A Melbourne engineering consultancy called our commercial practice in July. Their senior structural engineer had resigned and joined a competitor two suburbs away. His contract carried a twelve month non-compete covering all of Victoria. The director wanted an injunction by Friday. One fact reshaped the advice. The engineer held a 482 visa, and the firm was his sponsor.
In short: A restraint binds a sponsored employee only where it protects a legitimate business interest. A Victorian court will not rewrite an overreaching clause to save it. A non-compete that shuts a 482 holder out of his occupation has a second cost. It can stop him finding a new sponsor inside the 180 days the visa allows.
Why sponsorship changes the clause
A 482 visa is tied to an approved nomination for one occupation with one employer. When the employment ends, the worker has up to 180 days at a time to be nominated again. The cap is 365 days across the visa. He must find that sponsor in the occupation the visa was granted for. A non-compete drafted by occupation and radius removes the only work the visa permits. Courts weigh hardship when they test reasonableness. Hardship reads differently when the alternative to a new job is leaving Australia.
There is a second risk. A restraint letter sent to frighten a former sponsored worker can look like adverse action. The sponsorship obligations run alongside the Fair Work Act until the file is closed.
What a Victorian court actually asks
Victoria has no statutory power to read down an excessive restraint. New South Wales does, under its Restraints of Trade Act 1976. Here the clause stands or falls as written, subject only to severance. The questions a court works through are settled:
- Is there a legitimate interest: confidential information, client connection or workforce stability? Competition alone is not one.
- Is the restraint no wider than reasonably necessary in duration, area and scope of work?
- Was it reasonable when the contract was signed, not when the breach occurred?
- Was fresh consideration given if the clause was added during employment?
Cascading clauses answer the Victorian problem. The contract sets a ladder of periods and areas, each one an alternative. An invalid rung can then be severed while a shorter one survives. Our note on the eight clauses we read first covers severance.
Three restraints, three strengths
The hardest to enforce, because it bars the person from the work itself. Against a sponsored employee it is also the clause most likely to fail on hardship. It closes the occupation named in the nomination. Where a business needs one, we keep it short and name the actual competitors.
The most defensible of the three. It protects client connection, a legitimate interest courts accept. It does not stop the employee working, so a sponsored worker can still be nominated elsewhere. Draft it around clients he personally dealt with.
Often the clause that matters most to a sponsor. Losing a second nominated worker means a lapsed position, a fresh nomination at $330 and new labour market testing. It is usually upheld where confined to staff the person worked with. It cannot stop anyone answering a public advertisement.
The ban announced for 2027
The Commonwealth has announced a ban on non-compete clauses from 2027. It is to cover employees earning below the Fair Work high income threshold. That threshold is set under the Fair Work Act and reviewed each year. It sits well above the core skills income threshold of $79,423. Most sponsored workers would therefore fall inside the ban. Nothing has commenced yet. We already draft so confidentiality and non-solicitation carry the weight. The non-compete then falls away without gutting the agreement.
What do you actually need to protect?
Your sponsored employee has resigned. What is the real exposure?
How each clause reads against a sponsored worker
| Clause | Interest protected | Effect on the visa | Our usual position |
|---|---|---|---|
| Non-compete | Competition, framed around information or connection | Can block re-nomination in the only occupation the visa allows | Short, local and cascading |
| Client non-solicitation | Client connection | Neutral. The worker may still be nominated elsewhere | Limited to clients personally dealt with |
| Employee non-solicitation | Workforce stability | Protects the sponsor's other nominated positions | Limited to colleagues, for a set period |
| Confidentiality | Trade secrets, pricing, client data | Neutral | Survives employment for genuine secrets |
Garden leave, and why sponsors ask about it
Garden leave keeps the employee on the payroll through notice, away from clients and systems. It often works better than a restraint, because he still owes a duty of fidelity. For a sponsor there is a catch. The employment has not ended, so the nomination terms continue and salary must run at the nominated rate. The cessation notification is triggered only when the employment ends, within 28 days. Our note on making a sponsored worker redundant covers the same step.
The fortnight after a resignation
- Day 1Accept the resignation in writing and cut system access. Preserve the mailbox and the device before any restraint correspondence goes out.
- Days 2 to 5Read the actual clause. Check duration, area, scope and cascade. Check for fresh consideration if it was added later.
- Days 5 to 10Send a measured letter if one is warranted. State the clause, who it covers and what you ask him to confirm. Assert no more than it gives you.
- Last dayFinal pay, accrued entitlements and return of property.
- Within 28 daysNotify the Department that the sponsored employment has ended. Decide whether to re-nominate the position.
Drafting checklist
Our commercial practice drafts these clauses. The migration team then checks the same contract against the nomination. A restraint that reads well in isolation can still contradict the file lodged with the Department. See employment contracts for sponsored staff, the commercial page, or contact us.
Figures verified against Home Affairs visa pricing as at 1 July 2026.
Frequently asked questions
Can we enforce a non-compete against a worker we sponsored?
Sometimes, but the sponsorship makes it harder. A court tests whether the restraint goes further than reasonably necessary. It also weighs hardship. Closing the only occupation his visa permits is serious hardship, so the clause must be narrow.
Does a restraint stop our former employee being nominated by another business?
The restraint binds the employee, not the Department, so a new employer may lodge a nomination. What it can do is expose the employee to a breach claim. It can also expose the new employer, if it induced the breach.
Is a restraint void in Victoria if the area is too wide?
It can be. Unlike New South Wales, Victoria has no statute allowing a court to read an excessive restraint down. A cascading clause gives the court something shorter to sever back to.
Can we use garden leave instead of a restraint for a sponsored employee?
Yes, where the contract allows it. The employment continues during garden leave, so the nominated occupation and salary continue with it. The 28 day notification runs from the actual last day.
Does the announced non-compete ban apply to our existing contracts?
Nothing has commenced and the transitional detail is not settled. We draft new contracts so confidentiality and non-solicitation carry the protection. The agreement then stays intact if the non-compete later becomes unenforceable.
General information as at 25 September 2026. Not legal advice. Restraint clauses turn on their exact wording and on the facts of the departure, so obtain advice on the specific contract before acting.