# Non-Competes in Australia[^about] Australia treats post-employment non-competes under the common-law restraint-of-trade doctrine — presumptively void and enforceable only so far as reasonable to protect a legitimate business interest. Enforceability turns on the governing State or Territory, and NSW's Restraints of Trade Act 1976 lets a court read a restraint down. ## Are non-competes enforceable in Australia? {#enforceability} **Short answer.** Only if the employer can justify them. A post-employment non-compete is treated as a restraint of trade, which Australian courts presume is invalid unless the employer shows the restraint is reasonably necessary to protect a legitimate business interest and is reasonable in reference to the interests of the parties and the public [^lindner-prima-facie-void] [^olson-justifiable-reasonable]. The validity of the restraint is assessed at the time the contract is made, not with hindsight [^olson-tested-at-contract]. Australia is not a per se ban jurisdiction under current law, and there is no national statute setting fixed limits on duration, geography, or worker income. The national starting point is the common-law restraint-of-trade doctrine [^just-presumed-void]. The employer bears the practical burden of moving the clause out of presumptive invalidity by identifying a protectable interest and showing that the restraint does no more than the interest reasonably requires. "Any contractual restraint of trade is prima facie unlawful and invalid."[^lindner-prima-facie-void] Employment restraints receive stricter scrutiny than sale-of-business restraints, because a former employee is usually protecting a livelihood rather than selling goodwill for value [^olson-stricter-employment]. The rest of this national note explains the shared doctrine once, then points you to the State and Territory notes where the governing law, read-down powers, and local authorities matter most. ## What must an employer prove? {#legitimate-interest} **Short answer.** The employer must prove a legitimate business interest, not just a wish to avoid competition. Recognised interests include customer or trade connection, goodwill, confidential information, trade secrets, and in some cases workforce stability. Mere competition by a former worker is not enough [^lindner-not-competition-per-se]. The central distinction is between protecting an asset and suppressing a rival. Australian restraint law protects the employer's customer connection and confidential information, but it does not convert a former employee's general skill, experience, and know-how into the employer's property [^lindner-trade-connection]. A non-compete that blocks a worker from joining a competitor without tying the restraint to a specific interest is the weakest form of covenant. "An employer must be prepared to face the competition of a former employee if it comes."[^lindner-not-competition-per-se] > [!CAUTION] > **Drafting note.** > > Start with the interest, not the restraint. Identify the customer connection, confidential information, trade secrets, or workforce risk that actually needs protection, then draft the covenant around that interest. A restraint aimed only at preventing ordinary competition is exposed from the start [^lindner-not-competition-per-se]. ## How long and how wide can it be? {#reasonableness} **Short answer.** There is no Australian statutory maximum. Reasonableness is fact-specific and turns on the activity restrained, the geographic area, the period, the worker's role, the employer's business footprint, and the interest being protected. A restraint is reasonable only so far as it is necessary to protect that interest while preserving the worker's fullest liberty of action consistent with that protection [^bendtech-reasonableness-test], and the question is tested as at contract formation [^olson-tested-at-contract-reasonableness]. A court asks whether the restraint is no wider than reasonably necessary for the legitimate interest. Customer restraints often focus on the customers the worker dealt with or influenced. Confidential-information restraints often focus on the life of the information. A wider non-compete may be harder to justify because it stops work for a competitor even where a narrower non-solicit, non-dealing covenant, or confidentiality clause could protect the same interest. Because the analysis is made when the contract is entered, a clause should be reasonable on the facts known then. Later events can matter to remedies, but they do not make an overbroad covenant reasonable retroactively [^olson-tested-at-contract-reasonableness]. > [!NOTE] > **Practice note.** > > Do not treat a common period, industry template, or national form as a substitute for evidence. The enforceability question is whether this employer needed this restraint against this worker at the time of contracting [^bendtech-reasonableness-test]. ## Can a court narrow an overbroad clause? {#court-narrowing} **Short answer.