Are employee non-competes enforceable in New South Wales?
Only to the extent they are reasonable. A post-employment non-compete is treated as a restraint of trade, which the courts presume is void and contrary to public policy unless the employer shows it goes no further than is reasonably necessary to protect a legitimate business interest . What makes New South Wales distinctive is that, even when a clause is drafted too broadly, the Restraints of Trade Act 1976 (NSW) lets the Supreme Court enforce the clause to a reasonable extent rather than striking it down outright .
New South Wales is not a per se ban jurisdiction, and it has no statute that sets fixed numeric limits on duration or area. It is a reasonableness jurisdiction built on the common-law restraint-of-trade doctrine, modified by one important statute. The starting point is that every post-employment covenant is presumptively unenforceable, and the burden is on the employer to justify it as reasonable in the interests of both the parties and the public .
“Any contractual restraint of trade is prima facie unlawful and invalid.”
Courts apply the doctrine more strictly to employment covenants than to covenants in commercial deals, on the view that an employee usually has less bargaining power than a business seller . The sections that follow work through the statutory read-down power, what counts as a legitimate interest, how reasonableness of scope is judged, and the open question of whether a breach can extend the restraint.
Sources for this answer
Case law · 1950-09-29
A.1 Lindner v Murdock's GaragePDFLindner v Murdock's Garage supports the rule that all restraints of trade are presumptively invalid and may be upheld only if the party enforcing them shows they are reasonably necessary to protect a legitimate interest and not contrary to the public interest.
Any contractual restraint of trade is prima facie unlawful and invalid.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Kitto J).
Case law · 2004-10-20
A.3 Woolworths Ltd v OlsonA restraint of trade is justifiable only if it is reasonable in reference to the interests of the parties and the public; otherwise it is contrary to public policy and invalid.
A restraint of trade is justifiable only if the restriction is reasonable in reference to the interests of the parties and of the public
See Woolworths Ltd v Olson [2004] NSWCA 372.
Case law · 2004-10-20
A.4 Woolworths Ltd v OlsonCourts take a stricter and less favourable view of restraint covenants between employer and employee than of similar covenants in commercial agreements.
The courts in general take a stricter and less favourable view of covenants in restraint of trade entered into between employer and employee than of similar covenants in commercial agreements
See Woolworths Ltd v Olson [2004] NSWCA 372.
Primary law
A.2 Restraints of Trade Act 1976 (NSW) s 4(1)Section 4(1) provides that a restraint of trade is valid to the extent it is not against public policy, whether or not the clause is drafted in severable terms — the statutory basis for enforcing an overbroad clause to a reasonable extent.
A restraint of trade is valid to the extent to which it is not against public policy, whether it is in severable terms or not.
See Restraints of Trade Act 1976 (NSW) s 4(1).
Can a New South Wales court narrow an overbroad non-compete?
Yes — more readily than in most common-law jurisdictions, but only by enforcing the clause to a reasonable extent, not by re-drafting it. At common law an overbroad restraint was simply void, and a court could only delete severable words under the blue-pencil rule . Section 4(1) of the Restraints of Trade Act 1976 (NSW) changed that for New South Wales : a court may now enforce a covenant to the extent the restraint is reasonable, even though the clause as written is too wide .
This statutory power is stronger than the blue-pencil rule, but it is not a power to rewrite the bargain. The distinction matters in practice. A court applying s 4(1) looks at the actual or threatened breach and asks whether enforcing the clause against that conduct would be contrary to public policy; if not, it can grant a narrower injunction that falls inside the contractual words. It cannot reconstruct the clause into something the parties did not write .
Woolworths Ltd v Olson shows the power in action. The Court of Appeal accepted that a 12-month, Australia-and-New-Zealand restraint on a senior executive was expressed too broadly, but used s 4(1) to enforce a narrower, six-month restraint against the executive joining a named supermarket competitor in Australia. The reasoning is explicit that s 4(1) is a capacity to enforce a reasonable restraint within an over-wide clause, not a licence to remake the contract .
“The court may not rewrite the covenant while exercising the power under s4(1).”
