The end of the "can't work for a competitor" clause
For years, Australian MSP contracts have carried restraints that stop a service desk analyst on $70k from working for "any competitor" for 6 to 12 months. Most were unenforceable in court, but many workers didn't know that. The clause did its job simply by being there.
That's changing. In 2025 the Federal Government announced it would ban non-compete clauses for workers earning below the high income threshold, starting 1 January 2027. With the start date about ten weeks away, here's what MSP workers should understand now.
Status note: The rules below reflect the government's announced policy. Check the final legislation and Fair Work Ombudsman guidance for the exact start date, threshold and transitional arrangements before relying on them.
Who is covered
The ban is designed to protect workers earning below the Fair Work high income threshold (about A$175,000 for 2025β26, indexed each year). In MSP terms, that's almost everyone:
| Role | Typical 2026 base salary | Likely covered by the ban? |
|---|---|---|
| Service desk / L1 | $60kβ$80k | Yes |
| L2 / L3 engineer | $85kβ$130k | Yes |
| Senior engineer / team lead | $120kβ$160k | Yes, in most cases |
| Solutions architect / account director | $160kβ$220k+ | Depends on total earnings vs threshold |
Check where your pay sits with our salary benchmark or the MSP salary guide 2026.
What's banned, and what isn't
The announced reform targets non-compete clauses, which stop you working for a competitor or starting a competing business. Other common restraints are expected to stay:
- Non-solicitation of clients. You may still be barred from actively approaching your former employer's clients for a period.
- Non-solicitation of staff. No recruiting your old team away.
- Confidentiality. Client lists, pricing, credentials and internal IP stay off-limits indefinitely.
So after the ban, you should be able to join the MSP down the road. You still shouldn't bring the client list, or email your old accounts on day one.
Expect MSPs to adapt
Employers rarely give up leverage without looking for a replacement. Watch for:
- Broader non-solicitation clauses. "Any client you had contact with" can become "any client of the group". Check the scope.
- Longer notice periods and garden leave. Three-month notice clauses keep you out of the market without technically being a non-compete. Our notice period calculator shows what that costs you.
- Training bonds and clawbacks. Repayable certification costs are common in MSPs. They're not banned, but they must be reasonable. See our best certifications guide for what training is actually worth.
- ABN re-papering. Some employers may push workers onto contractor arrangements to sidestep worker protections. That raises sham contracting risk, and our coverage of the ABN contractor crackdown explains why.
What to do with your current contract
- Find the restraint clause. It's usually labelled "restraint of trade", "post-employment obligations" or "protection of business interests".
- Run it through our non-compete checker. It flags the usual problems: excessive duration, national geography, and "any competitor" wording.
- Don't assume it's enforceable before 2027. Australian courts already require restraints to protect a legitimate business interest and be reasonable. Cascading clauses ("12 months, or 6, or 3...") exist precisely because employers know the longer options often fail. Our enforcement guide and non-compete clauses explainer cover the case law.
- If you're signing a new contract now, ask for the non-compete to be removed. Given the ban is coming, many employers will agree rather than lose a candidate.
- If you're planning to leave, timing matters. Leaving after the ban starts could change your position. Get advice on the specific transitional rules first.
Why this matters for MSP pay
Non-competes suppress wages. If you can't easily move to a competitor, your employer has little reason to pay market rate. Removing that barrier should make the Australian MSP labour market more competitive, especially in thin regional markets where the "competitor" is the only other MSP in town.
When the ban lands, use it. Benchmark your pay, compare employers in the MSP directory, and if you're negotiating, our salary negotiation scripts help you turn the new mobility into a better offer.
This article is general information, not legal advice. Employment contracts vary. For advice on your situation, contact the Fair Work Ombudsman, your union, or an employment lawyer.
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