Some workers will find it easier to switch jobs after the government used the budget to ban non-compete clauses in employment contracts for those on low and middle-incomes. The government says the reform could boost the economy by up to 5-billion dollars a year.
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00:00Jocelyn Fair's staff have to agree to a non-compete clause in their contract when they join her
00:09team.
00:10I believe it's fair not to go to competitors or not to open up.
00:15Her ex-employees cannot work for or set up their own dress hire business for 12 months
00:20after resigning.
00:22I wouldn't be able to function if they were to leave with my customers also.
00:27Around 3 million workers have non-compete clauses in their employment contracts.
00:32The Albanese government will ban them for workers earning up to $175,000 a year.
00:39Research suggests it could lift wages by between 2-4% or up to $2,500 a year and potentially
00:47increase annual GDP by $5 billion.
00:51Having them banned here in Australia will make a real difference.
00:54We think that the better approach is education, not regulation.
00:59Non-compete clauses are often used to stop higher level employees and executives from
01:04switching to a competitor, but legal aid lawyers say they're also being used to stop lower
01:10paid workers from getting a better job, people who can't afford to take their boss to court.
01:17It may be the case that many non-compete clauses are in fact unenforceable if they were to
01:22be challenged in the courts.
01:24That doesn't necessarily mean that they have no practical effect.
01:28For many workers there can be a chilling effect.
01:31For employers like Jocelyn, the ban is bad news.
01:35There needs to be a competitive edge, there needs to be a time frame for all businesses.
01:41Setting the tone for the looming federal election.