Protection yes, restriction maybe
Non compete clauses prevent agents from selling competing products during or after their relationship with you. They protect your investment in training, your customer relationships, and your competitive advantages. But overly broad restrictions are unenforceable and can deter quality agents from joining your program.
What you can reasonably restrict
During the agreement
It is generally reasonable to restrict agents from selling directly competing products while they are actively representing yours. "During the term of this agreement, the Agent will not sell products that directly compete with [your product] in the assigned territory."
However, many commission only agents carry multiple product lines. A blanket restriction against selling anything competitive may make your opportunity unattractive. Consider whether limited restrictions (same product category, same territory) are sufficient.
After the agreement ends
Post termination non competes for contractors are harder to enforce than for employees. Australian courts assess whether the restriction is reasonable in duration (three to six months is typically more enforceable than twelve months or more), scope (restricting a specific product category is more enforceable than restricting all sales), and geography (restricting a specific territory is more enforceable than a nationwide ban).
What to restrict instead
Non solicitation of customers
Rather than preventing agents from selling competing products, prevent them from approaching your customers directly. "For 12 months after termination, the Agent will not solicit business from any customer they were introduced to through this agreement."
This protects your customer relationships without restricting the agent's ability to earn a living.
Non solicitation of agents
If you have a network of agents, prevent departing agents from recruiting your other agents. "For 12 months after termination, the Agent will not recruit or solicit any agent or contractor currently engaged by the Company."
Confidentiality
Protect your sensitive information through confidentiality clauses rather than broad non competes. Pricing strategies, customer lists, and sales methodologies can be protected without restricting the agent's future employment.
Practical considerations
Enforceability
A non compete clause that is too broad will not be enforced by an Australian court. You will have spent legal fees pursuing it only to have it struck down. Better to have a narrow, enforceable restriction than a broad, unenforceable one.
Agent reaction
Top agents with strong track records may refuse to sign agreements with restrictive non competes. If your non compete drives away quality candidates, it is costing you more than it protects.
Industry norms
Research what is standard in your industry. If no competitor requires non competes from their agents, imposing one puts you at a recruitment disadvantage.
Best practice
Include targeted restrictions that protect your legitimate business interests (customer relationships, confidential information, agent network) without unreasonably limiting the agent's ability to earn a living. Have a lawyer review the clauses to ensure enforceability in your jurisdiction.