Optometry employment conditions could be in for a shake-up, with non-compete clauses for employees earning under $175,000 facing potential abolishment.
The reform, that would come into effect in 2027, was a headline item from the recent Federal Budget, but it hinges on whether Labor wins the 3 May 2025 election.
Treasurer Mr Jim Chalmers said the change would make it easier for workers to switch to a better job while lifting the wages of affected workers by up to 4%, or about $2,500 per year for a worker on median wages.
It would also spur new business entry and competition, with non-compete clauses “a handbrake on business creation and a speed bump on aspiration”.
The government believes around three million Australians have a clause of this nature in their contract. Many of those are optometrists.
In fact, Optometry Australia (OA) CEO Ms Skye Cappuccio told Insight non-compete clauses “are currently standard” in most contracts the organisation’s optometrist advisor team or HR legal service review for OA members.
One of the most common questions OA fields from optometry employees relates to the legality of non-compete/restraint of trade clauses in their contracts, their enforceability, and whether employers can legally restrain from working for local competitors.
Mr Mark Corduff, business services manager for the 450-practice ProVision network of independents, said complexities due to non-compete clauses often came across his desk when an optometrist decided it was time to leave their employer to open or purchase an independent practice.
“Non-compete clauses are contractual agreements that restrict an employee from working for a competitor or starting a competing business for a certain period after leaving a company, typically this is a six months but can be longer, with a geographical boundary attached,” he said.
“Most of these cases are isolated to corporate chains and are designed to protect the employer’s investment in building a patient-base, training staff, and maintaining confidential business practices.”
He said while the news of potential abolishment of non-compete clauses would depend on the election outcome result followed by being passed in parliament, removing them could be an “opportunity for independent optometry”.
“The devil will be in the detail and we’re keeping a close eye on these developments from both an employment and acquisition perspective at ProVision over the coming 12 months.”
Chalmers said Labor would also close loopholes in competition law that currently allowed businesses to use “no-poach” agreements to block staff from being hired by competitors.
He noted Treasury’s Competition Review heard troubling accounts about the misuse of noncompete clauses, including minimum wage workers being sued by former employers and workers being threatened with legal action if they switched jobs.
Insight understands non-compete clauses are less prevalent in optical dispensing contracts.
“Australians shouldn’t need a lawyer to go to a higher paying job. Even where noncompete clauses are legally unenforceable, they can lower worker mobility,” Chalmers said.
Overall, he said the restrictions prevented workers from “setting up their own shop and pursuing entrepreneurial ambition”.
The ban on non-compete clauses would apply to workers earning less than the high income threshold in the Fair Work Act (currently $175,000).
If re-elected, the government will consult on policy details, including exemptions, penalties, and transition arrangements. It will also consider and consult further on non-solicitation clauses for clients and co-workers, and non-compete clauses for high income workers.
Following consultation and passage of legislation, the reforms would take effect from 2027, operating prospectively to give businesses and workers time to adjust.
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