We’ve previously talked about the common pitfalls of building contracts. At The Good Builder, we try to make your working life a little easier by cutting through the politics and the red tape to help you avoid errors that waste time and money.

This week (off the back of the budget announcements – see here for the current budget recap and here for the coalition breakdown), we’re looking at a clause that’s potentially been holding back a few tradies, contractors and aspiring builders: the restraint of trade clause.

Thanks to a quiet line in this year’s federal budget, its days could be numbered.

Before you exit the tab and go back to checking your messages, Outlook or Instagram, we’re keeping it as simple as we can.

What do I need to know?

If you’ve ever signed a contract that says you can’t work within a certain distance of your last site or for a competitor for a set period after leaving a job, that’s a restraint clause.

They’ve been common in the construction industry for years, especially in subbie agreements when selling a business. The idea is to protect trade secrets, customer lists, or business goodwill.

But in practice? They’re often more overlooked than they actually end up stopping someone from going out and starting something for themselves.

The federal government’s announcement is a timely reminder that these contract provisions don’t always go as planned; just because something’s in a contract doesn’t mean it’ll stand up in front of a judge.

In the 2024–25 Budget, Treasurer Jim Chalmers announced plans to scrap restraint clauses unless they’re “genuinely in the public interest.”

“We want workers to have the freedom to pursue better jobs, higher pay, or start a business, without being locked out by unfair clauses.”

That’s where the upcoming reforms step in.

Let’s say you’ve been on the tools for years, built solid relationships, and you’re finally ready to go out on your own. But your old contract says you can’t work within 30 kilometres of your last site for the next six months.

That’s not just annoying; it’s a real handbrake, especially if you don’t leave on good terms, work regionally or in tight local markets.

Removing restraint clauses could:

• Drive a bit of healthy competition across the industry
• Let tradies and subcontractors take on new work without legal threats
• Make it easier to start your own business sooner
• Support regional builders, who often have fewer job options.

Do I need to do anything?

As Pete pointed out on the The Good Builder podcast today, big announcements don’t mean much until the votes are in,

“Now the budget effectively… doesn’t really matter because we’ve got an election.”

“So whoever wins is what we’re gonna see implemented for the next budget, and both parties have said what they’re gonna do.”

If the current government stays in power, from 2027, most of these clauses will be banned for anyone earning under the high-income threshold, which is currently $175,000. The government’s also cracking down on “no-poach” agreements where businesses quietly agree not to hire each other’s staff. All up, it’s about giving workers more freedom to move, grow, and take the next step, whether that’s going out on their own or just chasing a better gig.

If this affects you, for better or worse, the government’s consultation process will be important.

Who might be affected?

According to the ACCC, nearly one in five Australian workers is currently bound by a restraint clause, and the construction sector is among the most affected sectors. There are likely thousands of skilled operators who could be out chasing better jobs or starting their own businesses but are instead sitting on their hands, waiting for a clause to expire.

The consultation process is expected to begin later this year.

They have said there will still be some exceptions for sensitive roles, like engineers managing big commercial contracts.

Author: Jonathan Tibbits

Starting his career as a lawyer, Jonathan transitioned into project management, compliance, and certification for companies throughout the industry supply chain in Australia and New Zealand. With international experience in green building, sustainability and stakeholder communication, he is passionate about innovation and building transparency and trust.