The non-compete in your stylists' contracts is being banned. The clause that protects your client list is not

On 7 September the government released draft legislation that would ban the non-compete clause in your staff contracts for anyone earning under $190,100 a year. In a salon that is everyone. The useful part is not the ban itself, it is what the ban leaves standing, because that is where whatever protection you actually have will have to live from now on.

Are non-compete clauses enforceable in Australia right now

Partly. That is the honest answer today, and it is the reason the change matters less than it looks.

A radius clause on a hairdresser binds only so far as a court thinks it goes no further than reasonably necessary to protect a real business interest. Draw the circle too wide or the period too long and a court can decline to enforce it. Treasury is blunt about what that means in practice. Its own material says restraints cause a "chilling effect" that discourages people from moving because they are unsure how enforceable the clause is, and that this "can still happen when the clause is unreasonable".

Read that from your side of the desk. The clause has been doing its work by being frightening, not by being sound.

From 2027 the frightening part stops. Treasury's position is that the reforms "should take effect from 2027, following consultation and legislation passing parliament", and the draft released on 7 September 2026 bans non-competes for workers earning below the Fair Work Act high income threshold, which is $190,100 from 1 July 2026.

The four clauses in your contract, and which ones are in trouble

Almost no salon contract contains "a non-compete". It contains one paragraph with four different jobs stacked inside it, and the reform treats them very differently. Treasury lists them separately and says plainly that they "are different from non-compete clauses" and "can apply at the same time".

• The non-compete. Stops the person working for a competitor or opening their own place, usually inside a radius for a number of months. This is the one in the draft bill. Under $190,100, it goes.
• The client non-solicitation clause. Stops them asking your clients to follow them. This is not in the ban, and it is not on the list of things the government says it is consulting on this round.
• The co-worker non-solicitation clause. Stops them taking your other stylists with them. This one is on the consultation list, so treat it as at risk.
• Confidentiality. Covers your client list, your pricing, your supplier terms. Untouched.

So the order of protection is being turned around. The blunt instrument goes. The narrow clause that actually names the thing you care about, your clients, is the one still standing.

One caution before you rebuild the contract around it. In March 2025 the government said it would "consider and consult further on non-solicitation clauses for clients and co-workers". This September it named only the co-worker version. That is a good sign for the client clause and it is not a promise, and the exemptions and safeguards are still being drafted.

The $190,100 line, and why it does not save you

The threshold is the Fair Work Act high income threshold, the same figure that decides who can bring an unfair dismissal claim when no award covers them. It is $190,100 from 1 July 2026, up from $183,100 the year before, and it moves every 1 July. Earnings for that test mean wages, amounts paid on the employee's behalf or as they direct, and the agreed money value of non-monetary benefits.

Nobody cutting hair is near it. Neither is a salon manager, and neither is an experienced injector on a good commission split in most clinics. If you employ twelve people, the ban covers twelve people. There is no "my top stylist is different" version of this rule.

The government named your trade out loud

That was not a drafting accident. Announcing the draft, the Minister for Employment and Workplace Relations said the aim is to lift mobility for "more than three million Australian workers constrained by a non-compete clause, including childcare workers, construction workers, and hairdressers".

The prevalence behind that is real. One in five Australian workers has a non-compete, from the e61 Institute survey Treasury cites. One in five Australian businesses uses them, from ABS 2023 data, and most of those businesses apply them to more than three quarters of their workforce. That last figure is the tell. Where restraints get used they get used on everybody, not on the two people who could genuinely damage the business.

The wage estimate tells you who the policy is aimed at. The government says a ban could lift the pay of affected workers by up to four per cent, or about $2,500 a year for a typical worker. Four per cent that produces $2,500 implies a typical affected worker on roughly $62,500. That is a salon wage. Those are economy-wide estimates rather than a hair and beauty benchmark, but the direction is clear enough: this policy is not aimed at executives.

What you were actually protecting

Treasury commissioned its own work on whether workers get paid extra for accepting a restraint. The finding, in Treasury's words, is "no systematic evidence of wage compensation for the mobility restrictions associated with non-competes".

So the clause has been free. You have not been paying for it, which means nothing in your profit and loss moves on the day it disappears. The cost lands somewhere you cannot see until it happens: the morning a stylist with a full column opens two streets away and there is no letter to send.

Which raises the question you should have asked before a government asked it for you. Would you actually have sued? Sued a former employee, in a trade where your clients can see it happening, over a clause your own lawyer would warn you might be read down anyway? Very few owners ever do. A moat you would never defend is not a moat, it is a paragraph.

The things that really do hold a client are duller and they are all yours to build. Who owns the phone number and the colour history. Whether the reminder comes from the salon or from a stylist's personal mobile. Whether a client has ever been seen by a second person in your building. Whether they have paid you for anything beyond their next appointment.

The sum to do this week, before you touch a contract

Open your booking system and pull twelve months of service revenue by staff member. Take your highest earner and split her column two ways: clients only ever seen by her, and clients who have also been seen by someone else in the salon or who first arrived as a walk-in or an online booking.

The first group is your real exposure. Not her whole column, and not nothing.

Now do the same for the second and third chairs. If more than about a third of your service revenue sits with one person and is single-relationship, then you never had a staffing risk that a clause was managing. You had client concentration, and the clause was keeping it out of view. Our guide on growing a barbershop attacks the same problem from the rebooking end.

The dates, and the one thing not to assume

• 7 September 2026. Draft legislation released for consultation.
• 2 October 2026. Submissions close on the Treasury consultation hub. This is the round in which exemptions, penalties and safeguards get settled, and where the co-worker clause, no-poach arrangements, wage-fixing and cascading restraints are all still in play. If your business genuinely turns on one of these clauses, two paragraphs from a real salon owner reads differently to another law firm letter, and it costs you twenty minutes.
• 2027. Treasury's stated commencement, once a bill passes.

The thing not to assume is grandfathering. The reform has been described as operating prospectively, which sounds like every contract signed before commencement is safe. Perhaps. How an existing clause is treated, and what prospective means for one signed this month, is exactly the transitional detail the consultation exists to settle, and the draft text sits on the consultation hub rather than in a press release. So do not hire this quarter on the strength of a radius clause you are assuming will still bite in 2028. If you are relying on specific wording, pay someone to read it.

What a buyer does with this

Anyone buying a salon is buying repeat client relationships and a reasonable expectation that those clients keep turning up after settlement. Restraints on key staff have been part of the comfort in that conversation for a long time. From 2027 that comfort is thinner, and a buyer's adviser will know it before you do.

What gets priced instead is transferability: can this business keep earning when one named person walks out. Two salons with identical profit are not worth the same money if one has three chairs each carrying a third of the takings on personal loyalty and the other has clients who book the salon. That gap turns up as a lower valuation multiple, or as an earnout that only pays you if the column survives you. The business valuation calculator will show you the size of it faster than an argument about wording will.

One boundary worth being clear on. This reform is about clauses you impose on staff. A restraint that you give a buyer when you sell your own business is a different instrument in a different contract, and nothing in the September release speaks to it. If your exit plan involves selling and staying out of the area for two years, that is a question for the lawyer doing the deal, not something to read off this page.

And there is a cheerful half. The same reform that removes your fence removes your competitor's. The chain up the road holding on to a good colourist with a two-year radius clause loses that hold as well. If you are the independent doing the hiring, that is on your side of the ledger, and hiring and keeping staff gets easier the moment the other side's paperwork stops working.