Government signals reform of non-compete clauses

Why should I read this?

The UK government has today announced its intention to legislate to restrict the use of non-compete clauses in employment contracts. During a speech focused on innovation and economic growth, the Prime Minister said that the government wants workers to be able to move freely between businesses and establish new ventures, describing non-compete clauses as “a drag on innovation”.

While the government has not yet published detailed legislative proposals, the announcement marks a significant development, confirming that the reform of non-compete clauses will take place.

What do I need to know?

Post termination non-compete clauses seek to restrict individuals from working for, establishing or otherwise becoming involved with a competing business following the termination of employment.

Under current UK law, non-compete clauses are not automatically enforceable. They will generally only be upheld where they are no wider than reasonably necessary to protect a legitimate business interest, such as confidential information, customer relationships, trade connections or workforce stability. Employers frequently rely on non-compete restrictions alongside confidentiality obligations, non-solicitation covenants, non-dealing provisions and garden leave arrangements.

In November 2025, the government published a working paper examining whether reform was needed (see our previous briefing: Non-competes under fire: Government aims to boost labour mobility.). The paper identified concerns regarding labour mobility, competition and economic growth and considered a range of options, including:

• a complete ban on non-compete clauses;
• statutory limits on their duration;
• restrictions linked to employee earnings;
• different approaches based on company size; and
• combinations of those models.

Despite the government’s commitment to legislate, a number of important issues remain unresolved, including whether the government intends to introduce a complete ban or a more targeted restriction and the timing of any consultation, legislation and implementation.

Part of a broader international trend

The UK's proposed reforms will not be occurring in isolation. Across a number of jurisdictions, policymakers have increasingly questioned whether traditional non-compete restrictions strike the right balance between protecting employers' legitimate business interests and promoting labour mobility, competition and innovation.

In Australia, the government has announced its intention to ban non-compete clauses for many lower and middle-income workers as part of a wider competition and productivity agenda. The reforms are intended to reduce barriers to employee mobility and increase competition for talent.

The United States has also seen significant debate in this area in recent years. While approaches vary, a number of states already impose substantial restrictions on the use of non-compete clauses.

Similar policy discussions are taking place elsewhere, with governments increasingly examining whether non-compete restrictions may suppress wages, reduce employee mobility and impede the transfer of skills and knowledge between businesses.

What should employers do now?

The proposed reforms may require employers to rethink their approach to protecting confidential information, customer relationships and key talent, as well as the role that non-compete clauses play within their broader business protection strategy.

Employers should keep developments under review. Whilst the legislative detail is awaited, employers may wish to begin reviewing:

• existing reliance on non-compete clauses;
• alternative protections for confidential information and trade secrets;
• intellectual property protections;
• non-solicitation and non-dealing restrictions;
• notice period and garden leave arrangements;
• retention and incentive arrangements; and
• practical measures governing access to sensitive information during employment and on departure.

How we can help

We work with employers across a range of sectors on the design, implementation and enforcement of business protection measures in the UK and internationally. We can help organisations review employment contracts, incentive arrangements, garden leave provisions and confidentiality protections, benchmark approaches across jurisdictions, and develop practical strategies to protect business interests while remaining aligned with an evolving legal and regulatory landscape.