Competition taskforce turns attention to non-compete clauses

Businesses that level non-compete clauses on staff could be stifling the Australian economy, Competition Minister Andrew Leigh will say, as the government’s competition taskforce considers a crackdown on contract terms that limit worker mobility.

Contract terms that prevent staff from joining a competitor or launching their own enterprise may encourage high-performing workers to stay put, benefiting their employer in the short-term.

But in an address to the McKell Institute in Sydney on Thursday, Leigh will argue the widespread use of non-compete clauses could limit Australia’s economic dynamism and opportunities for growth, harming businesses in the long-run.

“The diffusion of new technologies and new ideas occurs when workers join new firms and bring better ways of doing things with them,” Leigh will say.