Law Week: Circle Green’s Law Reform Advocacy in Action

For National Law Week 2024, we wrote about Circle Green’s law reform work, and why law reform is an important area of work for community legal centres who work directly with marginalised or disadvantaged members of our community.

To mark National Law Week 2025 (19-23 May), we want to zoom in on one example of law reform in action.  In this article we look at a submission made by Circle Green’s workplace team on the use of restraint of trade clauses in employment contracts.

The broad timeline was as follows:

1. Treasury commences consultation

In April-May 2024, the Treasury held a consultation on worker non-compete clauses and other restraint clauses, as part of their Competition Review.

You can read more about restraint clauses in our blog post here, but put simply, non-compete and other restraint clauses are found in many employment contracts, and they are clauses that seek to stop a current or former employee doing certain things that could theoretically damage their employers’ business, such as:

• working for a competing business nearby;
• starting a competing business of their own nearby;
• poaching co-workers or clients; or
• using confidential trade secrets or intel they gained from their old job, to benefit their new employer.

2. We contribute a submission based our client experiences and service data

Currently, there are no limits on when and how restraints can be used, and the law about when restraints are enforceable by a court is unclear. Whether or not a particular restraint can be enforced depends on the particular circumstances and, broadly speaking, whether the limits imposed on the employee are appropriate. In some cases, they are appropriate and do truly protect employers. The issue is that restraints are wielded as a threat to prevent employees who present no threat to the business from moving freely between jobs, for example to seek better pay or conditions in a similar role.

Many, many Western Australian workers have contacted our advice line, panicked about employers taking aggressive steps to enforce restraints, regardless of whether or not they are enforceable. Our clients reported employers sending threatening letters, making verbal threats and in some cases engaging lawyers. These clients often worked in lower-paid and/or casual roles, and would really not be expected to have significant trade secrets, confidential information or sway over clients or colleagues. Examples include hairdressers, physiotherapists, and support or social workers.

Our clients are particularly affected by the unscrupulous inclusion and enforcement of restraint clauses because they commonly face multiple barriers to understanding and enforcing their rights.

So, in June 2024 we made a submission to Treasury to highlight the issues our clients face.

We found that between 1 October 2020 and 7 May 2024, we:

• received 272 requests for assistance with restraint of trade issues; and
• provided legal assistance to 152 of these requests.

 
We included 18 case studies in our submission to highlight examples of unlawful and/or anti-competitive restraint clauses we have seen in clients’ employment contracts. These case studies and data from our services informed the 10 recommendations we made for the regulation of restraint of trade clauses.

You can read our submission here, and can skip to pages 8 and 9 for a summary table of our recommendations.

3. The Australian Labor Party announces a commitment to ban non-compete clauses

In the federal budget announcement in March 2025, the Australian Labor Party announced its commitment to ban non-compete clauses from 2027 for workers earning less than the Fair Work Act 2009 (Cth) high-income threshold. For context, in the 2024-2025 financial year the high-income threshold is $175,000. This commitment is consistent with our recommendations and will be an important and appropriate protection for lower-income workers. This is the cohort for whom restraints are simply not appropriate as they, generally, do not present a risk to their employer’s business of the kind restraints are designed to mitigate.

With the re-election of the Albanese Labor government this month, we are excited to see further announcements on the progress of this reform over the next two years.

4. What’s next…

The Labor Government has indicated that it will consult on policy details.  We will work to ensure the voices of marginalised communities are amplified and heard by Government during the reform process.

We won’t stop there. Once the legislation is passed by Parliament. Circle Green will continue to keep track of any teething issues with new laws, and monitor whether our clients are still experiencing any issues. If they are, we will continue to advocate for better laws and protections.

This timeline of law reform in action clearly shows how crucial our clients’ stories are to guide our law reform efforts.

It is these stories that form the foundations of our law reform work, which can ultimately lead to Government action.

Law reform efforts don’t always result in clear action or reform, especially not in the short term. However, when they do, it’s so rewarding and is such a win for the disadvantaged and marginalised members of our community. The purpose of our law reform work is to elevate and amplify the voices that already exist within our community, and to ensure that decision-makers continue to listen to those voices when making the laws that govern us.

To keep up to date with our law reform efforts, we often write about it on our news page, or you can see a list of Circle Green’s law reform submissions here.

Disclaimer: Please be aware that this article provides general information only. It is not legal advice. If you have a question about how the law applies to your specific situation, you can click here to request free legal assistance.