What happens if your employees can leave more easily?
Australia’s proposed non-compete reforms could increase employee mobility. Discover how employers can protect client relationships, confidential information and critical talent.
If a key employee resigned tomorrow, how confident are that your clients would stay, your confidential information would remain protected, and the rest of your team would remain engaged?
It is a question many employers are now asking following the release of the Federal Government’s draft Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026. The proposed reforms would significantly limit the use of non-compete clauses for many Australian workers and introduce broader changes to restraint provisions.
However, it is important to remember that this is draft legislation only. The consultation period remains open until 2nd of October 2026 and the proposals may change before any legislation is introduced and passed by Parliament.
Much of the public discussion has focused on whether non-compete clauses are fair. The Government’s view is that such clauses can restrict worker mobility, reduce competition and suppress wage growth. The proposed reforms seek to make it easier for employees to move between employers and pursue better opportunities.
For employers, however, the conversation is somewhat different.
The real question is not whether employees should have the freedom to pursue career opportunities. Most employers would agree they should. The real question is what happens to a business when employees can leave more easily, particularly when those employees hold client relationships, commercial knowledge or specialist expertise that is critical to the organisation.
While every business will be affected differently, there are three practical risks that employers should be considering now.
Risk 1: loss of client relationships
For many organisations, the greatest risk is not losing an employee. It is losing the clients that may follow them.
This is particularly relevant in professional services, consulting, financial services, engineering, healthcare,
recruitment, account management and many other relationship-driven industries.
In these sectors, clients often build strong connections with individual employees over many years. While the contractual relationship may sit with the organisation, the trust frequently sits with the person.
Imagine a senior consultant, adviser or account manager resigns and joins a competitor. If the proposed
reforms proceed, many employers may have fewer options to restrict that movement. Even where confidentiality obligations remain in place, clients may choose to continue working with the individual they know and trust.
This creates a significant commercial risk.
Many businesses have historically viewed restraint clauses as a safeguard for protecting client relationships. If those protections are diminished, organisations may need to rethink how they manage customer relationships more broadly.
The businesses likely to be most resilient will be those that avoid allowing important client relationships to rest with a single employee. Instead, they will focus on embedding relationships across multiple team members, documenting client knowledge, strengthening account management practices and ensuring clients develop trust in the organisation rather than just an individual.
In simple terms, if one employee leaving creates a substantial risk of losing a client; the issue may be larger than the employment contract itself.
Risk 2: loss of intellectual property and confidential information
The second area of concern is the protection of intellectual property, confidential information and commercially sensitive knowledge.
The draft legislation does not remove an employer’s ability to protect legitimate business interests. Various forms of confidentiality protections are expected to remain available, particularly where they are reasonable and necessary to protect confidential information and client relationships.
However, there is an important distinction between having legal rights and being able to effectively enforce them.
Businesses invest considerable time and resources developing intellectual property, pricing models, operational systems, client databases, strategic plans and proprietary methodologies. While most employees act with integrity, knowledge inevitably follows people as they move between organisations.
As employee mobility increases, so too may the risk of confidential information finding its way into competing businesses, whether intentionally or inadvertently.
This does not necessarily mean businesses should become alarmed. Rather, it highlights the importance of ensuring confidentiality protections are robust and supported by practical controls.
Employers may wish to review:
- confidentiality provisions within employment agreements;
- intellectual property ownership clauses;
- data security and cyber security measures;
- access controls for sensitive information;
- document management processes; and
- exit procedures for departing employees.
In many cases, organisations may discover they have relied heavily on restraint clauses while giving less
attention to the underlying systems designed to protect the information itself.
The proposed reforms serve as a useful reminder that protecting intellectual property starts long before an
employee resigns.
Risk 3: increased competition for talent
The third and potentially most significant impact may be increased competition for talent.
If non-compete restrictions are reduced, employers may find it easier to recruit experienced employees from
competitors. However, competitors will also find it easier to recruit from them.
For organisations already facing skill shortages, this may create an increasingly competitive labour market.
The proposed reforms are built on the premise that greater worker mobility can improve productivity and wages.
Research cited by the Government suggests that removing non-compete clauses could contribute to higher earnings for affected workers.
From an employer perspective, this could translate into greater pressure to attract and retain skilled
employees through positive workplace experiences rather than contractual restrictions.
This may require organisations to place greater focus on:
- leadership capability;
- career progression opportunities;
- employee engagement;
- remuneration and benefits;
- flexible work arrangements;
- workforce planning; and
- organisational culture.
The employers most likely to succeed in this environment will be those that create workplaces people genuinely want to remain part of. After all, a non-compete clause may slow an employee’s departure, but it rarely creates loyalty.
What should you be doing now?
Importantly, this is not the time for panic or wholesale contract rewrites.
The reforms remain in draft form and will continue through consultation before any final legislation is
considered by Parliament. The final outcome may look different to what is currently proposed.
However, the consultation does provide an opportunity for you to think strategically about your exposure and
preparedness.
Organisations should consider:
- reviewing employment contracts and restraint provisions;
- identifying roles that hold key client relationships;
- assessing vulnerabilities relating to confidential information;
- evaluating retention risks across critical positions;
- strengthening succession planning; and
- ensuring client relationships are embedded within the organisation rather than individual employees.
These are prudent business practices regardless of whether the legislation ultimately proceeds.
Next Steps
Importantly, this is not the time for panic or wholesale contract rewrites.
The proposed reforms remain draft legislation and are currently subject to consultation. The final version may differ from what has been released, and no changes will take effect unless the legislation is ultimately passed by Parliament.
What you can do now is use this consultation period as an opportunity to assess their exposure and identify any areas of vulnerability within the business.
Questions worth considering include:
· How reliant are key client relationships on individual employees?
· What commercially sensitive information would create risk if a key employee joined a competitor tomorrow?
· Are confidentiality, intellectual property and client protection provisions sufficiently robust?
· How exposed is the business to the loss of critical talent?
· Is your employee value proposition strong enough to retain high-performing employees in a more mobile labour market?
· Are succession plans and client relationship management practices mature enough to minimise disruption if a key person departs?
Regardless of whether these reforms proceed in their current form, these are important business resilience questions for every employer.
While the discussion is currently centred on non-compete clauses, the underlying issue is much broader than employment contract drafting.
At its core, the proposed reform challenges organisations to consider how they protect their business, maintain
client relationships and retain talent in an environment where employee mobility may increase.
For many employers, the most valuable outcome of this consultation period may not be determining whether a
non-compete clause remains enforceable. It may be gaining a clearer understanding of where the business is genuinely vulnerable and what practical steps can be taken to strengthen resilience for the future.
If you are unsure how these proposed changes could affect your organisation, now is an ideal time to review
your employment agreements, workforce risks and client relationship protections. Taking stock before any legislative changes occur will place your organisation in a much stronger position, regardless of the final outcome of the reform process.
AKYRA Can Help!
Our team understand that managing industrial relations is one of the most challenging aspects of running a business. It requires navigating complex legislation, understanding detailed awards and handling sensitive issues such as disciplinary actions, wage compliance and dismissals.
You can rely on our team at AKYRA to be your outsourced specialist in industrial relations – we help you understand, implement and manage…
Disclaimer – Reliance on Content
The material distributed is general information only. The information supplied is not intended to be legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice concerning your specific situation.
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