Australia Restraint of Trade Agreement
Also known as: Non-Compete Agreement · Non-Compete Clause · Post-Employment Restraint
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Restraint of Trade Agreement
Also called: Non-Compete Agreement, Non-Compete Clause
Legal Requirements
Australia Legal Requirements
Key Australia statutes and obligations that apply to your restraint of trade agreement.
Governed by the common law doctrine of restraint of trade — courts apply a reasonableness test
NSW Restraints of Trade Act 1976: courts may read down (reduce) an unreasonable restraint to a reasonable scope
Post-employment restraints must protect a legitimate proprietary interest: trade secrets, confidential information, or customer connections
Restraints must be reasonable in: duration, geographic scope, and the activities restrained
Senior employees with significant customer relationships or access to trade secrets: wider restraints more likely enforced
Consideration is required — restraints should be agreed at the start of employment
Restrictions & Key Considerations
Courts will not enforce a restraint that is simply designed to prevent competition without protecting a real interest
NSW courts can 'read down' overly broad restraints using cascading clauses (different time/geography options)
Cascading clauses are enforceable in NSW under the Restraints of Trade Act but not universally in other states
Injunctive relief is the most common remedy — damages must be proven and can be difficult to quantify
FAQ
Australia Restraint of Trade Agreement FAQ
Common questions about the restraint of trade agreement under Australia law.
Are non-compete agreements enforceable in Australia?
Yes, if reasonable. Australian courts follow the common law doctrine of restraint of trade. The restraint must protect a legitimate proprietary interest (e.g., confidential information, customer relationships) and go no further than reasonably necessary. Courts balance the interests of both parties.
What is a cascading restraint clause in Australian employment contracts?
A cascading clause sets out multiple combinations of scope (e.g., 12 months or 6 months or 3 months) and geography (e.g., Australia or NSW or within 50km of the business). Under NSW's Restraints of Trade Act 1976, courts can select and enforce the most reasonable combination, giving the clause a better chance of survival.
How long can an Australian non-compete last?
There is no fixed maximum, but courts assess reasonableness based on the employee's seniority, access to confidential information, and the time needed to protect legitimate interests. For senior employees with significant client relationships, 6–12 months is typically enforceable. Longer periods face greater scrutiny.
Can an employer seek an injunction for breach of a non-compete in Australia?
Yes. An injunction (court order preventing the former employee from breaching the restraint) is the most common and effective remedy. The employer must demonstrate a prima facie case and that damages would be inadequate. Courts act quickly in urgent cases to prevent ongoing harm.
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Non-Compete Agreement by Country
Laws vary significantly by country. Find the right form for your jurisdiction.
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