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Read more articles in: Amanda Hyam, Blog, Employment Law
Non-compete clauses have been a common feature in employment contracts in the UK, especially for employees in senior or specialist roles.
However, the Department for Business & Trade has published a new working paper exploring the option to reform non-compete clauses in employment contracts.
With a consultation period running until 18 February 2026, reform could be on the way and the benefits of a non-compete clause are being discussed.
A non-compete clause is a contractual restriction that prevents an employee from working for a competing business or setting up a competing venture, for a specified period after their employment ends.
These clauses are set to protect an employer’s business interests, such as confidential information, trade secrets, client relationships and investments.
Under current UK law, non-compete clauses are only enforceable if they are reasonable within scope, duration and geography and if they go no further than necessary to protect those legitimate interests.
With the clause being under review, employers need to understand the changes being discussed and whether this affects them.
The Government’s working paper highlights growing concerns that non-compete clauses may act as a barrier for job mobility and innovation.
Non-compete clauses are not limited to high earners, as the Competition and Markets Authority (CMA) found in their January 2023 – 2024 report that 20 to 30 per cent of workers in lower-paid jobs were subject to one.
Concerns may be raised that employees might comply with a non-compete clause by default, due to uncertainty and the perceived cost of legal challenges.
As a result, the Government has stressed that this could limit labour market flexibility and economic growth.
The working paper outlines several possible approaches to reform:
The proposal currently focuses on non-compete clauses in employment contracts and does not extend to other restrictive covenants, such as non-solicitation, non-dealing or confidentiality clauses.
Employers who rely on non-compete contracts to protect their business interests must stay informed on the working paper and any potential changes.
The reforms may require a business to revisit how it protects confidential information and client relationships.
The paper could lead to a greater reliance on alternative protections such as confidentiality clauses, longer notice periods, garden leave or non-solicitation provisions.
There may also be an increased focus on employee retention strategies, including competitive remuneration and career development opportunities.
Employers must seek early legal guidance to ensure they are acting compliantly when managing a non-compete clause.
While no changes have been implemented yet, the consultation could potentially affect how non-compete clauses are viewed and regulated in the UK.
Employers should assess their existing employment contracts and whether any current restrictions are necessary.
Our expert team can help you understand your legal obligations and the best way to protect your business’ interests.
To learn more about how to create a compliant non-compete contract, speak to our team today.
Head of Dispute Resolution and Employment
I have specialised in Dispute Resolution, Civil Litigation and Employment law for more than 15 years. I understand how daunting the prospect of litigation can be and because of this I am always available to discuss concerns.
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