The read-down power also has a safety valve that runs the other way. Section 4(3) lets a person who is subject to a restraint apply to the Supreme Court, and where the restraint is against public policy partly because of a manifest failure to attempt to make it a reasonable restraint, the Court may — notwithstanding s 4(1) — order the restraint to be altogether invalid or valid only to a lesser extent . In other words, an employer who draws a grossly overbroad clause with no genuine attempt at reasonableness cannot always count on s 4(1) to rescue it; that is one reason a cascading clause, which is evidence of an attempt to confine the restraint to reasonable bounds, matters.
The s 4(1) read-down power is not a reason to draft aggressively. The court can enforce a wide clause only to a reasonable extent and cannot add or substitute words to save it, so a covenant that can be narrowed only by re-drafting still fails. Draft scope, area, and duration to the minimum the legitimate interest requires, so the clause is defensible as written rather than dependent on the court trimming it .
Sources for this answer
Case law · 2004-10-20
B.1 Woolworths Ltd v OlsonAt common law an excessive and unreasonable restraint could not be severed; if the undertaking went beyond what was reasonable it was void and unenforceable.
The common law did not countenance the severance of an excessive and therefore unreasonable restraint.
See Woolworths Ltd v Olson [2004] NSWCA 372.
Case law · 2004-10-20
B.2 Woolworths Ltd v OlsonSection 4(1) of the Restraints of Trade Act 1976 overturned the common-law rule against severance of an excessive restraint.
Section 4(1) of the Restraints of Trade Act 1976 overturned this.
See Woolworths Ltd v Olson [2004] NSWCA 372.
Case law · 2004-10-20
B.3 Woolworths Ltd v OlsonSection 4(1) lets the court disregard that a restraint goes beyond what is reasonable, provided the restraint can be enforced to an extent that is reasonable.
Section 4(1) allows the court to ignore the fact that the restraint goes beyond what is reasonable, provided the restraint can be enforced to an extent that is reasonable.
See Woolworths Ltd v Olson [2004] NSWCA 372.
Case law · 2004-10-20
B.5 Woolworths Ltd v OlsonThe s 4(1) power does not extend to rewriting the covenant; the court enforces the existing clause to a reasonable extent rather than redrafting it.
The court may not rewrite the covenant while exercising the power under s4(1).
See Woolworths Ltd v Olson [2004] NSWCA 372.
Case law · 2004-10-20
B.4 Woolworths Ltd v OlsonA restraint validated under s 4 must fall wholly within the contractual provision; the court may cut the clause back but may not reconstruct it into a different bargain.
a restraint validated by the section must fall wholly within the scope of the contractual provision. Amputation is directed but reconstruction is not.
See Woolworths Ltd v Olson [2004] NSWCA 372, quoting ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640.
Primary law
B.6 Restraints of Trade Act 1976 (NSW) s 4(3)On application by a person subject to the restraint, where the restraint is against public policy partly because of a manifest failure to attempt to make it a reasonable restraint, the Supreme Court may order it to be altogether invalid or valid only to a lesser extent, notwithstanding s 4(1).
a manifest failure by a person who created or joined in creating the restraint to attempt to make the restraint a reasonable restraint
See Restraints of Trade Act 1976 (NSW) s 4(3).
Are cascading or ladder restraint clauses valid in New South Wales?
They can be, and they remain common in New South Wales drafting. A cascading clause sets out a menu of progressively narrower combinations of period and area, each expressed as a separate, severable restraint. In Hanna v OAMPS Insurance Brokers Ltd, the Court of Appeal held that a nine-rung cascading restraint was not void for uncertainty, because each rung was an independent covenant that could be understood and obeyed on its own . The restraints in Hanna were client non-solicitation and non-dealing covenants — restrictions on canvassing, soliciting, or dealing with named clients — rather than a blanket bar on competing, but the certainty and read-down reasoning applies equally to a cascading non-compete.
The certainty objection to cascading clauses is that the employee cannot tell which rung binds them. The Court of Appeal rejected that argument where the clause makes each combination a separate and independent covenant: every rung binds, and complying with the widest necessarily complies with the narrower ones, so no selection mechanism or hierarchy is required .
