The ban on non-compete clauses is coming but what about contractors?

Non‑compete clauses are conditions in employment contracts that prevent or restrict an employee from moving to a competitor, and may prevent them from moving to a better position. Back in March 2025, we told you about the Federal Government’s plan to ban them. At the time, it wasn’t clear whether independent contractors would be covered under the proposed ban. We advised you to “watch this space”.

The Government has now released an exposure draft of the proposed legislation so we now have our answer …

What has been proposed

Last month, Treasury published an exposure draft of the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026. The draft bans non-compete terms for employees only. Independent contractors and subcontractors are left out.

Why that matters for massage therapists

In AMT’s 2024 workforce survey, 14 per cent of respondents said they work as subcontractors. That is more than twice the proportion (under 7 per cent) who said they are employed under the Award.

AMT also regularly sees subcontracting agreements that members bring to us for advice. Every single one we have reviewed over the years has included some form of a non-compete clause, usually with cascading geographic and time restrictions (i.e. you cannot work as a massage therapist within X kilometres for Y months/years after terminating this contract).

Massage therapy is obviously local and client-facing by nature so imposing a restriction on working within a certain radius can seriously affect a practitioner’s livelihood. A 10-kilometre radius restriction on practice may not sound like a lot on paper but it wipes out vast chunks of even large, sprawling major cities.

AMT has even seen agreements where people considering new subcontracts would have their existing, established practice location(s) fall into an excluded zone. Ridiculous, right?

Why the proposed legislation doesn’t cut it

Please stick with us for a minute while we nerd out on the minutiae of competition law.

Treasury’s explanatory materials assert that contractors don’t need to be covered by the non-compete ban because cartel provisions within Australian competition law already apply. However, those provisions target collusion between competing businesses, such as agreements not to poach staff. And those provisions are unlikely to help an individual practitioner facing a restraint from a single clinic.

Other avenues, such as restraint of trade at common law and unfair contract terms, depend on going to court after the fact. The Government’s own explanatory materials recognise that the cost and fear of litigation is exactly what stops workers from moving. That applies just as much to a subcontractor. Under the draft, an employee knows where they stand before they sign or leave but a contractor doing the same clinical work does not.

Look ma, we made a submission to Treasury

AMT has responded to Treasury as part of the consultation on the exposure draft of the new Bill. You can read AMT’s full submission here.

What AMT has asked for

AMT’s main recommendation is to extend the non-compete protections to individual contractors and subcontractors whose principal contribution is their own labour, skill and professional expertise. Genuine business-to-business arrangements, confidentiality protections and the sale of a business would remain outside the ban.

Our fallback if Treasury won’t extend the full ban is to apply the same conditions that the Bill sets for permitted employee restraints. In this scenario, a restraint would have no effect unless it is necessary to protect confidential information or client relationships, is reasonable, and is not drafted in a cascading manner.

What this means for you

Nothing changes yet. This is a draft Bill and the consultation is ongoing. Until final legislation passes, existing non-compete terms in agreements remain as they are. If you’re unsure about a restraint in a contract you’ve been offered, contact AMT for guidance before you sign.

We’ll keep you updated as the Bill progresses.