** Generally, only by blue-pencil severance. Outside NSW's statutory read-down regime, a court may delete severable words if the remaining covenant still works, but it will not read an unduly wide clause down, add words, or rewrite the bargain to preserve validity [^just-no-readdown] [^just-rewrite]. The general common-law position is strict. Severance is deletion, not reconstruction. If the unreasonable part cannot be removed without changing the substance of the bargain, the restraint fails rather than being converted into the clause the employer wishes it had drafted [^just-no-new-agreement]. "However, it is not permissible for a court to read down an unduly wide clause in order to preserve its validity."[^just-no-readdown] NSW is the major exception and is dealt with separately below. Elsewhere, draft every operative rung so it can stand on its own. A court applying the common law is enforcing a contract, not designing a better restraint after the fact. > [!CAUTION] > **Drafting note.** > > Draft the narrow clause you can defend. A severance clause and a long list of fallback positions do not let a court rewrite a restraint into a reasonable one [^just-no-new-agreement]. ## Does any State let a court read a restraint down? {#nsw-read-down} **Short answer.** Yes. NSW is the important exception. Section 4 of the Restraints of Trade Act 1976 (NSW) makes a restraint valid to the extent it is not against public policy, whether or not it is expressed in severable terms [^rota-s4-1]. That lets a NSW court enforce a restraint to a reasonable extent and ignore the excess [^olson-s4-ignore-excess]. The NSW power is stronger than the common-law blue-pencil rule, but it is still not a licence to remake the contract. A NSW court may enforce a narrower restraint that falls within the contractual words. It may not rewrite the covenant or reconstruct the bargain [^olson-no-remake] [^olson-amputation]. "a restraint validated by the section must fall wholly within the scope of the contractual provision. Amputation is directed but reconstruction is not."[^olson-amputation] That distinction is the national fault line. In NSW, an overbroad restraint may still be enforceable to a reasonable extent. In the rest of Australia, absent an equivalent statute, the common-law position is deletion of severable words only. Section 4(3) also gives NSW a safety valve where the restraint reflects a manifest failure to attempt a reasonable restraint [^rota-s4-3]. > [!NOTE] > **Practice note.** > > Do not assume a NSW-style read-down outside NSW. If the governing law is Victoria, Queensland, Western Australia, South Australia, Tasmania, the ACT, or the Northern Territory, start from the common-law severance position unless local authority points otherwise [^rota-s4-1]. ## How do cascading clauses work? {#cascading-clauses} **Short answer.** Cascading or ladder clauses list multiple restraints, usually by stepping down period, area, activity, or customer group, so that each narrower rung can stand if a wider rung fails. They can work where each rung is a separate and severable covenant [^hanna-nine-restraints]. They can also fail where an overbroad definition is embedded in every rung and cannot be severed [^emeco-client-definition]. The point of a cascade is to give the court independent covenants, not a single overbroad covenant dressed in alternatives. In *Hanna v OAMPS Insurance Brokers Ltd*, the NSW Court of Appeal held that no selection mechanism or hierarchy was needed where each restraint operated as an independent covenant [^hanna-no-mechanism]. The court also explained why the device exists: parties draft multiple severable restraints because the common law can delete severable words but cannot freely read a clause down [^hanna-why-cascading]. "Neither their operation nor any principle of law concerned with certainty of contract requires a mechanism or hierarchy of order of operation."[^hanna-no-mechanism] The trap is a shared definition that contaminates every rung. In *Emeco International Pty Ltd v O'Shea [No 2]*, the court would not internally sever an overbroad definition of client, because doing so would rewrite each restraint using that definition [^emeco-rewrite-restraints]. The ACT Supreme Court applied the same logic in *Steadfast ICT Security Pty Ltd v Peak*, where the embedded definition meant no severance question could arise [^steadfast-no-read-down]. > [!CAUTION] > **Drafting note.** > > A cascade should be built from genuinely independent restraints and definitions that are themselves narrow enough to defend. If the same overbroad defined term sits inside every rung, a court may be unable to remove the defect without rewriting the clause [^emeco-client-definition]. ## Which State or Territory's law applies? {#which-jurisdiction} **Short answer.