1 in 5 employers using non-compete clauses: ABS

Government to look at impact of 'prevalent' non-compete clauses

1 in 5 employers using non-compete clauses: ABS

One in five employers in Australia are using non-compete clauses, according to a new report from the Australian Bureau of Statistics (ABS).

The report, which determined the prevalence restraint clauses across the country, found that 20.8% of Australian employers are using non-compete clauses and accounting for 31% of all employee jobs.

According to the ABS survey, 68.2% of employers using non-compete clauses apply them to 76 to 100% of their employees. The top industries utilising them include:

  • Financial and insurance services (39.6%)
  • Rental, hiring, and real estate services (32.6%)
  • Electricity, gas, water, and waste services (29.6%)
  • Administrative and support services (29.5%)
  • Professional, scientific, and technical services (28.8%)

"Today's results confirm that non‑compete clauses are prevalent across the Australian economy," said Assistant Minister for Employment Andrew Leigh in a statement.

The survey also mirrors the findings by E61 Institute last year, which found that 22% of employees are subjected to a non-compete clause.

Concerns about non-compete clauses

Non-compete clauses are conditions of employment that prevent employees in working for a competitor or starting their own business. But there has been a growing interest on them considering their potential impact on job mobility and recruitment for employers.

"There is growing concern internationally that these clauses are increasingly restricting workers from shifting to better paying jobs and may be hampering business innovation and productivity," Leigh said.

According to the ABS, approximately one per cent of businesses said a potential employee turned down a job offer because of a non-compete clause.

The assistant minister said the government will launch an issues paper for public consultation in April to look into non-compete clauses and their impact on employment.

"Employment terms that make it harder for workers to move to a better job may be acting as a drag on wages and economic dynamism," Leigh said.

Overall, the ABS survey found that 46.9% of Australian employers are using at least one type of restraint clauses on employees.

The most prevalent type of restraint clause is non-disclosure (45.3%). Non-disclosure and non-solicitation clauses are also being used by 25.4% and 18%, respectively.

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