{ "type": "practice-guide", "canonical": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales", "links": [ { "rel": "self", "href": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales.json", "type": "application/json" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales", "type": "text/html" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales/markdown", "type": "text/markdown" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales/json", "type": "application/json" } ], "data": { "topic": "non-compete", "state": "new-south-wales", "frontmatter": { "title": "Non-Compete Enforceability in New South Wales", "description": "In New South Wales a post-employment non-compete is presumptively void as a restraint of trade and binds a former employee only to the extent it is reasonable, but the Restraints of Trade Act 1976 (NSW) gives the Supreme Court a statutory power to enforce an overbroad clause to a reasonable extent rather than striking it down entirely.", "state": "New South Wales, Australia", "country_code": "AU", "lastReviewed": "2026-06-10", "license": "CC BY 4.0", "authors": [ "steven-obiajulu" ], "summary": { "enforceability": "reasonable", "bottomLine": "A NSW non-compete is presumptively void and binds a former employee only to the extent it is reasonable to protect a legitimate interest, but the Restraints of Trade Act 1976 (NSW) lets the Supreme Court enforce an overbroad clause to a reasonable extent instead of voiding it outright.", "keyLaw": "Restraints of Trade Act 1976 (NSW) s 4; common-law restraint of trade", "exceptions": "Sale-of-business covenants are judged more leniently; a proposed federal ban would cover most employees earning under the Fair Work Act high-income threshold but would exclude sale-of-business and above-threshold restraints.", "courtNarrowing": "trimOnly", "appliesToContractors": "yes", "extendedForBreach": "Untested; courts treat rolling or indefinite restraints with suspicion and prefer damages over extending an injunction.", "maxLength": "No statutory cap; periods beyond about 12 months in employment are heavily scrutinised.", "noticeRequirement": "None", "saleOfBusiness": "Sale covenants judged less strictly than employee restraints", "customerNonSolicit": "12-month client non-solicit upheld", "employeeNonSolicit": "Workforce stability via non-solicit" }, "about": [ "New South Wales non-compete agreements", "NSW restraint of trade clauses", "Restraints of Trade Act 1976 section 4", "NSW read-down restraint of trade", "cascading restraint clause Australia", "Woolworths v Olson restraint", "Hanna v OAMPS cascading clause", "Lindner v Murdock's Garage reasonableness", "NSW garden leave non-compete", "Australia proposed non-compete ban" ], "eyebrow": "New South Wales · Australia Law Practice Guide" }, "questions": [ { "slug": "enforceability", "label": "Are non-competes enforceable?", "heading": "Are employee non-competes enforceable in New South Wales?", "answerText": "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.", "sources": [ { "id": "lindner-prima-facie-void", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Kitto J).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "Lindner 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.", "verbatimQuote": "Any contractual restraint of trade is prima facie unlawful and invalid.", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-lindner-prima-facie-void" }, { "id": "olson-justifiable-reasonable", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Woolworths Ltd v Olson", "citation": "Woolworths Ltd v Olson [2004] NSWCA 372.", "url": "https://www.caselaw.nsw.gov.au/decision/549fb2db3004262463b8633d", "proposition": "A 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.", "verbatimQuote": "A restraint of trade is justifiable only if the restriction is reasonable in reference to the interests of the parties and of the public", "date": "2004-10-20", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-olson-justifiable-reasonable" }, { "id": "olson-stricter-employment", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Woolworths Ltd v Olson", "citation": "Woolworths Ltd v Olson [2004] NSWCA 372.", "url": "https://www.caselaw.nsw.gov.au/decision/549fb2db3004262463b8633d", "proposition": "Courts take a stricter and less favourable view of restraint covenants between employer and employee than of similar covenants in commercial agreements.", "verbatimQuote": "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", "date": "2004-10-20", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-olson-stricter-employment" }, { "id": "rota-s4-1", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Restraints of Trade Act 1976 (NSW) s 4(1)", "citation": "Restraints of Trade Act 1976 (NSW) s 4(1).", "url": "https://legislation.nsw.gov.au/view/whole/html/inforce/current/act-1976-067", "proposition": "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.", "verbatimQuote": "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.", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-rota-s4-1" } ] }, { "slug": "court-narrowing", "label": "Can a court