Government announces reform to non-competes in employment contracts

The prime minister has announced that the government will legislate to curb the use of non-compete clauses.

Speaking at a business conference in Manchester, Andy Burnham stated that the government will…

…legislate to make sure that non-compete clauses will no longer be a barrier to hiring for our most promising start-ups and scaling firms.

But what do these proposed changes mean for employers?

One potential answer is: nothing at all. Reform of non-compete clauses is a topic which appears to pique the interest of the UK government from time-to-time but, to date, has never resulted in legislation:

• In 2016, the then Business Secretary, Sajid Javid, launched a call for evidence to examine whether non-compete clauses were stifling entrepreneurship. Over 80 responses were submitted and meetings with interested parties were held in Whitehall. Then there was a cabinet reshuffle in which Javid lost the Business brief, and the exercise was quietly shelved.
• In late 2020 the Conservative government opened a formal consultation on regulating non-competes, seeking views on various proposals for controlling their use. The consultation closed in February 2021 but the government did not respond to it until May 2023. It announced that it would legislate to impose a three-month limit on the duration of non-competes which was, bizarrely, not one of the options it sought views on in the consultation. However, no legislation was brought forward prior to the government losing power in the 2024 general election.
• In November 2025 Keir Starmer’s Labour government issued a new working paper (rather than a formal consultation), again calling for views and evidence on a range of proposals to regulate non-competes including an outright ban, a limit on duration, a salary threshold and the potential for different rules based on company size. Burnham’s announcement on 9 October 2026 is the first time any proposals have been tabled since that consultation closed in February this year.

Assuming legislation will now be brought forward on this issue, Burnham’s announcement provided no indication of the form the regulation of non-competes will take, and which proposals (if any) from the 2025 working paper will be adopted. Employers will have to wait for full details before deciding on what pre-emptive steps they should take in order to protect their position. The eventual proposals may go further than simply targeting non-compete clauses, and might, for example, also look to curtail the use of garden leave and long notice periods (which some employers adopted in response to the 2023 proposal for a three-month limit on non-competes).

Any proposed legislation will also warrant scrutiny against the stated aim of promoting innovation. Non-compete clauses may well make it more difficult for startups and scaleups to recruit from more established competitors. However, they also protect the fruits of innovation and provide potential investors with confidence that key employees cannot start working for a competitor without any buffer following the termination of their employment. Startups and scaleups who ultimately succeed often subsequently come to value the protection that non-competes provide.