Earlier this year the ASA made a submission to the Competition Review Taskforce’s inquiry into worker non-compete clauses and other constraints, calling for the Government to prohibit non-compete clauses in contracts with low-paid freelancers. This Inquiry took place as The Federal Trade Commission in the United States banned non-compete clauses in contracts with workers, including independent contractors, in April this year. 

In the book industry a non-compete clause is a clause that prevents authors from publishing any future work which is similar to, or might compete with, their current work without their publisher’s permission. We understand the rationale: publishers investing in a book don’t want their author to tweak it and publish something substantially similar with another publisher. But, firstly, the exclusive licence granted by authors to publishers already  prevents this from happening and, secondly, non-compete clauses are often drafted far more broadly than this. It’s one thing to impose restraints on very highly paid employees and another thing to include restraints in publishing contracts which are outside an employment relationship and often poorly remunerated. 

In our view, these clauses are unnecessary to protect the legitimate business interests of publishers, are often drafted in quite vague language, are rarely enforced, and can unfairly impede authors from making a living.

Although terms vary across contracts, typically authors are required to warrant that they will not publish, write or become involved in any work of a similar nature, containing the same or similar characters or themes that is likely to compete or likely to lessen its sales for themselves and their licencees. Publishers rarely limit the non-compete by time or geographic territory. It is very difficult for authors to know the parameters of such restraints and their vagueness can cause stress and uncertainty for authors. 

Unless non-competes are very short-lived, they may restrain authors’ abilities to earn a living, particularly for genre fiction writers (where all their works arguably compete with each other), specialist non-fiction writers (where they are an expert in a niche area and may want to publish multiple books on the same subject matter) or illustrators commissioned specifically for their unique style. 

Lastly, non-compete clauses are ‘one way’. Authors are not permitted to go to another publisher with a ‘competing work’ but the publisher is not committed to any further support of the author. Nor does the publisher offer a reciprocal promise not to publish a work with a third party that is similar, or likely to compete in the same market, or that has the potential to reduce sales of the author’s work. 

In our observation, authors can be fearful about losing a publishing contract if they request the removal of non-compete clauses and often lack the resources or desire to get into a dispute with their publishers about the scope of the clause. Therefore, while non-competes are rarely actually enforced by publishers, these clauses can have a chilling effect on author decision-making. If the Government introduced a ban on non-competes, authors would be empowered to simply reject such clauses as unlawful.

Read more about the review and download our submission from the Review website.