employer's legitimate interest.
See Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 (Warren CJ and Davies AJA).
Is a federal ban on non-competes coming to Australia?
A ban has been proposed but is not yet law, and as of June 2026 the common-law restraint-of-trade framework above still governs in Victoria . According to Australian Government Treasury material and law-firm commentary, the Government has announced that it intends to ban post-employment non-competes for workers earning under the Fair Work Act high-income threshold (reported at around AUD $183,100), with consultation on the design under way, the reform expected to be legislated during 2026 and to take effect from 2027, and operating prospectively. Those figures and dates come from that secondary material — Treasury announcements and commentary — not from any enacted statute. Until any ban is enacted, the existing common-law framework continues to govern .
The proposal, as described in current Treasury material and law-firm commentary rather than in any enacted statute, would cover most employees earning below the high-income threshold while excluding sale-of-business covenants and restraints on higher earners. Related arrangements such as non-solicitation, no-poach, and wage-fixing clauses are also reported to be under consideration. None of this is in force, and the precise scope, threshold, and commencement could change before any legislation passes; the threshold figure and the timeline in particular are drawn from secondary reporting and should be re-checked against the enacted text when it appears.
Because this is a future legislative matter, employers should treat the timeline and detail as provisional rather than settled. A covenant entered into now is governed by existing law; whether and how a future ban would affect existing or new agreements will depend on the enacted text and its transitional provisions.
Do not draft to a federal ban that does not yet exist. As of June 2026 no Commonwealth statute bans employee non-competes, so enforceability in Victoria still turns on the common-law reasonableness test . Track the proposal through to enacted legislation before changing practice, because its threshold, scope, and commencement remain proposals subject to change.
Sources for this answer
Case law · 2016-12-20
J.1 Just Group Ltd v PeckUntil any federal ban is enacted, the common-law restraint-of-trade doctrine — under which a restraint is presumed void unless shown to be reasonable — continues to govern the enforceability of non-competes in Victoria.
A term in a contract, which is a restraint of trade ('a restraint clause'), is presumed to be void as contrary to public policy.
See Just Group Ltd v Peck [2016] VSCA 334 (the Court).