Non-compete clauses

Share this...

The Government has published a detailed working paper (available here) exploring four potential models for reforming non-compete clauses in employment contracts.

The paper outlines four models for reforming non-compete clauses;

Introduce a statutory cap on the length of non-compete clauses. While the previous Government’s proposal for a three-month limit (see our Blog) attracted support, the paper recognises that any such cap could become a default benchmark and would still require non-competes to be reasonable. Views are also sought on varying the cap by employer size. An example is given of a statutory cap of 3 months for employees of companies with over 250 employees and 6 months for companies with fewer than 250 employees.

Complete ban on non-compete clauses. This could improve the mobility of workers, but may also lead employers to place greater reliance on other forms of restrictive covenants or confidentiality obligations. Views are sought on whether restrictions should apply to restrictive covenants other than non-competes.

Limit the use of non-compete clauses to workers earning above a certain salary. This aims to protect lower-paid workers who may be least able to challenge unenforceable restrictions. Views are also sought on whether the restrictions proposed should be limited to employment contracts only or implemented in respect of ‘wider workplace contracts’.

Hybrid approach under which non-competes would be banned for lower earners and capped for those above the salary threshold. The paper emphasises that the enforceability of clauses would still be subject to reasonableness and asks for views on potential unintended consequences (for example, greater use of other post-termination restrictions, such as non-dealing and non-poaching).

The closing date for providing views is 18 February 2026, but we have no indication of when this might be implemented.

5.0/5