Are non-compete agreements enforceable in Australia?

Yes, but only if they are reasonable. Australian courts treat restraints as prima facie void and will only enforce a restraint that goes no further than necessary to protect a legitimate business interest, such as confidential information, client connections, or goodwill.

How long can a non-compete last?

There is no fixed maximum. Typical periods range from 3 to 12 months for employees and up to 2 or 3 years for sellers of a business. Longer periods may be enforced where the legitimate interest justifies it — for example, where unique goodwill has been purchased.

Why do Australian non-competes use cascading clauses?

Outside NSW, courts will not rewrite an unreasonable restraint. A cascading clause offers multiple durations and areas as independent alternatives so that, if the broadest fails, a narrower version can still operate. In NSW, the Restraints of Trade Act 1976 allows courts to read down an unreasonable restraint directly.

Does the employee need to be paid for a non-compete?

Consideration is required. Where the restraint is signed at the outset of employment or as part of a business sale, the consideration is inherent in the transaction. A restraint added mid-employment needs fresh consideration — such as a bonus, pay rise, or promotion — to be enforceable.

Can a non-compete stop someone working anywhere in Australia?

Nationwide restraints are rarely enforceable unless the employer truly operates nationally and the employee had national client responsibilities. Courts look at the actual area of the employer's business when assessing reasonableness.

What happens if the restraint is breached?

The beneficiary can apply to a state Supreme Court or the Federal Court for an urgent interlocutory injunction, claim damages for lost profits, and, in exceptional cases, seek an account of profits. Delivery up of confidential materials may also be ordered.

Is a non-compete different from a non-solicitation clause?

Yes. A non-compete prevents working for or operating a competing business. A non-solicitation clause prevents approaching specific clients or employees of the former employer. Non-solicitation clauses are generally more readily enforced because they are narrower.

Can I enforce a non-compete across state borders?

Yes, subject to the governing law clause. Australian courts have inherent jurisdiction over restraints where proper service can be effected, and injunctions can operate throughout Australia.

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Non-Compete Agreement Template

A non-compete agreement restricts a party from competing with a business for a defined period and in a defined area after the end of the relationship. Use our free Australian template to create a reasonable, enforceable restraint that complies with common-law principles and, where applicable, the Restraints of Trade Act 1976 (NSW).

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NON-COMPETE AGREEMENT

State Of New South Wales, Australia

EMPLOYER

Harbour Digital Pty Ltd · ABN 12 345 678 901

Level 12, 1 Martin Place, Sydney NSW 2000

By: Sarah J. Mitchell, Chief Executive Officer

RESTRICTED PARTY (EMPLOYEE)

Jack R. Morrison

45 George Street, Sydney NSW 2000

Effective: 25 April 2026

Duration: 12 months · Employee

This Non-Compete Agreement (this "Agreement") is entered into as of 25 April 2026 by and between Harbour Digital Pty Ltd (the "Employer") and Jack R. Morrison (the "Restricted Party"). Important Notice — Australian Restraint of Trade Law: Under the common law restraint of trade doctrine (as applied in Australia following Nordenfelt v Maxim Nordenfelt Guns [1894] AC 535 and Australian cases including Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126), restrictive covenants must be reasonable in scope, duration, and geography to be enforceable. The Restraints of Trade Act 1976 (NSW) s. 4 allows a NSW court to read down an unreasonable restraint to make it enforceable to the extent it is reasonable, rather than voiding it entirely. The parties agree as follows:

CONSIDERATION

In consideration of the Restricted Party's continued employment with the Employer, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Restricted Party agrees to be bound by the restrictive covenants in this Agreement.

NON-COMPETITION COVENANT

During the Restricted Party's relationship with the Employer and for a period of 12 months following the termination of that relationship for any reason (the "Restraint Period"), the Restricted Party shall not, directly or indirectly, within the geographic area of Sydney Metropolitan Area (the "Restrained Area"):

(a) carry on, be engaged in, or be interested in any business, enterprise, or activity that competes with the Employer's business in the following restricted activities:

Providing enterprise software sales consulting or business development services to companies in the cloud computing and financial technology sectors with annual revenue exceeding 10,000,000 AUD.

(b) assist, advise, or facilitate any person or entity in doing any of the above.

This covenant is intended to apply as a cascading restraint. If any combination of duration and geographic area is unenforceable, the next combination shall apply, pursuant to the Restraints of Trade Act 1976 (NSW) s. 4.

