Every now and again I see something come through and think, I don't like the look of that at all.

Last month it was the Federal Government's draft laws on post-employment restraints. I'm a lawyer, but I didn't read it as a lawyer first. I read it as someone who owns a small business in Townsville and employs people. I took a breath and thought, how do I mitigate my risk now?

What the Government is proposing

On 7 September 2026 the Government released exposure draft legislation called the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026. Consultation closed on 2 October. It is not law yet, and the detail may change before it reaches Parliament. The Government's case is that the reforms will lift wages and make it easier for workers to move between jobs.

Here is what the draft would do:

• Non-competes banned at or below $190,100. Employers could not include, or try to enforce, a non-compete for any employee earning at or below the Fair Work high income threshold. That threshold is currently $190,100, as set out by the Fair Work Commission, and it is indexed each year. Casual employees are covered whatever they earn.
• No more restraints on poaching your staff, at any salary. Clauses that stop a former employee recruiting your staff would be banned for every employee, regardless of what they earn. Keeping a stable workforce would no longer count as an interest a restraint can protect.
• Cascading clauses become all or nothing. Many employment contracts list several time periods and several areas, so that if one is found to go too far, the next one applies. Under the draft, a clause written that way fails completely, not just the part that goes too far.

What stays

Restraints on a former employee soliciting your clients are not affected, and neither are reasonable confidentiality obligations. Non-competes also remain available for employees above the threshold, if they are reasonable and necessary to protect a legitimate business interest.

Our starting point for following this has been the Employment Law Handbook's bulletin, which I rate highly.

Why this worries me as a small business owner

We've never been able to prevent somebody from earning a living. The courts have been very clear about that. But there is a balancing line between protecting a business and protecting an employee's right to go elsewhere. In my view this draft moves that line a long way, and small employers will feel it most.

It catches the people you can least afford to lose

Look at who earns under $190,100 in a professional services firm. Going by the salary guides, it is your senior people, the ones sitting just under partner level. They are the most valuable employees you have.

In all likelihood they have their own client base, which is part of your firm's revenue. They mentor your junior staff, so they have a persuasive relationship with them. Those are the very protections that professional services firms have been trying to build into employment contracts for decades.

Restraints are risk mitigation

Non-compete and restraint clauses are just risk mitigation. That's all they are.

You're employing somebody and you're investing in them. You may be marketing them. You may be spending money training them up. You may have put them through a specialist accreditation. I'm talking about law firms because that's what I know, but I'd expect any professional services business is exactly the same.

A restraint was never a guarantee. What it gave you was an agreed set of expectations. Most people accepted that they had signed the contract and they would abide by its terms.

Regional employers are small, and already short of people

Townsville is the largest city in northern Australia, and as the crow flies we are closer to Port Moresby than to Brisbane. That matters when you're hiring.

When a senior person leaves a firm in a capital city, there are others nearby who can step in. Here, replacing that person usually means asking someone to relocate. That is a decision for a whole household, not just a career move, and it takes time and money on both sides to make it work.

Almost every employer up here is small. According to the Australian Small Business and Family Enterprise Ombudsman, 97.3% of Australian businesses have fewer than 20 employees. Queensland is one of only two states where most small businesses are located in regional areas, the Ombudsman's location data shows.

Those businesses already struggle to fill roles. Jobs and Skills Australia reports that regional employers filled only 65% of advertised vacancies in the March quarter of 2026, and the gap between regional and metropolitan areas widened to 4.6 percentage points. Locally, Townsville Enterprise says businesses across all industries have consistently raised the difficulty of attracting and retaining workers.

You never know how hard it is to employ somebody until you're a micro firm or a boutique. So when a regional business finds the right person, trains them and helps them build a life here, that investment is far bigger than a salary. A restraint clause is one of the few tools an employer has to protect it.

This won't stop at professional services either. I draft employment agreements for contractors who service mine sites, and those agreements say you can't go and work for competing businesses or clients. These are qualified tradespeople earning really good money, working for employers who also have trouble attracting staff. Not everybody wants to work in Clermont or Mount Isa.

The question every employer now has to ask

What it looks like when a team walks

I had a client who was very successful in the medical services field and had opened multiple clinics. And then the manager left. She took all of the staff and approached the clients. She also took the intellectual property: the policies, absolutely everything. My client had set up a model, and this person took it.

At that time, we had the capacity to do something about it.

Under the draft, part of that protection would remain. A properly drafted contract could still restrain the approach to clients and the use of confidential information. But the clause that stops a departing manager from recruiting the whole team would be gone. It doesn't matter how much the person earns. In a smaller organisation, losing the team in one hit could decimate the business.

When I read the draft, my next thought was this. How far do I let my senior employees build relationships with my clients?

Will this change the way we encourage senior people to relate to our clients and to work in our business?  It's an interesting question, and I don't like where it leads. Small firms can offer mentoring, flexibility and real responsibility early. A law that makes owners nervous about giving their best people that access helps nobody.

What I'd be doing now, as a lawyer

This is a draft and it may change, but I wouldn't wait for the final version before looking at your documents.

• Review your employment contracts before the law starts. As drafted, restraints in arrangements entered into before commencement keep operating, unless the arrangement is later varied. A variation after commencement brings the restraint under the new rules, even where the change has nothing to do with the restraint. So get your contracts right now, and get advice before you vary one later.
• Replace cascading clauses with one reasonable restraint. Any restraint that survives will need a single duration and a single geographic area. Pick the one you can justify.
• Tighten client non-solicitation and confidentiality terms. These become your main protection, so they need to be specific to your business. Don't overreach. A confidentiality clause so broad that it effectively stops someone taking a new job would be treated as a non-compete in disguise.
• Look at notice periods and retention incentives. Reasonable notice periods, fully paid gardening leave and genuine retention arrangements such as deferred bonuses sit outside the ban. For key people, these may do more for you than a restraint ever did.
• Check your commercial agreements too. The draft would also make "no-poach" arrangements between businesses a form of cartel conduct. If your service contracts say a client won't hire your staff, get them reviewed. Restraints in shareholders agreements and sale of business agreements that protect goodwill are not caught by the employment changes.
• Clean up your templates. Simply including a banned clause would be a contravention, even if you never intended to enforce it. For a company the penalty could be up to $109,200, or $1,092,000 for a serious contravention, with a six-month grace period before the penalties start.

Cohen Legal Office, Townsville, Employment Law Advice For Regional Employers

Not law yet, but don't wait

This is a real concern for people like me, and it should be a concern for every professional services firm and every regional employer who has invested in their people. I'll be watching what comes out of the consultation.

In the meantime, your employment contract is still your first port of call. If you're not sure what yours says, or whether it would hold up under the new rules, now is the time to find out. Getting clear legal advice early can make all the difference. Talk to our team about a review of your employment contracts.

Disclaimer: This article provides general information only and does not constitute legal advice. You should obtain advice specific to your circumstances before making any decisions.