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No Holding Back


Non-compete clauses in employment contracts have long been a topic of debate, with proponents arguing they protect a company’s interests and detractors claiming they stifle employee mobility and innovation, as well as restrain the trade of employees; essentially depriving them of the opportunity to use their skills to earn a living.

Historically, non-compete clauses have been successfully used for high paying, corporate executive level roles, where employers needed to protect their business. At this level, employers were able to launch an argument built around protecting their intellectual property, business networks and their investment into the employee, which often resulted in individuals needing to take some time out of working (Gardening Leave), before commencing with a new employer.

One issue is that employers have been using these sort of clauses for lower-level positions in an attempt to retain workers and prevent them from moving to competitors. These have yielded limited success because they are generally found to be not fair, not enforceable and for roles at that level, are just not necessary.

The recently released Non-competes and Other Restraints: Understanding the Impacts on Jobs, Business, and Productivity Issues Paper (Issues paper (, sheds light on the complexities and consequences associated with these contentious clauses.

One of the key recommendations from the Issues Paper is for employers to carefully consider the necessity and scope of non-compete clauses in their contracts. It emphasises the importance of balancing the company’s interests with employee rights and the potential negative impacts on job growth and productivity. Employers are urged to tailor non-compete agreements to specific roles and industries to prevent overreach and unintended consequences.

Moreover, the Issues Paper highlights the importance of transparency and communication when implementing non-compete clauses. Employers must clearly explain the rationale behind the clauses and provide employees with a full understanding of their rights and responsibilities. Open dialogue and clear expectations can help mitigate potential conflicts and misunderstandings down the line.

Another key lesson for employers is the need to regularly review and update non-compete agreements to ensure they align with current laws and industry standards. As regulations regarding non-compete clauses continue to evolve, employers must stay informed and adapt their practices accordingly. Failing to do so could leave them vulnerable to legal challenges and reputational harm.

The Issues Paper serves as a valuable resource for employers grappling with the complexities of non-compete clauses in employment contracts and provides some items to consider further for those employers who are thinking of inserting such clauses. By following the key recommendations and lessons outlined in the paper, employers can navigate the challenges associated with non-competes while promoting fairness, innovation, and productivity in the workplace.

While it is important for employers to retain talent, a non-compete clause may not be the best approach for all levels within your business. Ultimately, employers may be better off seeking to understand why employees are looking to leave in the first place and how they may be able to address other cultural issues overall. Further to this, it might pay to part ways with the employee in an amicable way with the key message of, “give us a call if it’s not working out”.

This is an area of employment that is attracting a lot of attention so be sure to keep an eye on how it plays out. The carrot is often better than the stick, particularly if the stick can’t actually be used.

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Written by:
Jamie Paterson
With over 18 years’ experience as a human resources professional within large multi-national organisations, Jamie provides tailored employment relations solutions across geographically diverse operations focusing on all aspects of leading and managing people and practically applying his expertise in HR/IR strategy, leadership coaching, enterprise bargaining, and functional/operational auditing processes.