Cosboa has warned that the exposure draft of the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 could increase compliance costs and create challenges for SMEs.
The reforms initially targeted non-compete clauses for employees earning below the high-income threshold. The draft would extend the ban to co-worker non-solicitation clauses at all income levels and introduce rules covering no-poach arrangements between businesses.
“Small businesses want workers to be able to get ahead. They compete for good people every day,” Cosboa CEO Skye Cappuccio said. “But these changes go much further than stopping an unfair clause from preventing someone from taking another job.”
Cosboa supports removing unreasonable barriers to workers changing jobs but said the legislation must also account for the impact of staff departures and existing commercial agreements.
Cappuccio said a business with 10 employees could be affected if a senior employee leaves and takes several staff with them. She also warned that the no-poach rules could apply to commercial arrangements such as franchise and service agreements.
“Small business owners should not face serious penalties because they have relied on standard contractual arrangements and the law around those arrangements has changed,” she said.
Cosboa also called for clearer protections for the sale of a business, where goodwill, customer relationships and knowledge can form part of its value.
“For many small business owners, their business is the asset they have spent decades building,” Cappuccio said. “That protection needs to be explicit in the legislation itself.”
In its submission, Cosboa proposed changes to the co-worker non-solicitation ban, exclusions for legitimate sale-of-business restraints, and the removal of criminal cartel exposure for routine small business contracts. It also called for a transition period to review and amend existing franchise and service agreements, with penalties deferred for 12 months.
Cappuccio said the legislation should target non-compete clauses without creating disproportionate penalties or legal uncertainty for small businesses.
“Small businesses have dealt with relentless changes to workplace laws over the past four years. If the Government makes another significant change, they need enough time to understand it and get it right,” she said.
Cosboa will lodge its submission before consultation closes on October 2. It has called on the Government to address the issues before introducing the Bill.
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