In a bold move for the Australian workforce, last night the Albanese government announced in the 2024–25 Federal Budget that it will ban non-compete clauses for workers earning up to $180,000. The ban will apply to an estimated 3 million Australians, including a significant portion of those employed in the professional hair and beauty industry.
Non-compete clauses (once a standard feature in many employment contracts) have restricted salon employees from working for nearby competitors, starting their own businesses, or even serving former clients they’ve built relationships with.
With one in five workers affected by such clauses, their removal represents a major shake-up to traditional employment protections, especially in our industry, an industry already known for high staff turnover and competition for skilled workers.
The government’s rationale is clear: remove barriers to job mobility, encourage wage growth, and promote new business creation. For the professional hair and beauty space, this policy shift may usher in a new era of empowerment - but also intensify the war for talent and client retention.
“Even if the worker moved across town, a non-compete clause could typically prevent them taking or ‘poaching’ any clients they developed a relationship with.”– ABC News, May 2024
How This Will Affect the Professional Hair & Beauty Industry
Here’s what the ban means in practice:
Increased Staff Mobility: Employees will have the freedom to move between salons or start solo businesses without the fear of being sued or penalised — giving more power back to the workforce.
Greater Risk of Client Loss: Salons will no longer be able to enforce protections that stop staff from taking loyal clients with them. Relationship-based businesses will need to rely on service quality and loyalty incentives, not legal clauses.
Spike in Solo Operators & Home-Businesses: With non-compete clauses gone and barriers to entry remaining low, expect more stylists and therapists to set up home-based, mobile or boutique studios.
Pressure on Retention Strategies: Retaining top-performing staff will become more about culture, flexibility, career progression and pay, rather than contractual obligation.
The Industry Was Already Shifting
Even before this announcement, the professional hair and beauty landscape was navigating tight margins, rising wage pressure and fierce competition. The latest ATO and IBISWorld figures confirm what many owners already know: expenses are high, profits are lean, and the market is overcrowded.
ATO Benchmarks for 2022–23
Annual Turnover Range | ‘Total Expenses’ as % of Turnover | Average Total Expenses |
$65,000 – $200,000 | 49% to 69% | 59% |
$200,001 – $400,000 | 70% to 83% | 76% |
More than $400,000 | 76% to 88% | 82% |
These figures confirm that as turnover increases, so too do expense ratios - largely due to wage costs.
According to IBISWorld, wages now account for nearly 59% of industry revenue, reflecting the heavy reliance on human touch and one-on-one service delivery. With owner investment sitting at just $0.06 for every $1 spent on wages, most salons aren’t structured for automation or scalability - making every employee departure more costly.
Taking a birds eye view of the industry landscape, we can already see that;
The industry is highly fragmented, with most salons independently owned and operated.
There are low barriers to entry, minimal regulation, and little financial outlay needed to start — which encourages a high rate of new business launches.
With the non-compete ban, this already-crowded market is likely to see a surge of new solo practitioners and boutique studios — increasing competition for clients and local market share.
So, if you're a Salon Owner, you might be asking how do I survive this? Our hot take is to zoom in and focus on the following:
✔️ Retention, not restriction — Create environments people don’t want to leave. ✔️ Client experience — Your edge lies in how you serve, not just what you offer. ✔️ Niche offerings — Generic services won’t hold up in a crowded, mobile market. ✔️ Smart brand building — Those who own their brand presence will weather staff exits with less disruption. ✔️ Strategic partnerships — Build collaborative ecosystems, not competitive silos.
The removal of non-compete clauses is a major shift in employment law - and it won’t just affect contract templates. It will reshape how salons hire, train, retain and compete. While it offers new freedom for employees and future business owners, it also demands a more strategic, human-centred approach to leadership from salon owners.
The industry is entering a new chapter — one where trust, culture, and innovation will define long-term success.
Sources
ABC News, 2024 Federal Budget Coverage
ATO.gov.au, 2022–23 Small Business Benchmarks
IBISWorld, Hairdressing and Beauty Services in Australia 2023
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