Prime Minister announces intention to limit the use of non-competes
In a speech on driving innovation in the UK, Prime Minister Andy Burnham recently confirmed the government’s intention to limit the use of non-compete clauses and other “restrictive practices” in employment contracts. Reforms in this area have been floated repeatedly over the past years – it seems that change may now finally be coming.
What is a non-compete?
A non-compete is a contractual restriction preventing an employee from joining a competitor for a certain specified period after their employment with a current employer comes to an end.
Non-competes are difficult to enforce. The law does not recognise contractual restrictions on free competition, and non-competes are therefore only enforceable if they protect a legitimate interest of the employer (generally their confidential information), and go no further than is necessary to do so. In simple terms, the idea is that, by virtue of having been employed by a business, an employee will have gained access to confidential information which would give them (or a new employer) an undue competitive advantage – for example, information about business plans, growth strategy or pricing. That justifies a non-compete restriction to protect against the misuse of that information to create a competitive advantage. In other words, a non-compete is enforceable not because it prevents an employee from competing, but because it is (arguably) necessary to prevent them from misusing an employer’s proprietary information, to which they have only had access because of their employment. While there is no statutory limit on the length of a non-compete, restrictions longer than 12 months are not generally regarded as enforceable in an employment context – in practice, three- or six-month non-compete restrictions are more common.
Non-competes are one element of an employer’s business protection armoury. They will generally sit alongside other post-termination restrictions, including provisions protecting customer/client relationships and non-poaching provisions. For senior employees, they will also often be accompanied by long notice periods during which an employer can place the employee on garden leave, taking them out of the market for an extended period – albeit periods of garden leave would typically act to reduce any post-termination restricted period and are paid.
What’s the issue?
Opponents of the use of non-compete provisions argue that they inhibit the free movement of talent and stifle innovation. They argue that the interests that non-competes are designed to protect are adequately protected by other contractual provisions, including confidentiality protection and other post-termination restrictions. While opponents recognise that non-competes are difficult to enforce, they argue that their inclusion in employment contracts has a chilling effect on talent movement, even where clauses may not technically be enforceable.
Defenders of non-competes argue that they are essential to protect employers’ trade secrets and confidential information and certain intellectual property, which they say are not adequately protected by other provisions, for example because breaches of other protections are more difficult to evidence. From a policy perspective, proponents argue that non-competes encourage and safeguard investment in innovation and that the current law is already carefully calibrated to strike a balance between employer interests and preserving free movement of talent.
What is going to change?
The Prime Minister’s speech indicates that we can expect legislation to limit the use of non-competes and other “restrictive practices” in employment contracts.
We do not have detailed proposals yet, but the announcement follows various reform proposals over recent years – including, most recently, a working paper issued in November 2025 under the Starmer government. The working paper considered a number of options for reforming the use of non-competes, including:
- An outright ban, or a ban below a certain salary threshold;
- A statutory limit on the length of a non-compete, either for all companies or based on company size; or
- A combination of these approaches.
The working paper gives us an outline of policymakers’ thinking and may therefore give us some idea of what to expect. However, the Prime Minister made no express reference to it, so we may also see proposals going in another direction, for example revisiting options previously considered of requiring employers to remunerate employees during any restricted period.
It is worth noting that the Prime Minister appears to be eyeing up reforms that go further than tackling the use of non-competes. In his speech, he refers to other “restrictive practices”, read by some as potentially targeting long notice periods and garden leave provisions which can see senior employees taken out of the market for up to 12 months (albeit paid).
When can we expect more information?
Press commentary suggests that government officials are planning to publish more detailed proposals alongside the Chancellor’s Autumn Budget on 28 October 2026. Watch this space.
What should you do now?
We would advise against any knee-jerk action until the government has published detailed proposals. Any reform will require primary legislation, so change will not happen overnight and businesses will have plenty of time to prepare once the position becomes clear.
For now, we recommend that you continue to include established business protection provisions (including non-competes, where applicable) in your employment contracts.
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