The decision also explains why these clauses persist. Because the common law allows a court to delete severable words but not to read a clause down, employers draft multiple severable restraints so that, if the widest is unreasonable, a narrower one can still stand . The Court left open whether a sufficiently complex, repetitive cascading structure might be against public policy under s 4(1), but held that this particular deed was not .
A cascading clause is not a guaranteed safety net. The Court of Appeal reserved the question whether an overly complex, multi-layered cascade could be against public policy under s 4(1), so each rung should still represent a genuinely reasonable restraint rather than a mechanical ladder of every possible permutation . The flip side also matters: under s 4(3) a restrained person can ask the Court to strike a clause down where there has been a manifest failure to attempt a reasonable restraint, so a cascade should read as a genuine attempt to confine the restraint, not as an aggressive maximal grab .
Sources for this answer
Case law · 2010-11-12
C.1 Hanna v OAMPS Insurance Brokers LtdA cascading restraint deed comprising nine separate restraints, from the widest (15 months across Australia) to the narrowest (12 months in the Sydney metropolitan area), was upheld as a set of binding independent covenants.
Thus there were nine restraints, from the widest (15 months in Australia) to the narrowest (12 months, in Mr Hanna's case, in the metropolitan area of Sydney).
See Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.
Case law · 2010-11-12
C.2 Hanna v OAMPS Insurance Brokers LtdWhere each rung of a cascading clause is a separate binding covenant capable of compliance without breaching any other, no mechanism or hierarchy of order of operation is required and the clause is not uncertain.
Neither their operation nor any principle of law concerned with certainty of contract requires a mechanism or hierarchy of order of operation.
See Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.
Case law · 2010-11-12
C.3 Hanna v OAMPS Insurance Brokers LtdBecause of the common-law severance and blue-pencil rules, it is understandable why commercial parties draft multiple severable restraint clauses.
Given the common law rules and, in particular, those concerning severance and the so-called "blue-pencil" test, it is understandable why commercial parties seek to employ multiple severable clauses.
See Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.
Case law · 2010-11-12
C.4 Hanna v OAMPS Insurance Brokers LtdThe particular cascading restraint deed was not against public policy by reason of the multiple and several operation of its clauses, though the Court reserved the broader public-policy question for a fuller argument.
The restraint deed is not against public policy by reason of the multiple and several operation of cll 2 and 4.
See Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.
Primary law
C.5 Restraints of Trade Act 1976 (NSW) s 4(3)On application by a person subject to the restraint, where the restraint is against public policy partly because of a manifest failure to attempt to make it a reasonable restraint, the Supreme Court may order it to be altogether invalid or valid only to a lesser extent, notwithstanding s 4(1).
a manifest failure by a person who created or joined in creating the restraint to attempt to make the restraint a reasonable restraint
See Restraints of Trade Act 1976 (NSW) s 4(3).
What legitimate interest must an employer show to enforce a NSW non-compete?
A protectable business interest — not a mere wish to avoid competition. An employer cannot restrain a former employee just because the new employer is a rival . The recognised interests are the employer's trade connection with its customers and the goodwill of the business, together with trade secrets and confidential information , and, increasingly, the maintenance of a stable trained workforce, usually protected through a non-solicitation clause rather than a blanket non-compete.
The dividing line drawn in Lindner v Murdock's Garage is between protecting an asset and suppressing a rival. An employee's own general skill, experience, and know-how are the employee's to use; what the law protects is the employer's customer connection and confidential information . A covenant aimed at competition by itself, rather than at a recognised interest, is invalid .
“An employer must be prepared to face the competition of a former employee if it comes.”
Two further cases sharpen the confidential-information limb. In Buckley v Tutty (1971) 125 CLR 353, the High Court confirmed the modern reasonableness framework that NSW courts apply, and in Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 the NSW Court of Appeal mapped the spectrum between genuine trade secrets, which can support a restraint, and the general know-how an employee is free to carry away, which cannot. The practical point for drafters is that the interest has to be identified and real; an employer who cannot point to a protectable interest cannot enforce the clause whatever its scope.
A clause that simply bars a former employee from joining or starting a competing business, without tying the restraint to a specific protectable interest, is the weakest position. Identify the actual interest — the customer connection, the trade secrets, or the workforce — and draft the restraint around it, because a restraint aimed only at competition by a former employee is not enforceable .
