The Federal Government announced plans in September to ban non-compete clauses for employees earning below the Fair Work Act’s high-income threshold.
The draft, known as the Competition and Fair Work Legislation Amendment Bill 2026, also proposes broader restrictions. These include co-worker non-solicitation clauses for employees at all income levels and rules covering ‘no-poach agreements’ (preventing businesses from hiring each other’s employees) and wage-fixing arrangements.
The Council of Small Business Organisations Australia (COSBOA) has warned the proposed changes could create high costs and challenges for small businesses. CEO Skye Cappuccio said amid a seemingly never-ending wave of changes to workplace legislation, small business owners deserve greater clarity.
“Small businesses want workers to be able to get ahead. They compete for good people every day. But these changes go much further than stopping an unfair clause from preventing someone from taking another job,” she said.
“A small business with ten employees can be seriously affected if a senior employee leaves and takes several staff with them.”
COSBOA is particularly concerned that the proposed no-poach rules could affect franchise and service agreements.
“A café owner with a standard franchise agreement should not risk being caught by laws and penalties designed to deal with serious cartel conduct,” she said.
COSBOA is seeking changes to the proposed co-worker non-solicitation ban to protect businesses from coordinated staff departures, remove criminal cartel exposure from routine contracts, and allow time to review existing franchise and service agreements. It is also urging greater certainty around restraints associated with business sales.
“The legislation needs to target genuinely unfair non-competes without exposing ordinary small businesses to disproportionate penalties, undermining the value of businesses their owners have spent a lifetime building, or burying them in legal uncertainty,” Cappuccio explained.
“Small businesses have dealt with relentless changes to workplace laws over the past four years. If the government makes another significant change, they need enough time to understand it and get it right.”
COSBOA supports removing unreasonable barriers to job mobility; however, it believes the broader proposals need to better recognise the circumstances of small businesses.
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