What the Post-Employment Restraint Changes Mean for Leadership & Team Management

If you run a small business, chances are you’ve relied (at least quietly) on the idea that when a great employee leaves, they won’t instantly become your competition.

Until now, restraint clauses in employment contracts offered some peace of mind. But from 2027, that protection may be significantly reduced. The Federal Government recently announced it will amend and limit the enforceability of post-employment restraint clauses. This means you may not be able to stop a former employee from starting a competing business or joining a competitor, as long as they earn under the high-income threshold. And while there’s still consultation underway, we can now see where it’s headed.

So what does that mean for small businesses? Quite simply: contracts won’t be your safety net anymore. Leadership will.

Beyond the Contract: Why This Is a Leadership Challenge

This isn’t just a legal update. It’s a signal that your approach to hiring and managing people will need to evolve. If your team doesn’t feel connected to your business, if they don’t trust your leadership or see a future in your company, there’s little stopping them from leaving and recreating what they’ve learned with someone else. Or even for themselves.

What keeps people loyal isn’t a clause. It’s clarity, connection, and purpose.

And here’s the catch: employees rarely start out disengaged. Most walk through the door motivated. But over time, if they feel underutilised, overlooked, or unsupported, they begin to check out.

That’s not an employee issue. That’s a leadership opportunity.

The Strongest Retention Strategy is Engagement and Alignment

Contracts don’t keep people from walking out, building the kind of business that people want to stay in, because they feel invested, valued, and clear on what they’re contributing to, does.

That means:

• Writing clear role descriptions and measurements before you hire, not after
• Setting up simple performance metrics that let both parties see progress
• Building feedback into your rhythm, not just at crisis points
• Leading with transparency and structure, rather than assumption or control

This doesn’t need to be complicated. It just needs to be consistent, and with success for everyone at its foundation.

This Is What We Do

At Chrysallis, we help small business owners bridge the gap between leadership and team performance. Whether you’re growing your team for the first time or restructuring after a tough period, we help you lay the groundwork for success, before your next hire walks through the door.

From building out clear expectations and onboarding processes to coaching you through feedback, leadership development, and role design, we’re here to make sure your business is not just compliant, but resilient and ready for your growth.

Don’t Wait for 2027 to Rethink Your Team Strategy

This shift isn’t about fear, it’s about foresight. If you want a team that is connected to you, your business and your goals, now’s the time to lead with purpose, not paperwork.