Prime Minister Andy Burnham has committed the Government to legislating on non-compete clauses, though employment lawyers say businesses are still waiting to find out what the changes will look like.
Speaking at the Innovation Nation Summit in Manchester on 9 October, the Prime Minister confirmed the Government will introduce legislation to crack down on non-compete clauses that “trap” workers and act as a “drag on innovation”. He described the plans as the “Bosman ruling for the innovation sector”, but did not set out how the restrictions would be changed.
Corinne Aldridge, Head of Employment at Kingsley Napley, said the announcement responded to long-standing pressure for reform:
“There have long been calls for reform in this area, by the tech industry in particular viewing the use of restrictive trade practices here as impacting innovation, being more onerous than in the US and a dampener on growth. A six month notice period followed by a six months to a year non-compete period is not unusual for senior executives and many say this is too biased in favour of the employer rather than the employee.”
However, she noted that key questions remain unanswered:
“Whilst today’s announcement signifies the Government are alive to this, some will be disappointed by the lack of concrete detail following the recent review under Sir Keir Starmer. We still don’t know for sure whether non-competes will be outlawed altogether or reduced to say a 3 months cap with pay. If the former as some are hoping for after Andy Burnham’s words this morning, then this would be a significant and radical change. However there is a balance to be struck between existing and prospective employers. Whatever the final form legislated for, it will be rocket fuel for talent mobility and will likely lead to employers becoming more creative in thinking about how they can protect their business.”
Options already on the table
Dan Pollard, partner at employment law firm Fisher Phillips, also highlighted the lack of detail, pointing to the options set out under the previous administration:
“The Prime Minister’s speech is short on detail. He calls it the ‘Bosman ruling for the innovation sector’, but he doesn’t actually say what the Government is proposing. The Starmer administration published a thoughtful working paper in November 2025 setting out several options, including an outright ban, a limit on the duration of restrictions, and a salary threshold. We have yet to see which of these Andy Burnham has chosen. His focus on start-ups, scaling firms and the ‘everyday economy’ suggests he may be planning something different altogether, and employers need clarity on where the lines will be drawn.”
He questioned whether reform would deliver the innovation boost the Government expects:
“The case for reform rests on promoting innovation, but the position is far more nuanced than the Prime Minister would have us believe. Business opinion is divided on whether non-competes enhance or hinder innovation. The opposing view is that, properly used, non-competes protect investment by safeguarding know-how. This is especially true at an early stage, when patent or other IP protection isn’t yet available, which is precisely the start-up and scale-up territory the Prime Minister says he wants to support.”
Unfair dismissal concerns
Pollard argued that changes to unfair dismissal law pose a bigger risk to the UK’s appeal for employers:
“If the Government really wanted to make the UK an ‘innovation nation’, it would abandon its misguided reform of unfair dismissal law. From 1 January 2027, employees will be entitled to uncapped compensation, making the UK a significantly less attractive destination for global employers. These measures will discourage innovators from taking the risk of hiring staff in the UK, and no reform of non-competes will offset that damage.”