** Start with the contract's governing-law clause and the forum where enforcement is sought. The national common-law doctrine is shared, but enforceability turns on the governing State or Territory because NSW has a statutory read-down power and the other jurisdictions generally apply common-law severance only [^rota-s4-1-jurisdiction] [^just-no-readdown-jurisdiction]. Use this national page for the common structure, then go to the local note for the governing jurisdiction: - - - - - - - - For cross-border context, see the [worldwide comparison](/practice-guides/non-compete/international#country-au). > [!NOTE] > **Practice note.** > > Choice of law can be outcome-determinative. A clause that might be enforceable to a reasonable extent in NSW may fail outright elsewhere if the defect cannot be removed by ordinary severance [^just-no-readdown-jurisdiction]. ## Is a federal ban on non-competes coming to Australia? {#federal-reform} **Short answer.** A ban has been proposed but is not yet law. As of June 2026, no Commonwealth statute bans employee non-competes, so the common-law restraint-of-trade framework still governs nationally, with NSW's Restraints of Trade Act operating where NSW law applies [^lindner-prima-facie-void-reform] [^rota-s4-1-reform]. According to Treasury material and law-firm commentary, the Australian Government announced in the 2025-26 Federal Budget an intention to ban post-employment non-competes for workers earning under the Fair Work Act high-income threshold, reported at around AUD $183,100. Treasury ran consultation in July 2025, legislation was expected during 2026, and commencement was described as from 2027 on a prospective basis. The proposal was also reported to exclude sale-of-business restraints and restraints on above-threshold workers. Those details are proposals, not enacted law. They come from Treasury material and secondary commentary rather than an operative Commonwealth non-compete statute. The threshold, coverage, exclusions, transitional provisions, and commencement could change before legislation passes. > [!NOTE] > **Practice note.** > > Do not draft to a federal ban that does not yet exist. As of June 2026, enforceability still turns on the common-law reasonableness test and, where NSW law applies, the Restraints of Trade Act 1976 (NSW). Re-check the enacted text before changing practice [^rota-s4-1-reform]. [^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-06-16. License: CC BY 4.0. Steven Obiajulu, J.D. is not admitted to practise law in Australia. This article summarizes publicly available Australia legal sources for general information only — it is not legal advice and does not create a lawyer–client relationship. It may not reflect the most recent legal developments and is provided without warranty as to accuracy or completeness; verify against the primary sources cited and consult a locally qualified lawyer before relying on it. [^lindner-prima-facie-void]: **Lindner v Murdock's Garage** — "Any contractual restraint of trade is prima facie unlawful and invalid." *Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Kitto J).* [^olson-justifiable-reasonable]: **Woolworths Ltd v Olson** — "A restraint of trade is justifiable only if the restriction is reasonable in reference to the interests of the parties and of the public" *Woolworths Ltd v Olson [2004] NSWCA 372.* [^olson-tested-at-contract]: **Woolworths Ltd v Olson** — "The validity of the restraint is to be tested at the time of entering into the contract" *Woolworths Ltd v Olson [2004] NSWCA 372.* [^just-presumed-void]: **Just Group Ltd v Peck** — "A term in a contract, which is a restraint of trade ('a restraint clause'), is presumed to be void as contrary to public policy." *Just Group Ltd v Peck [2016] VSCA 334 (the Court).* [^olson-stricter-employment]: **Woolworths Ltd v Olson** — "The courts in general take a stricter and less favourable view of covenants in restraint of trade entered into between employer and employee than of similar covenants in commercial agreements" *Woolworths Ltd v Olson [2004] NSWCA 372.* [^lindner-not-competition-per-se]: **Lindner v Murdock's Garage** — "An employer must be prepared to face the competition of a former employee if it comes." *Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).* [^lindner-trade-connection]: **Lindner v Murdock's Garage** — "The knowledge which, because its use may deprive the employer of the business connection which he is entitled to preserve as his own, he may require his employee to abstain from using, is objective knowledge of customers, their peculiarities, their credit and so forth" *Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Kitto J).* [^bendtech-reasonableness-test]: **Bend-Tech Group (A Firm) v Beek** — "A restraint will be reasonable in relation to the restraining party if it is necessary for the adequate protection of that party and reasonable in relation to the party restrained if it preserves the fullest liberty of action consistent with that protection." *Bend-Tech Group (A Firm) v Beek [2015] WASC 491 (Pritchard J).