Yesterday, the federal government announced a proposal to eliminate non-compete clauses for up to 3 million workers in a range of sectors. The main intention of this change is to increase worker mobility. The second reason – more freedom for employees to switch jobs and take the leap on exciting new opportunities – might be more surprising. The proposal has since sparked a passionate firestorm of debate. The Australian Chamber of Commerce and Industry (ACCI) has been particularly noisy, leading the charge against the measure.
ACCI's Opposition
Our coalition, the ACCI, has been outspoken in our opposition to this proposed non-compete crack-down. CEO Andrew McKellar has been courageously vocal in his opposition to the proposal. He makes the case that it disproportionately penalizes employers who are deploying these clauses in good faith. Moreover, McKellar notes that only 1% of a typical employer’s employees would reject a job offer due to non-competes. This shows that the impact of these clauses might be less powerful than people have assumed.
"Businesses must be able to protect their confidential information and competitive advantages," said Andrew McKellar.
Non-compete clauses are widely used in sectors like construction and child care to prevent workers from going to rival firms. To the ACCI, the government’s proposed ban represents a gross overreach that tramples on legitimate business interests.
Broader Implications
The proposed ban has turned into an unexpected key issue in the November election. It points more broadly, though, to the importance of employment law debates. The Administration is committed to breaking down barriers that inhibit workers’ ability to move between jobs. This, in turn, will further contribute to a more dynamic and flexible labor market. Business groups such as the ACCI have repeatedly painted this move as making inroads on long-held, important protections for businesses.
According to McKellar, the government should take a different approach. Rather than non-compete clauses, he thinks it should do away with multi-employer bargaining entirely, which he describes as a “wage-fixing scheme for unions.”
Industry Reactions
The proposal has drawn wildly divergent reactions from the public and private sectors. While proponents appreciate the measure as a hard-fought progressive advance toward worker empowerment, opponents worry it may undermine the competitiveness of business in turn. The bitter dispute really highlights how angry the battle is on non-competes in the arena of employment law right now.
Work remains to be done on both sides but conversations continue. From supporters to opponents, everyone is bracing for the ban’s effect on the industry and job market. The federal government’s recent non-compete clause announcement has thrust these controversial employment contracts into the national dialogue. This change would have profound implications for employers and workers alike.
