ACTU modelling shows non-compete clauses trapping three million workers, costing Aussies thousands
Three million Australians could be paid up to $4300 more a year if a legal ‘trap’ in workplace contracts is abolished, a peak union group says.
More than three million low and middle-income Australians could be paid an extra $4300 a year if non-compete contract clauses are banned, Australian Council of Trade Unions modelling shows.
The federal government is working on laws to ban non-compete clauses for workers on less than $190,100 a year. Business industry groups have criticised the proposal, saying a ban would discourage business investment.
The ACTU’s submission on the proposed ban shows that based on the national average full-time wage as at May this year, a ban on non-compete clauses would lift salaries by 4 per cent or $4300 a year.
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“Not only are these clauses keeping workers trapped in jobs they don’t want, they are also limiting Australia’s productivity and innovation. Workers with valuable skills are being handcuffed to lower-paid jobs” she said.
“The Business Council want to keep anti-competitive restrictions that hold down workers’ wages, rather than supporting practical reforms that would boost job mobility, productivity and innovation.”
Non-compete clauses kept workers like hairdressers, early childhood educators and tradies from putting their talents to better use at more productive jobs, Ms Donnelly said. The clauses also created unnecessary legal issues, she said.
“Working people shouldn’t have to pay for a lawyer or get their boss’s permission to take the next step in their career,” Ms Donnelly said.
“Workers deserve the freedom to pursue a better job and a better life. Non-compete clauses deny that opportunity for too many people.”
The federal government has released a draft Bill that aims to ban non-compete clauses for workers on salaries and wages under $190,100 a year. These clauses come standard in contracts for some three million Australians.
Productivity Commission modelling says the change could boost productivity and living standards by lifting GDP by 0.2 per cent or $5bn per annum.
Business groups have criticised the proposed reform, which include banning contract clauses that stop someone poaching a former colleague, and proposed restrictions to no-poach and wage-fixing agreements between companies.
The Council of Small Business Organisations Australia says a small operation can be seriously derailed if a former worker takes one or more colleagues off to a new venture.
The Business Council of Australia says the proposed change to ban wage-fixing between companies is hypocritical given unions advocate for multi-employer bargaining.
Submissions on the draft exposure Bill closed on Friday, and details of the ACTU’s submission have exclusively been shared with NewsWire.
The peak union group says the draft does not go far enough; that employers should not be able to propose or offer a non-compete clause during the pre-employment, interview stages.
The law should enshrine a worker’s right to be free from non-compete clauses as a “workplace right” under the Fair Work Act, the ACTU says.
The union group says its affiliate unions have seen examples where a company tries to lock a worker into a non-compete clause after the worker has resigned or been terminated as a way of settling a workplace claim.
The unions are also concerned about companies enacting excessively long notice periods when a worker quits, effectively blocking the worker from accessing confidential information while still at the company but keeping them there for so long they cannot go and start a new job.
Co-worker non-solicitation – preventing a departing employee from poaching a current or former colleague for a new business – restricts job mobility the same way as non-compete clauses, the ACTU submission says.
“ … and have become an increasingly common feature in employment contracts including those of lower-paid workers,” the union said.
Wage-fixing and no-poach agreements between companies distort wage markets and put unfair, detrimental limitations on workers, the ACTU says.
The union group backs criminal punishments under cartel laws for breaches of the proposed reforms.
Originally published as Non-compete clauses trapping three million Aussie workers, ACTU says
