The government has issued a working paper seeking views on options to reform non-compete clauses in employment contracts, with the aim of boosting labour market dynamism, supporting innovation, reducing barriers to recruitment and protecting workers.
The options considered are:
- Statutory limit on length (for example, 3 months, possibly varying by company size).
- Complete ban on non-compete clauses.
- Ban below a salary threshold (protecting lower-paid workers).
- Combination of salary threshold ban and a statutory time limit for those who earn above the threshold.
The government is also seeking views on:
- Whether restrictions should be limited to non-compete clauses only or should also apply to other restrictive covenants.
- How the government can ensure that other restrictive covenants, for example non-dealing clauses, are not used in a way that would have a similar effect as a non-compete clause, if restrictions were limited to non-compete clauses only.
- Whether restrictions on non-compete clauses should be limited to employment contracts or whether the government should consider applying them to wider workplace contracts
- Whether the threat of high legal costs presents an obstacle to bringing claims on restrictive covenants, including non-compete clauses.
Extensive research and consultation on the use of non-compete clauses in employment contracts was undertaken by the previous government. On 10 May 2023, the previous government announced that it would introduce a statutory limit on the length of non-compete clauses of 3 months. However, no action was taken.
The working paper closes for responses on 18 February 2026.
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