Key Takeaways
- • MFA submitted a formal comment letter to the Australian Government supporting proposed non-compete reforms, advocating for targeted protections rather than blanket restrictions on restrictive covenants.
- • The MFA recommendations prioritize inclusion of performance-based compensation (bonuses, deferred pay, incentive arrangements) in high-income threshold calculations, assessed over a reasonable look-back period, to capture how alternative asset managers actually compensate specialized talent.
- • MFA backs narrow co-worker non-solicitation clauses for high-income employees as a legitimate means to protect confidential information and workforce stability while preserving employee mobility.
- • The proposed framework shifts from a previously-considered blanket ban to allowing reasonable non-compete agreements for high-income employees with specialized access to proprietary information—a strategic win for the alternative asset management industry.
Summary
The Managed Funds Association (MFA) has formally supported Australia's non-compete agreement reforms through a comment letter submitted to the Australian Government, positioning the alternative asset management industry's perspective on workforce mobility and intellectual property protection. Rather than accept broad restrictions on restrictive covenants, MFA advocates for a targeted legislative framework that acknowledges the unique compensation structures and information sensitivities inherent to specialized financial sector roles.
Jillien Flores, MFA Chief Advocacy Officer, framed the submission as balancing competing interests: "This framework ensures employee mobility while enabling firms to sensibly protect their intellectual property." The core argument rests on the premise that highly specialized, high-income employees in alternative asset management often possess sensitive proprietary information that warrants reasonable restraints, while unnecessary restrictions on worker mobility harm Australia's competitive position in the financial sector.
MFA's specific recommendations address three areas where the draft legislation requires refinement. First, the association urges the government to count performance-based compensation—including bonuses, deferred compensation, and other incentive-based pay—toward the high-income employee threshold used to determine eligibility for non-compete protection. This recommendation reflects industry practice, where total compensation packages in alternative asset management often blend fixed and variable elements assessed over multi-year periods. Second, MFA supports allowing narrowly tailored co-worker non-solicitation clauses for high-income employees as a measured alternative to full non-competes, protecting confidential information and team stability without blocking job transitions. Third, the association advocates for preservation of existing restraint agreements already in place, minimizing retroactive disruption to current employment arrangements.
The submission marks a strategic shift from earlier reform discussions that contemplated a near-total prohibition on non-competes in Australia. MFA's endorsement of the modified approach—permitting reasonable restraints for a defined cohort of specialized, high-income personnel—reflects the industry's assessment that some protective framework is essential for managing proprietary asset management methodologies and client relationships.
Jillien Flores, MFA Chief Advocacy Officer, framed the submission as balancing competing interests: "This framework ensures employee mobility while enabling firms to sensibly protect their intellectual property." The core argument rests on the premise that highly specialized, high-income employees in alternative asset management often possess sensitive proprietary information that warrants reasonable restraints, while unnecessary restrictions on worker mobility harm Australia's competitive position in the financial sector.
MFA's specific recommendations address three areas where the draft legislation requires refinement. First, the association urges the government to count performance-based compensation—including bonuses, deferred compensation, and other incentive-based pay—toward the high-income employee threshold used to determine eligibility for non-compete protection. This recommendation reflects industry practice, where total compensation packages in alternative asset management often blend fixed and variable elements assessed over multi-year periods. Second, MFA supports allowing narrowly tailored co-worker non-solicitation clauses for high-income employees as a measured alternative to full non-competes, protecting confidential information and team stability without blocking job transitions. Third, the association advocates for preservation of existing restraint agreements already in place, minimizing retroactive disruption to current employment arrangements.
The submission marks a strategic shift from earlier reform discussions that contemplated a near-total prohibition on non-competes in Australia. MFA's endorsement of the modified approach—permitting reasonable restraints for a defined cohort of specialized, high-income personnel—reflects the industry's assessment that some protective framework is essential for managing proprietary asset management methodologies and client relationships.
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