Assistant minister says non-compete clauses can 'hamper entrepreneurs'
The prevalence of non-compete clauses in Australian employment contracts can prevent organisations from thriving, according to Assistant Minister for Competition, Charities, and Treasury Andrew Leigh.
In an opinion piece for The West Australian, Leigh pointed out how non-compete clauses can "hamper entrepreneurs."
"Suppose you decided to establish a firm called 'Principled Wisdom Consultants.' In a full‑employment economy, it's unlikely that you'd be able to staff your new company by hiring people who were previously unemployed. More likely, you would be looking for people working at existing consulting firms," Leigh said in the article.
"Yet if all the talent in the consulting sector is tied down by non‑compete clauses, then Principled Wisdom Consultants might never get off the ground."
He made the remarks as non-compete clauses have become "ubiquitous" across the economy, with one in five Australian workers subjected to one, according to a survey by e61.
But there have been concerns that these non-compete clauses could actually hurt job mobility and employees' career development.
Early this year, the government sought public feedback on the use and impact of non-compete clauses and related restraints across workplaces.
Submissions closed by the end of May, and Leigh said it garnered "thoughtful submissions."
"Right now, the Australian government is considering the best way to regulate non‑compete clauses," he said. "We are working through those submissions and will have more to say soon."
Employer association Ai Group has already come out against constraining non-compete clauses in employment contracts.
"Any changes that reduce an employer's ability to protect its confidential and commercially sensitive information would be a backwards step," said Ai Group chief executive Innes Willox in a previous statement.
Leigh said the government will engage in an "open consultation process" if they decide to limit the use of non-compete clauses in contracts.
