Workplace Watch – 9 September 2026: Federal Government’s proposed ban on restraint clauses, WFH clause for the Clerks Award, decision on the right to disconnect

Welcome to the latest edition of the KHQ Workplace Watch where we give you insights on key developments in workplace relations and safety law and what that means for you as an employer, HR practitioner, in house legal counsel or fellow IR enthusiast.

In this edition, we cover the Federal Government’s proposed ban on restraint clauses, the draft work from home clause for the Clerks Award, the first decision on the right to disconnect and other important Fair Work Commission decisions.

Federal Government releases draft legislation banning co-worker non-solicitation terms and limiting non-compete terms

The Federal Government has released the exposure draft of its long-awaited legislation limiting the use of restraints of trade in employment arrangements.  The amendments are substantial and will require employers to revisit how they use post-employment restraints and seek to protect their legitimate business interests.

The Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 would amend the Fair Work Act 2009 (FW Act) to prohibit:

• non-compete terms in employment arrangements for employees earning less than or equal to the high-income threshold (currently $190,100), as well as casual and piecework employees;
• co-worker non-solicitation terms in employment arrangements (for all employees); and
• the use of cascading restraints of trade in employment arrangements (for all employees).

The prohibitions will apply to employment arrangements entered into or varied after commencement of the provisions, and employers may be subject to civil penalties if they enter into an arrangement that includes a prohibited clause.  The commencement date for the legislation is not currently known.

The Bill would also:

• limit what can be considered by a Court when determining whether a permitted restraint clause is reasonable. Under the Bill the only interests which can be protected by a post-employment restraint in an employment arrangement are:
  • the use or disclosure of confidential information; and
  • relationships with customers, clients or professional networks that the employee has gained through the employment; and
• create a right to be free from non-compete terms (unless one of the exemptions applies), and a right to be free from co-worker non-solicitation terms.

The prohibitions in the Bill would not affect restraints of trade arising in sale of business agreements or shareholder agreements.

The Bill also amends the Competition and Consumer Act 2010 to prohibit arrangements between businesses that prevent staff from being hired by competitors (ie ‘no-poach’ agreements) or ‘wage-fixing’ agreements.  There are limited exemptions in the Bill which include joint ventures, secondments and labour hire arrangements.

The Government is conducting a period of consultation on the Bill with feedback closing on 2 October 2026.  The consultation webpage which includes the Bill and Explanatory Materials can be found here.

Work from home arrangements in modern awards

The Fair Work Commission (FWC) has confirmed, following its review of the Clerks – Private Sector Award 2020 (Clerks Award), that it will introduce a working from home term (WFH Term) allowing employees to request a work from home arrangement.

The FWC issued a draft clause for consultation, which:

• allows employees and employers to agree to modify certain clauses of the Clerks Award by way of a working from home arrangement; and
• prescribes what a working from home arrangement must include, including:
  • the day(s) on which an employee may work from home;
  • the location where the work is to be performed; and
  • the means by which the arrangement may be terminated by either party.

While the right to request a working from home arrangement arising from the WFH Term would be a workplace right under the FW Act, on the current drafting, there is no express requirement for an employer to consider or reply to a request for a work from home arrangement.  The WFH Term also does not identify any factors that an employer is required to take into account when considering a request.

While disputes under the clause can be dealt with under the dispute resolution provisions of the Clerks Award, it is difficult to see what orders the FWC could make where there’s no obligations on employers under the proposed term.

The draft clause is open for consultation until Thursday, 17 September 2026, and there’s a chance that further changes will be made before the clause is finalised.

The FWC has indicated that, once settled, the model WFH Term for clerical workers will serve as a template for other modern awards. While no timetable has been published, the FWC is expected to consider similar amendments to awards covering industries with a high capacity for hybrid work, including office, professional, technical and IT sectors.

The draft determination, containing the WFH Term, can be found here.

The FWC’s decision can be found here.

First Tribunal decision on right to disconnect

The South Australian Employment Tribunal (sitting as the South Australian Employment Court) has handed down the first decision relating to the right to disconnect provisions in a modern award. The Hair and Beauty Award 2020 provides that an employer “must not directly or indirectly prevent an employee from exercising their right to disconnect under the [Fair Work] Act [2009]”.

In this case, the employer frequently contacted the employee outside of work hours, including by sending TikTok and Snapchat videos about the employer’s social life and non-urgent work matters. The employer would be in a bad mood and ignore the employee if the employee did not respond to the contact, but would not otherwise take any disciplinary action against the employee.