Sources for this answer
Case law · 1950-09-29
D.1 Lindner v Murdock's GaragePDFAn employer has no protectable interest in freedom from competition by a former employee as such and must be prepared to face that competition; only a recognised interest such as trade connection or confidential information can support a restraint.
An employer must be prepared to face the competition of a former employee if it comes.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Case law · 1950-09-29
D.2 Lindner v Murdock's GaragePDFThe protectable interest is the employer's business connection with its customers — the objective knowledge of customers an employee acquires — not the technical skill and general knowledge the employee is free to take away.
The knowledge which, because its use may deprive the employer of the business connection which he is entitled to preserve as his own, he may require his employee to abstain from using, is objective knowledge of customers, their peculiarities, their credit and so forth
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Kitto J).
How long and how wide can a New South Wales non-compete be?
There is no statutory limit; reasonableness is decided case by case on the activity restrained, the geographic area, the duration, and the employee's seniority and actual customer influence. Reasonableness is tested as at the date the contract was made, not by hindsight . A geographic area wider than the employer's business reaches, or a period longer than is needed to protect the interest, is likely to be unreasonable .
Because the limits are judge-made, there is no fixed ceiling to anchor a covenant, and the analysis cuts both ways. In Lindner v Murdock's Garage the High Court held an area covenant void because the area it covered was wider than the employer's business reasonably required . By contrast, in Woolworths Ltd v Olson the Court of Appeal enforced a six-month restraint against a senior executive joining a named supermarket competitor, treating that scope as reasonable in light of the executive's access to a valuable confidential project .
On duration, NSW courts ask what period is reasonably necessary to protect the interest — for a customer-connection interest, commonly how long it takes for the former employee's influence over clients to fade or for the employer to cement its own connection. Hanna v OAMPS Insurance Brokers Ltd makes clear there is no single mandatory test for the reasonable length of a restraint ; the court chooses the approach that fits the facts . In that case a 12-month client non-solicitation and non-dealing restraint on a senior insurance broker — not a 12-month general non-compete — was held reasonable, the period being tied to the annual policy-renewal cycle over which the broker's client influence would persist. As a general matter, periods beyond about 12 months in the employment context attract close scrutiny.
Sources for this answer
Case law · 2004-10-20
E.1 Woolworths Ltd v OlsonThe validity and reasonableness of a restraint are tested at the time of entering the contract, by reference to what the clause entitled or required the parties to do.
The validity of the restraint is to be tested at the time of entering into the contract
See Woolworths Ltd v Olson [2004] NSWCA 372.
Case law · 1950-09-29
E.2 Lindner v Murdock's GaragePDFA restraint whose geographic area is wider than reasonably necessary to protect the employer's business is unreasonable and void; here the area covered was held unreasonably wide.
I think it must be held that the area was unreasonably wide.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Case law · 2010-11-12
E.3 Hanna v OAMPS Insurance Brokers LtdThere is no legally required test for assessing the reasonableness of the duration of a restraint period.
There is no legally required test in these circumstances.
See Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.
Case law · 2010-11-12
E.4 Hanna v OAMPS Insurance Brokers LtdThe approach to assessing the reasonable duration of a restraint depends on the facts and the evaluation of what is reasonable, rather than on any single mandatory test.
The use of one test or another depends on the facts and the evaluation of the approach that is reasonable.
See Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.
Do paid restraints, garden leave, and fresh consideration help in New South Wales?
They can strengthen an employer's position, but they do not displace the reasonableness requirement. A restraint that the employee is paid to observe is more likely to be enforced, because it weighs against the argument that the clause stops the employee from earning a living . Garden leave, where the employee stays employed and paid through the notice period, is assessed more flexibly than a post-termination restraint because the employee remains bound by duties of fidelity.
In Woolworths Ltd v Olson the restraint was coupled with a contractual restraint payment equal to the executive's pay for the restraint period, and the Court of Appeal treated that payment as one of the circumstances supporting enforcement of a six-month restraint. A court gives weight to what the parties negotiated, though the parties' own statement that a clause is reasonable is not conclusive .
