Reform of non-compete clauses on the agenda (again) 

Reform of non-compete clauses on the agenda (again) 

A new ‘working paper’ was published by the Government on 26 November 2025, setting out possible options for reform of non-compete clauses in employment contracts. Such clauses are often used to restrict an employee’s ability to work for a competitor once they have left employment, alongside other contractual restrictive covenants. 

The previous (Conservative) Government had indicated an intention to introduce a statutory cap of three months for non-compete clauses in employment contracts (see our previous article). These proposals had not been further progressed by the time of the July 2024 General Election. 

The current Government is similarly concerned that non-compete clauses unnecessarily restrict job mobility, wage growth and innovation. It is concerned about the ‘behavioural effect’ of including a non-compete clause in an employment contract, where workers may perceive a clause as binding and comply with it even if it is broadly drafted and unenforceable. The Government considers such clauses to restrict job mobility and put downward pressure on wages. 

Proposed reforms 

The working paper is seeking views on the following options for reform: 

• introducing a statutory limit on the length of non-compete clauses, with three months being a possibility (both shorter and longer periods also under consideration) 

• introducing a statutory limit, but with the length potentially varying according to the size of the company (potentially three months for companies with more than 250 employees and six months for those with fewer than 250 employees)  

• prohibiting the use of non-compete clauses entirely 

• prohibiting the use of non-compete clauses for employees earning below a certain salary threshold, with the aim of eliminating non-compete clauses for lower-paid workers who cannot challenge the enforceability of the clause in the courts 

• a combination of a salary threshold and a statutory limit of three months. 

In addition, the Government is seeking views on whether any new restrictions should be limited to non-compete clauses only, or should apply to other restrictive covenants. It also wants to know whether the threat of high legal costs presents an obstacle to challenging the validity of restrictive covenants in the courts. 

The Birketts view 

The closing date for responding to the working paper is 18 February 2026, following which the Government will decide on which proposals to take forward. There is no confirmed timescale for these reforms to take effect. 

In the meantime, employers should continue to include non-compete clauses in employment contracts, where appropriate to an employee’s role. Such clauses should always be carefully tailored to ensure they are reasonable in both scope and duration, and should go no further than is necessary to protect legitimate business interests. This will help to ensure that the clause is enforceable.  

It is likely that once the reforms take effect, any existing non-compete clauses will only be enforceable subject to the statutory provisions. Employers should therefore ensure that they use other contractual mechanisms to protect their business interests, including confidentiality clauses and contractual garden leave provisions.