NON-SOLICITATION

During the Restraint Period, the Restricted Party shall not, directly or indirectly: (a) solicit, canvas, approach, or accept approaches from any client, customer, or prospective customer of the Employer with whom the Restricted Party had material contact or about whom the Restricted Party obtained confidential information during the course of the relationship; or (b) solicit, induce, recruit, or attempt to hire any employee, contractor, or consultant of the Employer. Australian courts assess non-solicitation clauses using the same reasonableness test as non-competition covenants (Cactus Imaging Pty Ltd v Peters [2006] NSWSC 717). This clause is drafted to be proportionate and enforceable.

CONFIDENTIAL INFORMATION

The Restricted Party acknowledges that during the course of the relationship with the Employer, the Restricted Party has had or will have access to confidential and proprietary information of the Employer, including trade secrets, client lists, pricing strategies, operational processes, and technical know-how. The Restricted Party agrees to: (a) hold all such information in strict confidence both during and after the relationship; (b) not use or disclose confidential information to any third party without the Employer's prior written consent; and (c) return all confidential materials upon termination of the relationship. This obligation continues regardless of how the relationship ends and complements the restraint covenants above.

REASONABLENESS

The Restricted Party acknowledges and agrees that: (a) the restraints in this Agreement are reasonable and necessary to protect the Employer's legitimate business interests, including confidential information, client relationships, and goodwill; (b) the duration, geographic scope, and scope of restricted activities are no broader than reasonably required in the circumstances, assessed at the time of entry into this Agreement; and (c) adequate consideration has been provided. The parties acknowledge that Australian courts apply a reasonableness test to restraint of trade clauses and intend this Agreement to satisfy that test (Nordenfelt v Maxim Nordenfelt Guns [1894] AC 535; Buckenara v Hawthorn Football Club Ltd [1988] VR 39).

REMEDIES

The Restricted Party acknowledges that any breach of this Agreement would cause irreparable harm to the Employer for which monetary damages alone would be an inadequate remedy. Accordingly, the Employer shall be entitled to seek urgent interlocutory injunctive relief in any court of competent jurisdiction in Australia without the necessity of posting security or proving actual monetary loss, in addition to any other remedies at law or in equity. In addition, upon any breach of the restraint covenants, the Restricted Party shall pay the Employer the sum of 75,000.00 AUD as liquidated damages. The parties acknowledge that this amount is a genuine pre-estimate of the Employer's likely losses arising from a breach and is not a penalty. Australian courts will only enforce a liquidated damages clause if it is a genuine pre-estimate and not punitive (Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656).

SEVERABILITY OF RESTRAINTS

If any restraint covenant in this Agreement is found to be unreasonable or unenforceable by a court of competent jurisdiction, the court is requested to exercise its powers under the Restraints of Trade Act 1976 (NSW) s. 4 to read down or modify the covenant to the minimum extent necessary to render it enforceable. The modified covenant shall be binding on the parties to the fullest extent permitted by law.

FAIR WORK ACT COMPLIANCE

This Agreement is entered into in connection with an employment relationship governed by the Fair Work Act 2009 (Cth). Nothing in this Agreement is intended to exclude, restrict, or modify any right or entitlement that the Restricted Party has under the National Employment Standards (NES), any applicable Modern Award, or any registered enterprise agreement. In the event of any inconsistency between this Agreement and the Restricted Party's minimum statutory entitlements, those statutory entitlements shall prevail.

GOVERNING LAW

This Agreement is governed by and construed in accordance with the laws of the State of New South Wales and, where applicable, the laws of the Commonwealth of Australia, including the Fair Work Act 2009 (Cth). Any dispute arising under this Agreement shall be resolved exclusively in the courts of the State of New South Wales, and each party hereby submits to the jurisdiction of those courts.

10.

GENERAL PROVISIONS

Entire Agreement: This Agreement constitutes the entire agreement between the parties regarding restrictive covenants and replaces all prior understandings on these matters. Amendment: No modification is effective unless in writing and signed by both parties. Waiver: Failure to enforce any provision does not constitute a waiver. Assignment: The Employer may assign this Agreement to any successor, acquirer, or purchaser of all or a substantial part of its business. Electronic Execution: This Agreement may be executed electronically. Electronic signatures are valid under the Electronic Transactions Act 1999 (Cth) and applicable state legislation.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date first written above.

EMPLOYER

Sarah J. Mitchell

Chief Executive Officer

Harbour Digital Pty Ltd

Date: ____________________

RESTRICTED PARTY

Jack R. Morrison

Date: ____________________

What Is a Non-Compete Agreement?

