As part of the governments BREXIT reforms and the ‘Smarter Regulation to Grow the Economy’ published 10th May 2023, new measures are being proposed to limit non-compete clauses
Reform non-compete clauses to boost competition and innovation
Non-compete clauses are often included in employment contracts to restrict an individual’s ability to work for or establish a competing business after they have moved on from a job.
They can play an important role in protecting businesses who invest in their staff, but unnecessarily burdensome clauses have become a default part of too many employment contracts, including where they fulfil no purpose. This can inhibit workers from looking for better paying roles, and limit the ability of businesses to compete and innovate.
The Government intends to legislate when Parliamentary time allows to limit the length of non-compete clauses to three months, providing employees with more flexibility to join a competitor or start up a rival business after they have left.
This will give up to 5 million UK workers greater freedom to switch jobs, apply their skills elsewhere and even earn a pay rise.
The change are claimed to also provide a boost to the wider UK economy, supporting employers to grow their businesses and increase productivity by widening the talent pool, and improving the quality of candidates they can hire.
It is claimed that limiting non-compete clauses will not interfere with the ability of employers to use (paid) notice periods or gardening leave, or to use non-solicitation clauses.
These reforms will not cut across arrangements on confidentiality clauses, nor will they affect restrictions on (former) public sector employees under the Business Appointment Rules