narrow an overbroad clause?", "heading": "Can a New South Wales court narrow an overbroad non-compete?", "answerText": "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.", "sources": [ { "id": "olson-common-law-no-severance", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Woolworths Ltd v Olson", "citation": "Woolworths Ltd v Olson [2004] NSWCA 372.", "url": "https://www.caselaw.nsw.gov.au/decision/549fb2db3004262463b8633d", "proposition": "At common law an excessive and unreasonable restraint could not be severed; if the undertaking went beyond what was reasonable it was void and unenforceable.", "verbatimQuote": "The common law did not countenance the severance of an excessive and therefore unreasonable restraint.", "date": "2004-10-20", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-olson-common-law-no-severance" }, { "id": "olson-s4-overturned", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Woolworths Ltd v Olson", "citation": "Woolworths Ltd v Olson [2004] NSWCA 372.", "url": "https://www.caselaw.nsw.gov.au/decision/549fb2db3004262463b8633d", "proposition": "Section 4(1) of the Restraints of Trade Act 1976 overturned the common-law rule against severance of an excessive restraint.", "verbatimQuote": "Section 4(1) of the Restraints of Trade Act 1976 overturned this.", "date": "2004-10-20", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-olson-s4-overturned" }, { "id": "olson-s4-ignore-excess", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Woolworths Ltd v Olson", "citation": "Woolworths Ltd v Olson [2004] NSWCA 372.", "url": "https://www.caselaw.nsw.gov.au/decision/549fb2db3004262463b8633d", "proposition": "Section 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.", "verbatimQuote": "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.", "date": "2004-10-20", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-olson-s4-ignore-excess" }, { "id": "olson-no-remake", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Woolworths Ltd v Olson", "citation": "Woolworths Ltd v Olson [2004] NSWCA 372.", "url": "https://www.caselaw.nsw.gov.au/decision/549fb2db3004262463b8633d", "proposition": "The 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.", "verbatimQuote": "The court may not rewrite the covenant while exercising the power under s4(1).", "date": "2004-10-20", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-olson-no-remake" }, { "id": "olson-amputation", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Woolworths Ltd v Olson", "citation": "Woolworths Ltd v Olson [2004] NSWCA 372, quoting ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640.", "url": "https://www.caselaw.nsw.gov.au/decision/549fb2db3004262463b8633d", "proposition": "A 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.", "verbatimQuote": "a restraint validated by the section must fall wholly within the scope of the contractual provision. Amputation is directed but reconstruction is not.", "date": "2004-10-20", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-olson-amputation" }, { "id": "rota-s4-3", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Restraints of Trade Act 1976 (NSW) s 4(3)", "citation": "Restraints of Trade Act 1976 (NSW) s 4(3).", "url": "https://legislation.nsw.gov.au/view/whole/html/inforce/current/act-1976-067", "proposition": "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).", "verbatimQuote": "a manifest failure by a person who created or joined in creating the restraint to attempt to make the restraint a reasonable restraint", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-rota-s4-3" } ] }, { "slug": "cascading-clauses", "label": "Are cascading or ladder clauses valid?", "heading": "Are cascading or ladder restraint clauses valid in New South Wales?", "answerText": "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.", "sources": [ { "id": "hanna-nine-restraints", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hanna v OAMPS Insurance Brokers Ltd", "citation": "Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.", "url": "https://www.caselaw.nsw.gov.au/decision/549ff3313004262463c5979a", "proposition": "A 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.", "verbatimQuote": "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).", "date": "2010-11-12", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-hanna-nine-restraints" }, { "id": "hanna-no-mechanism", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hanna v OAMPS Insurance Brokers Ltd", "citation": "Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.", "url": "https://www.caselaw.nsw.gov.au/decision/549ff3313004262463c5979a", "proposition": "Where 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.", "verbatimQuote": "Neither their operation nor any principle of law concerned with certainty of contract requires a mechanism or hierarchy of order of operation.", "date": "2010-11-12", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-hanna-no-mechanism" }, { "id": "hanna-why-cascading", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hanna v OAMPS Insurance Brokers