* [^olson-tested-at-contract-reasonableness]: **Woolworths Ltd v Olson** — "The validity of the restraint is to be tested at the time of entering into the contract" *Woolworths Ltd v Olson [2004] NSWCA 372.* [^just-no-readdown]: **Just Group Ltd v Peck** — "However, it is not permissible for a court to read down an unduly wide clause in order to preserve its validity." *Just Group Ltd v Peck [2016] VSCA 334 (the Court).* [^just-rewrite]: **Just Group Ltd v Peck** — "to read down the first limb, in the manner suggested, would be to, impermissibly, rewrite the restraint clause in order to preserve its validity" *Just Group Ltd v Peck [2016] VSCA 334 (the Court).* [^just-no-new-agreement]: **Just Group Ltd v Peck** — "It is not for the Court to make a new agreement for the parties." *Just Group Ltd v Peck [2016] VSCA 334 (the Court).* [^rota-s4-1]: **Restraints of Trade Act 1976 (NSW) s 4(1)** — "A restraint of trade is valid to the extent to which it is not against public policy, whether it is in severable terms or not." *Restraints of Trade Act 1976 (NSW) s 4(1).* [^olson-s4-ignore-excess]: **Woolworths Ltd v Olson** — "Section 4(1) allows the court to ignore the fact that the restraint goes beyond what is reasonable, provided the restraint can be enforced to an extent that is reasonable." *Woolworths Ltd v Olson [2004] NSWCA 372.* [^olson-no-remake]: **Woolworths Ltd v Olson** — "The court may not rewrite the covenant while exercising the power under s4(1)." *Woolworths Ltd v Olson [2004] NSWCA 372.* [^olson-amputation]: **Woolworths Ltd v Olson** — "a restraint validated by the section must fall wholly within the scope of the contractual provision. Amputation is directed but reconstruction is not." *Woolworths Ltd v Olson [2004] NSWCA 372, quoting ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640.* [^rota-s4-3]: **Restraints of Trade Act 1976 (NSW) s 4(3)** — "a manifest failure by a person who created or joined in creating the restraint to attempt to make the restraint a reasonable restraint" *Restraints of Trade Act 1976 (NSW) s 4(3).* [^hanna-nine-restraints]: **Hanna v OAMPS Insurance Brokers Ltd** — "Thus there were nine restraints, from the widest (15 months in Australia) to the narrowest (12 months, in Mr Hanna's case, in the metropolitan area of Sydney)." *Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.* [^emeco-client-definition]: **Emeco International Pty Ltd v O'Shea [No 2]** — "The definition of 'Client' cannot be internally severed in this case." *Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348 (Edelman J).* [^hanna-no-mechanism]: **Hanna v OAMPS Insurance Brokers Ltd** — "Neither their operation nor any principle of law concerned with certainty of contract requires a mechanism or hierarchy of order of operation." *Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.* [^hanna-why-cascading]: **Hanna v OAMPS Insurance Brokers Ltd** — "Given the common law rules and, in particular, those concerning severance and the so-called ‘blue-pencil’ test, it is understandable why commercial parties seek to employ multiple severable clauses." *Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.* [^emeco-rewrite-restraints]: **Emeco International Pty Ltd v O'Shea [No 2]** — "To 'blue pencil' part of the definition of Client would be to rewrite each of those restraints." *Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348 (Edelman J).* [^steadfast-no-read-down]: **Steadfast ICT Security Pty Ltd v Peak** — "No question of severance can arise in those circumstances because it is not possible to read down or sever the clauses which have embedded within them that definition: Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348 ; 225 IR 423." *Steadfast ICT Security Pty Ltd v Peak [2021] ACTSC 199 (Mossop J), citing Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348; 225 IR 423.* [^rota-s4-1-jurisdiction]: **Restraints of Trade Act 1976 (NSW) s 4(1)** — "A restraint of trade is valid to the extent to which it is not against public policy, whether it is in severable terms or not." *Restraints of Trade Act 1976 (NSW) s 4(1).* [^just-no-readdown-jurisdiction]: **Just Group Ltd v Peck** — "However, it is not permissible for a court to read down an unduly wide clause in order to preserve its validity." *Just Group Ltd v Peck [2016] VSCA 334 (the Court).* [^lindner-prima-facie-void-reform]: **Lindner v Murdock's Garage** — "Any contractual restraint of trade is prima facie unlawful and invalid." *Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Kitto J).* [^rota-s4-1-reform]: **Restraints of Trade Act 1976 (NSW) s 4(1)** — "A restraint of trade is valid to the extent to which it is not against public policy, whether it is in severable terms or not." *Restraints of Trade Act 1976 (NSW) s 4(1).*