Federal Budget 2025: Industry groups say Labor’s | Australian Markets
Industry groups say Labor’s ban on non-compete clauses for some staff is a “heavy handed” measure that would hurt small companies.
Treasurer Jim Chalmers outlined a crackdown on the anti-competitive labour apply for staff incomes beneath $175,000 yearly within the Federal Budget on Tuesday, saying it might permit higher job mobility.
The clauses are sometimes utilized in as a scare tactic in contracts by companies to stop employers from working for a aggressive company to guard trade secrets and techniques, mental property and shopper relationships.
“A big theme of the Budget is what we’re trying to do to rebuild wages and incomes to make sure that people can earn more and keep more of what they earn,” Dr Chalmers informed ABC on Wednesday.
“Banning non-competes is part of that and the tax cuts are an important part of it too.”
A report by not-for-profit financial analysis institute e61 Institute discovered staff at companies which use the clauses are paid 4 per cent much less as a consequence of weaker bargaining leverage and ready longer in between jobs.
Chamber of Commerce and Industry WA chief govt Peter Cock stated the present system “worked effectively” and adjustments could possibly be “alarming” for WA companies.
Mr Cock stated any adjustments would need to be rigorously designed to make sure business’ mental property isn’t compromised.
“Many businesses will be alarmed by the Federal Government’s move to curtail the use of non-compete clauses,” he stated.
“We would not want to see a situation where employees are able to leave a workplace and take valuable intellectual property or clients to a direct competitor.
“The current system, where non-compete clauses are decided on a case-by-case basis by the courts, is working effectively to balance the legitimate rights of both businesses and their employees.
“We are concerned the government has not struck the right balance with this.”
Australian Chamber of Commerce and Industry chief govt Andrew McKellar added that the ban was a coverage measure and it was “strange” that it was unveiled within the Budget.
“It’s very strange that that appears in a Budget statement. It’s not really a Budget measure. This is a piece of policy,” he stated.
“We think it’s heavy-handed. If you look at these so-called non-compete clauses, around one per cent of employees in practice are affected by these.
“So it’s a very, very small number of people. In most cases where they’re put in place, they’re probably not enforceable.”
He stated small companies could possibly be harmed after investing, coaching, and equipping a worker who may now take all their mental property and shopper lists to create a new competing business.
“That’s just a setback for the business concerned,” he stated.
But Dr Chalmers stated the creeping use of non-competes was a drag on wages and the creation of new small business ventures.
About one in 5 Australian staff are subject to the clauses and job mobility fell to a report low stage in 2024, in line with surveys performed by the e61 Institute and the Australian Bureau of Statistics.
Shadow treasurer Angus Taylor stated the Coalition was hesitant in supporting the measure, insisting more element was needed.
“There’s a lot of questions about how this would all work.
“We want people to have options in the labour market, but we also want small business to be strong.
“Anthony Albanese on Wednesday said Australians shouldn’t need a lawyer to go to a higher paying job.
“These non-compete clauses just stop people being able to earn more wages or to transfer their skills,” he stated.
“Whether it be in the finance sector or a hairdresser. They lock people into a single employer because they can’t use their skills other places.”
Businesses had been consulted forward of the ban’s inclusion within the Budget.
It’s understood financial and insurance coverage providers, mining corporations and the tech sector will largely be exempt as their staff usually earn above $175,000.
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