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Government Publishes Working Paper on Options to Reform Non-Compete Clauses
Adrian Fryer
Non-competition clauses in employment contracts are a contentious issue. They are clauses which survive the end of the employment relationship and restrict the ex-employee, for a period of time, from working for a competitive business or setting up in competition with their ex-employer.
These clauses will only be enforced by the Courts if they are narrowly drafted and go no further than is reasonably necessary to protect legitimate business interests. Legitimate business interests include factors such as protecting confidential information and client relationships.
Non-competition clauses are a form of restrictive covenants. Other restrictive covenants, which are less controversial, include clauses which prevent solicitation or dealing with clients, or those which prevent solicitation or dealing with suppliers.
There is a good argument that, if the identified legitimate business interest can be sufficiently protected via these other forms of covenant, then these should be used – there should be no place for a non-competition provision at all.
The Government remains concerned that non-compete clauses may be impacting their ‘growth mission’ by hindering free movement of labour. It has recently published a working paper asking for opinions on options to reform non-compete clauses.
The Government’s working paper outlines possible options including:
- A statutory limit on the length of non-compete provisions – perhaps to three months.
- A statutory limit linked to business size
- Restricting the use of non-compete provisions to high earners only
- An outright ban on any form of non-compete clause.
The closing date for responses and views is 18th February 2026.
In light of the Government’s clear direction of travel on this: a move towards a more restrictive role for non-competition clauses, employers should take the time now to review their contractual documentation and check that it is fit for purpose. If non-compete clauses are going to become less reliable, then businesses with high risk from departing employees should consider the following:
- Reviewing express confidentiality clauses to make sure that employees are absolutely clear what information is covered and that it remains confidential after the end of employment.
- Reviewing other restrictions to see if they can adequately ‘fill the gap’ if non-competition clauses can no longer be freely used. Look at non-solicitation and non-dealing clauses in particular and check that they are tightly drafted.
- Consider including garden leave provisions alongside lengthy notice periods for key staff members. This combination will give them a period of time away from the business (and away from sensitive business information) before they are able to move to a competitor.