“From the point of view of a worker reading their contract, the message is unmistakable: you are boxed in. Faced with a clause that looks like it was drafted with a dartboard, most people simply will not risk moving at all,” he will say.
Some large businesses, particularly those that employ people with specialist skills or have access to company intellectual property, have pushed back at the government’s non-compete clause ban. They have argued it could mean losing valuable staff or company secrets to competitors.
Non-compete clauses are turning up in occupations from bricklaying to childcare.Credit: Getty Images
But Leigh will argue non-compete clauses have permeated the entire economy, with childcare workers, bricklayers, retail workers and nurses being caught up by restrictions. The clauses suppress wages, limit job mobility and slow down the spread of ideas.
He will say that overall productivity is being restricted by these clauses and a dearth of competition in key parts of the economy.
“We want an economy that looks less like Monopoly, where one player wins the lot, and more like Lego, where everyone can build and create. And unlike Monopoly, an economy built on Lego doesn’t end with someone flipping the board in frustration,” he will say.
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Research in Australia suggests people with non-compete clauses earn 4 per cent less, or about $2500 a year, than those without such clauses.
A new study out of the United States suggests banning non-compete clauses there would lift average wages by between 3.5 per cent and 13.7 per cent. It found that women and non-white workers face double the wage penalty caused by non-competes than other workers.
Submissions on the government’s plan revealed that many non-compete clauses are affecting people who have no trade secrets to protect. In many cases, the clauses are so broad that it appears they have been copied from other employers.
The submissions also suggested that while employees might suspect a clause was legally unenforceable, the threat of court action was enough to put them off moving to another job.
“They are not about safeguarding sensitive information. They are about scaring people away from moving,” Leigh will say.
“Employees shared story after story of contracts written with such sweeping restrictions you would think they were drafted for Cold War spies, not everyday workers.”
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