For mid-employment restraints — covenants introduced after the employee is already on foot — the practical concern is consideration and reasonableness assessed at the time the new clause is agreed. New South Wales courts test validity as at the date the restraint is made , so a restraint bolted on later is judged on the circumstances then, not on the original hiring.
On garden leave for senior people, Pearson v HRX Holdings Pty Ltd [2012] FCAFC 111 illustrates that a generously remunerated, fixed-term garden-leave arrangement for a key executive can be enforced, but it remains subject to the same underlying reasonableness scrutiny rather than being automatically valid.
Sources for this answer
Case law · 2004-10-20
F.1 Woolworths Ltd v OlsonA court gives considerable weight to what the parties negotiated and embodied in their contract, but a contractual statement of reasonableness is not conclusive on validity.
The court gives considerable weight to what parties have negotiated and embodied in their contracts, but a contractual consensus cannot be regarded as conclusive
See Woolworths Ltd v Olson [2004] NSWCA 372.
Case law · 2010-11-12
F.2 Hanna v OAMPS Insurance Brokers LtdThe reasonableness and validity of a restraint clause are assessed at the time of entry into the contract, which matters for restraints introduced mid-employment.
it was common ground that the reasonableness and validity of the restraint clause should be assessed at the time of entry into the contract
See Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.
What if the employer wrongfully dismissed the employee?
The restraint may fall away. The employer carries the onus of proving the restraint is reasonable in the first place , so an employer seeking an injunction starts from a position where it must justify the covenant. Beyond that, the long-standing common-law principle associated with General Billposting Co Ltd v Atkinson [1909] AC 118 is that an employer who wrongfully dismisses an employee — for example by repudiating the contract through a dismissal without the notice the contract requires — generally cannot afterwards enforce a post-employment restraint against that employee. The staged New South Wales authorities here do not themselves decide that point, so it is best treated as a general principle a court may apply rather than a settled NSW rule.
The reasonableness analysis assumes a clause an employer is entitled to rely on, and the employer bears the onus of establishing that reasonableness . Where the employer is the party in serious breach, a court may, applying the general common-law principle, treat the employee as released from the covenant, and in any event the equitable remedies an employer needs — chiefly an injunction — are discretionary and sensitive to the employer's own conduct.
The employer already bears the onus of proving the restraint reasonable before any question of its own breach arises . On top of that, an employer that terminates abruptly — without giving contractual notice or paying in lieu — may risk losing the very non-compete it wants to rely on, because under the general common-law principle a repudiatory breach by the employer can release the employee from the restraint. That repudiation point is not settled by the NSW authorities discussed here, so treat it as a risk rather than a certainty: before suing to enforce a covenant, confirm that the termination itself complied with the contract.
Sources for this answer
Case law · 1950-09-29
G.1 Lindner v Murdock's GaragePDFThe employer bears the onus of proving circumstances showing the restriction on the employee's freedom to work is reasonable.
The onus was on the plaintiff firm to prove circumstances showing that the restriction on the defendant's freedom to work was reasonable.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Does a New South Wales non-compete pause or extend if the employee breaches?
This is an open question, and an employer should not assume the clock stops. No settled New South Wales authority holds that a restraint period tolls — pauses and then resumes — while a former employee is in breach or while litigation runs. Australian courts treat rolling or indefinite restraints with suspicion and generally prefer to address a breach through damages or a tailored injunction rather than by extending the restraint period .
The reasonableness of a restraint is judged as at the date the contract was made , which sits uneasily with a clause that purports to lengthen the restraint automatically depending on the employee's later conduct. A drafting device that extends the period by the length of any breach pushes the effective duration beyond what was assessed as reasonable at the outset, and there is no clear NSW authority validating it. The safer assumption is that the stated period is the maximum the employer can rely on.
Do not rely on a clause that purports to extend the non-compete by the length of any breach. No clear New South Wales authority validates tolling of the restraint period, and because reasonableness is tested as at the date of the contract, an automatic extension risks being treated as unreasonable. Treat the stated duration as the maximum and address an actual breach through an injunction or a damages claim instead .
Sources for this answer
Case law · 1950-09-29
H.1 Lindner v Murdock's GaragePDFBecause restraints of trade are presumptively invalid, courts confine them to what is reasonably necessary; this disfavours open-ended or self-extending restraints.