A non-compete agreement, also known as a restraint of trade clause, is a contractual promise by one party not to engage in activities that compete with another party for a defined period and within a defined geographic area. Non-competes are commonly used to protect employers, buyers of businesses, and franchisors against the loss of customers, trade secrets, and goodwill that the protected party has legitimate interest in preserving.

Australian courts treat restraints of trade as prima facie void and contrary to public policy. A restraint will only be enforced where it is reasonable in the interests of the parties and the public. The leading test was stated by the House of Lords in Nordenfelt v Maxim Nordenfelt Guns and Ammunition Company [1894] AC 535, which remains the touchstone in Australia. The restraint must go no further than necessary to protect a legitimate business interest — such as confidential information, customer connections, or goodwill.

In New South Wales, the Restraints of Trade Act 1976 (NSW) allows courts to read down an otherwise unreasonable restraint to make it reasonable, a statutory power not available in other states where the common-law severance rules apply. Outside NSW, cascading or ladder clauses are commonly used so that, if the broadest restraint is unenforceable, a narrower version may still operate.

What's Covered in This Template

Our non-compete agreement template is drafted to withstand judicial scrutiny in Australian courts.

Party Details

Legal names, ABNs or ACNs, and registered addresses of the restrained party and the beneficiary.

Legitimate Business Interests

Explicit identification of confidential information, customer connections, and goodwill being protected.

Cascading Restraint Periods

Multiple durations (e.g., 12, 9, 6, 3 months) allowing courts to uphold the longest reasonable period.

Cascading Geographic Areas

Multiple territories (e.g., Australia, state, metropolitan area, suburb) drafted as alternatives.

Scope of Prohibited Activities

Precise definition of competing conduct, including solicitation and business relationships.

Non-Solicitation of Clients

Restriction on soliciting or dealing with specified clients during the restraint period.

Non-Solicitation of Employees

Restriction on poaching employees and contractors of the beneficiary.

Consideration

Clear consideration supporting the restraint — payment, access to information, or goodwill value.

Carve-outs

Permitted activities such as passive investment below a share threshold.

Severability

Standard severance clause and acknowledgement of NSW Restraints of Trade Act 1976 where applicable.

Remedies

Right to seek injunctive relief, damages, and account of profits for breach.

Governing Law and Jurisdiction

Choice of governing state and courts with jurisdiction over disputes.

How to Create a Non-Compete Agreement

Follow these steps to produce a reasonable, enforceable restraint in minutes.

1
Identify the Legitimate Interest
Clearly articulate the confidential information, customer connections, or goodwill being protected.
2
Enter Party Details
Provide legal names, ABNs or ACNs, and registered addresses of both parties.
3
Define Cascading Restraints
Set multiple restraint periods and geographic areas as independent alternatives.
4
Add Non-Solicitation Clauses
Specify clients and employees covered by the non-solicitation obligations.
5
Review and Download
Check consideration, governing state, and severability terms, then download the PDF.

Legal Considerations

The enforceability of a non-compete agreement depends on reasonableness and legitimate business interest.

This template is for informational purposes only and does not constitute legal advice. Restraint of trade litigation is highly fact-specific — obtain legal advice before relying on a restraint.

Reviewed for Australian law

Common Law Test of Reasonableness

Australian courts apply the test from Nordenfelt v Maxim Nordenfelt Guns and Ammunition Company [1894] AC 535, as applied in cases such as Lindner v Murdock's Garage (1950) 83 CLR 628 and Woolworths Ltd v Olson (2004) 63 NSWLR 134. A restraint is enforceable only if it protects a legitimate interest (confidential information, customer connection, or goodwill), is reasonable in duration, area, and scope of activities, and is not contrary to the public interest.

Restraints of Trade Act 1976 (NSW)

Section 4 of the Restraints of Trade Act 1976 (NSW) empowers courts to read down an unreasonable restraint to the extent necessary to make it reasonable. This is a powerful statutory tool unique to NSW. In other states, courts apply the common-law blue-pencil rule, which only allows severance of distinct promises, making cascading drafting essential.

Consideration and Timing

A restraint given after employment has commenced requires fresh consideration — something beyond continued employment — to be enforceable. A restraint in an initial employment contract or business sale is usually supported by adequate consideration inherent in the transaction.

Remedies for Breach

Breach typically attracts interlocutory injunctions under the Federal Court Rules 2011 or state Supreme Court rules, damages for loss of goodwill or business, and, in appropriate cases, an account of profits. Courts may also order the delivery up or destruction of confidential materials taken during the employment.

Frequently Asked Questions

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