Ltd", "citation": "Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.", "url": "https://www.caselaw.nsw.gov.au/decision/549ff3313004262463c5979a", "proposition": "Because of the common-law severance and blue-pencil rules, it is understandable why commercial parties draft multiple severable restraint clauses.", "verbatimQuote": "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.", "date": "2010-11-12", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-hanna-why-cascading" }, { "id": "hanna-not-against-policy", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hanna v OAMPS Insurance Brokers Ltd", "citation": "Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.", "url": "https://www.caselaw.nsw.gov.au/decision/549ff3313004262463c5979a", "proposition": "The 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.", "verbatimQuote": "The restraint deed is not against public policy by reason of the multiple and several operation of cll 2 and 4.", "date": "2010-11-12", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-hanna-not-against-policy" }, { "id": "rota-s4-3-cascade", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Restraints of Trade Act 1976 (NSW) s 4(3)", "citation": "Restraints of Trade Act 1976 (NSW) s 4(3).", "url": "https://legislation.nsw.gov.au/view/whole/html/inforce/current/act-1976-067", "proposition": "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).", "verbatimQuote": "a manifest failure by a person who created or joined in creating the restraint to attempt to make the restraint a reasonable restraint", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-rota-s4-3-cascade" } ] }, { "slug": "legitimate-interest", "label": "What interest must an employer protect?", "heading": "What legitimate interest must an employer show to enforce a NSW non-compete?", "answerText": "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.", "sources": [ { "id": "lindner-not-competition-per-se", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "An 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.", "verbatimQuote": "An employer must be prepared to face the competition of a former employee if it comes.", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-lindner-not-competition-per-se" }, { "id": "lindner-trade-connection", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Kitto J).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "The 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.", "verbatimQuote": "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", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-lindner-trade-connection" } ] }, { "slug": "reasonableness-factors", "label": "How long and how wide can it be?", "heading": "How long and how wide can a New South Wales non-compete be?", "answerText": "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.", "sources": [ { "id": "olson-tested-at-contract", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Woolworths Ltd v Olson", "citation": "Woolworths Ltd v Olson [2004] NSWCA 372.", "url": "https://www.caselaw.nsw.gov.au/decision/549fb2db3004262463b8633d", "proposition": "The 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.", "verbatimQuote": "The validity of the restraint is to be tested at the time of entering into the contract", "date": "2004-10-20", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-olson-tested-at-contract" }, { "id": "lindner-area-too-wide", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "A 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.", "verbatimQuote": "I think it must be held that the area was unreasonably wide.", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-lindner-area-too-wide" }, { "id": "hanna-no-required-test", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hanna v OAMPS Insurance Brokers Ltd", "citation": "Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.", "url": "https://www.caselaw.nsw.gov.au/decision/549ff3313004262463c5979a", "proposition": "There is no legally required test for assessing the reasonableness of the duration of a restraint period.", "verbatimQuote": "There is no legally required test in these circumstances.", "date": "2010-11-12", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-hanna-no-required-test" }, { "id": "hanna-test-depends-on-facts", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hanna v OAMPS Insurance Brokers Ltd", "citation": "Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.", "url": "https://www.caselaw.nsw.gov.au/decision/549ff3313004262463c5979a", "proposition": "The 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.", "verbatimQuote": "The use of one test or another depends on the facts and the evaluation of the approach that is reasonable.", "date": "2010-11-12", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-hanna-test-depends-on-facts" } ] }, { "slug": "garden-leave", "label": "Do paid restraints and garden leave help?", "heading": "Do paid restraints, garden leave, and fresh consideration help in New South Wales?", "answerText": "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.", "sources": [ { "id": "olson-negotiated-weight", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Woolworths Ltd v Olson", "citation": "Woolworths Ltd v Olson [2004] NSWCA 372.", "url": "https://www.caselaw.nsw.gov.au/decision/549fb2db3004262463b8633d", "proposition": "A 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.", "verbatimQuote": "The court gives considerable weight to what parties have negotiated and embodied in their contracts, but a contractual consensus cannot be regarded as conclusive", "date": "2004-10-20", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-olson-negotiated-weight" }, { "id": "hanna-assessed-at-contract", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hanna v OAMPS Insurance Brokers Ltd", "citation": "Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267.", "url": "https://www.caselaw.nsw.gov.au/decision/549ff3313004262463c5979a", "proposition": "The reasonableness and validity of a restraint clause are assessed at the time of entry into the contract, which matters for restraints introduced mid-employment.", "verbatimQuote": "it was common ground that the reasonableness and validity of the restraint clause should be assessed at the time of entry into the contract", "date": "2010-11-12", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-hanna-assessed-at-contract" } ] }, { "slug": "employer-breach", "label": "What if the employer breached first?", "heading": "What if the employer wrongfully dismissed the employee?", "answerText": "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.", "sources": [ { "id": "lindner-onus-reasonable", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "The employer bears the onus of proving circumstances showing the restriction on the employee's freedom to work is reasonable.", "verbatimQuote": "The onus was on the plaintiff firm to prove circumstances showing that the restriction on the defendant's freedom to work was reasonable.", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-lindner-onus-reasonable" } ] }, { "slug": "tolling", "label": "Does the restriction pause or extend during a breach?", "heading": "Does a New South Wales non-compete pause or extend if the employee breaches?", "answerText": "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.", "sources": [ { "id": "lindner-prima-facie-void-tolling", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Kitto J).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "Because restraints of trade are presumptively invalid, courts confine them to what is reasonably necessary; this disfavours open-ended or self-extending restraints.", "verbatimQuote": "Any contractual restraint of trade is prima facie unlawful and invalid.", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-lindner-prima-facie-void-tolling" }, { "id": "olson-tested-at-contract-tolling", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Woolworths Ltd v Olson", "citation": "Woolworths Ltd v Olson [2004] NSWCA 372.", "url": "https://www.caselaw.nsw.gov.au/decision/549fb2db3004262463b8633d", "proposition": "Validity 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.", "verbatimQuote": "The validity of the restraint is to be tested at the time of entering into the contract", "date": "2004-10-20", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-olson-tested-at-contract-tolling" } ] }, { "slug": "contractors-and-sale", "label": "Do the rules differ for contractors and business sales?", "heading": "Do New South Wales restraint rules differ for contractors and business sales?", "answerText": "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.", "sources": [ { "id": "lindner-sale-distinction", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Latham CJ).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "A 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.", "verbatimQuote": "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.", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-lindner-sale-distinction" }, { "id": "lindner-sale-more-easily", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Latham CJ).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "A restraint is more easily upheld in the sale-of-business context than in the employment context.", "verbatimQuote": "The restraint is more easily upheld in the former than in the latter case.", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-lindner-sale-more-easily" } ] }, { "slug": "federal-reform", "label": "Is a federal non-compete ban coming?", "heading": "Is a federal ban on non-competes coming to Australia?", "answerText": "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.", "sources": [ { "id": "rota-s4-1-reform", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Restraints of Trade Act 1976 (NSW) s 4(1)", "citation": "Restraints of Trade Act 1976 (NSW) s 4(1).", "url": "https://legislation.nsw.gov.au/view/whole/html/inforce/current/act-1976-067", "proposition": "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.", "verbatimQuote": "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.", "anchor": "https://openagreements.org/practice-guides/non-compete/au/new-south-wales#src-rota-s4-1-reform" } ] } ] } }