Any contractual restraint of trade is prima facie unlawful and invalid.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Kitto J).
Case law · 2004-10-20
H.2 Woolworths Ltd v OlsonValidity and reasonableness are tested at the time of entering the contract, which is in tension with a clause that automatically extends the restraint based on the employee's later breach.
The validity of the restraint is to be tested at the time of entering into the contract
See Woolworths Ltd v Olson [2004] NSWCA 372.
Do New South Wales restraint rules differ for contractors and business sales?
Yes, in opposite directions. Restraints on independent contractors are assessed under the same restraint-of-trade doctrine as employee covenants, and courts may give a contractor slightly more latitude because the relationship is treated as more commercial than a pure employment relationship. Restraints given by the seller of a business are judged much more leniently, because a buyer is entitled to protect the goodwill it paid for and the parties bargain on more equal terms .
The sale-of-business leniency is long-standing. A restraint in a sale agreement is more easily upheld than the same restraint in an employment contract , because the policy concerns that make employment covenants suspect — unequal bargaining power and the risk of locking a person out of their livelihood — are weaker when a vendor sells a business for value and promises not to immediately compete away the goodwill just sold. A multi-year restraint can be reasonable in that setting.
For contractors, the key question is the same one that governs employees: is there a legitimate interest, and is the scope no wider than necessary to protect it. The label matters less than the substance of the relationship and the interest at stake.
Sources for this answer
Case law · 1950-09-29
I.1 Lindner v Murdock's GaragePDFA distinction is drawn between a restraint in a sale-of-business agreement and a restraint in an employment agreement, with the former treated more favourably.
A distinction is drawn between a restraint upon trade included in an agreement for the sale of a business and a restraint included in an agreement with an employee.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Latham CJ).
Case law · 1950-09-29
I.2 Lindner v Murdock's GaragePDFA restraint is more easily upheld in the sale-of-business context than in the employment context.
The restraint is more easily upheld in the former than in the latter case.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Latham CJ).
Is a federal ban on non-competes coming to Australia?
A ban has been proposed but is not yet law, and as of June 2026 the common-law and Restraints of Trade Act framework above still governs in New South Wales . According to Australian Government Treasury material and law-firm commentary, the Government announced in the 2025–26 Federal Budget that it intends to ban post-employment non-competes for workers earning under the Fair Work Act high-income threshold (reported at around AUD $183,100), with Treasury running a consultation on the design, and the reform expected to be legislated during 2026 and to take effect from 2027, operating prospectively. Those figures and dates come from that secondary material — Treasury announcements and commentary — not from the Restraints of Trade Act, which does not address the proposed federal scheme. Until any ban is enacted, the existing statutory and common-law framework continues to govern .
The proposal, as described in current Treasury material and law-firm commentary rather than in any enacted statute, would cover most employees earning below the high-income threshold while excluding sale-of-business covenants and restraints on higher earners and contractors. Non-solicitation, no-poach, and wage-fixing arrangements are also reported to be under consideration. None of this is in force, and the precise scope, threshold, and commencement could change before any legislation passes; the threshold figure and the 2026/2027 timeline in particular are drawn from secondary reporting and should be re-checked against the enacted text when it appears.
Because this is a future legislative matter, employers should treat the timeline and detail as provisional rather than settled. A covenant entered into now is governed by existing law; whether and how a future ban would affect existing or new agreements will depend on the enacted text and its transitional provisions.
Do not draft to a federal ban that does not yet exist. As of June 2026 no Commonwealth statute bans employee non-competes, so enforceability in New South Wales still turns on the common-law reasonableness test and the Restraints of Trade Act 1976 (NSW). Track the proposal through to enacted legislation before changing practice, because its threshold, scope, and commencement remain proposals subject to change .
Sources for this answer
Primary law
J.1 Restraints of Trade Act 1976 (NSW) s 4(1)Until any federal ban is enacted, s 4(1) of the Restraints of Trade Act 1976 (NSW) and the common-law reasonableness doctrine continue to govern the enforceability of non-competes in New South Wales.
A restraint of trade is valid to the extent to which it is not against public policy, whether it is in severable terms or not.
See Restraints of Trade Act 1976 (NSW) s 4(1).