While accepting that the employee would have felt pressure to respond to the messages, His Honour Deputy President Lieschke ultimately found that the employer had not prevented the employee from exercising her right to disconnect as there was no real consequence to the employee not replying to the messages.

This decision highlights that the right to disconnect is for the employee to refuse to monitor, read or respond to out of hours contact, unless the refusal is unreasonable, and there is no automatic prohibition on an employer attempting to make out of hours contact with an employee.

The SAET’s decision can be found here.

Refusal to extend parental leave upheld by FWC

The FWC has recently found that an employer’s refusal to extend the parental leave of one of its employees was based on reasonable business grounds.

The employee worked as a Specialist Data Reporter in a small and highly specialised team providing services to two mine sites across Queensland. During her parental leave, the workload in the team increased significantly and the nature of the role also developed, with the team starting to support an additional four mine sites within New South Wales.

The employee was due to return from parental leave in August 2026, and in February 2026 she put in a request under s 76A of the FW Act to extend her parental leave to February 2027. The employer rejected the request on the basis of reasonable business grounds, submitting that the relevant team was under significant pressure and was not able to complete all of its work in a timely manner. The employer submitted that the employee had a highly valuable set of skills that were required by the employer, and that it would be impractical to change the working arrangements of other employees in the team to accommodate the request to extend parental leave. The employer also provided evidence that it would take 12-weeks to onboard a replacement contractor, and that the minimum estimated cost would be between $182,500 and $202,000 plus GST, which was higher than the employee’s salary.

Commissioner Spencer accepted the employer’s evidence, and was satisfied that reasonable business grounds to refuse the request existed.

Given the timing of the decision, and the employer’s agreement, Commissioner Spencer made an order extending the employee’s parental leave until September 2026.

A copy of the decision can be found here.

Request for offshore job-sharing arrangement validly refused

The FWC has recently considered two requests for flexible working arrangements made by employees of an offshore floating liquified natural gas facility.

Both employees applied for the flexible working arrangements on the basis that they were over the age of 55, but both failed to convince the FWC that there was an ‘objective and rational connection’ between their age and the change in working arrangements sought because:

• one employee wanted to travel, visit siblings and reduce his time at work, which could easily apply to a person under the age of 55, and there was no evidence that his request to spend more time off work had any objective connection to being over 55; and
• the other employee cited a back injury requiring physiotherapy, however the FWC noted that the employee had not attended the physiotherapist in over 18 months. He also said he wanted to get used to having a lower salary, and have his wife get used to him being home more. The FWC also found that these did not have a connection to him being over 55.

This decision highlights that a person is not entitled to a flexible working arrangement simply because they meet one of the criteria in the FW Act to be allowed to request such an arrangement. As part of dealing with a request, employers should consider whether there is an objective and rational connection between the circumstance of the employee and the request.  If there is not, there is likely to be a sound basis to decline the request.

A copy of the decision can be found here.

Justice Hatcher opines on extraterritorial application on the Fair Work Act

In upholding a jurisdictional objection to a general protections application, Justice Hatcher has expressed his preferred view that regulation 1.15F of the Fair Work Regulations 2009 has the effect of extending the general protections provisions of the FW Act to actions taken by an Australian employer anywhere in the world, regardless of whether the action is taken against an Australian-based employee.

The FW Act generally requires the relevant employment to have a ‘sufficient connection’ to Australia such as to have been ‘in and of Australia’ to apply. Regulation 1.15F of the FW Act extends the operation of Part 3-1 (General Protections) of the FW Act to the area outside the outer limits of the exclusive economic zone and the continental shelf. In the interlocutory decision of Woodsford v Range International Limited [2018] FCA 1007 (Woodsford), Perram J proceeded on the basis that regulation 1.15F applies extraterritorially to Australian employers only in respect of Australian-based employees.

In this matter, an employee based in the Philippines made an application under Part 3-1 of the FW Act in relation to contraventions involving dismissal. While there was some dispute regarding the employee’s employer, Justice Hatcher ultimately determined that the employee worked for an Australian employer but was not an Australian-based employee.

In upholding the jurisdictional objection and dismissing the application, Justice Hatcher considered that he was required to follow Perram J’s approach in Woodsford. Justice Hatcher noted that, on his preferred approach, the fact that the employee was not an Australian-based employee would not have been determinative of the jurisdictional question.

This decision confirms that, at least until there is further judicial consideration of the issue, employees working for Australian employers will only be covered by Part 3-1 of the FW Act if they are Australian-based employees.

A copy of the decision is available here.

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