“Just like with trademarks and with copyright, we do actually need to have some degree of protection for small businesses – that when they’re building these assets, and they’re building these client bases, that there are those protections.
“That’s a bit un-Australian. I don’t think it really passes the pub test.”
COSBOA chief executive Luke Achterstraat.Credit: Michael Quelch
‘More harm than good’
The government’s plans have been heavily influenced by growing research on non-compete clauses, including by Australian independent think tank e61.
Jack Buckley, a senior researcher at e61, said people who joined a business that used non-compete clauses did not get higher wages compared with those who began work with a business that did not use such clauses.
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He said that, in theory and in practice, these people should get higher wages because they were giving up the opportunity to move to another firm easily for better pay or conditions.
“It appears people are signing up not knowing about these non-compete clauses or what it will mean to them,” he said.
The research also found that high-income earners – who are not affected by the government’s plans – spent long periods of time out of the workforce when they had signed non-compete contracts, Buckley said.
Non-disclosure agreements allowed highly skilled, well-paid senior staff to move around, but non-compete clauses left these people out of the workforce, often for more than six months, he said.
The proposed ban is being closely watched by the Australian technology sector too, where one executive has said the clauses have done “more harm than good to Australia’s ecosystem”.
“For employees, non-competes keep wages stagnant and limit opportunities for career growth and skills development,” tech recruitment consultancy Real Time’s director Ellis Taylor said.
“For employers, the clauses make it harder to attract top talent, and they stifle knowledge-sharing and innovation, especially in industries like tech, where exchange of ideas is key.”
Only 1 per cent of workers turn down jobs because of non-compete clauses, ABS figures show.
Australian Chamber of Commerce and Industry (ACCI) chief executive Andrew McKellar echoed Achterstraat’s sentiments that there were legitimate uses for the clause, and described the ban as heavy-handed. “The policy does not achieve this balance,” McKellar said.
Andrew McKellar is chief executive of the Australian Chamber of Commerce and Industry (ACCI).Credit: Alex Ellinghausen
“All businesses have the right to protect their confidential information,” he said. “Any suggestion that they should not be able to do so is abjectly inappropriate. Restraints derived from business-sale agreements, confidentiality clauses and NDAs have zero impact on labour force mobility – limitations should be expressly off the table.”
Hairdressing council CEO Fiona Beamish is meanwhile hoping to see further detail from the Albanese government on the proposal, and questions whether the government has thought through the proposal’s impacts.
“It’s raising concern and raising questions around the government supporting small business,” she said. “Where is the consideration of the impact that this has on the industry?
“Maybe it doesn’t affect some, but it definitely does affect us and many trades. It’s a challenge in our industry anyway, and then to add this ban – it’s a double layer of business challenges that we’re faced with all the time.”
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