Time is running out to respond to the government’s November 2025 working paper seeking views on reforming non-compete clauses in employment contracts. Anyone interested in contributing must respond by 18 February 2026. The paper signals that post-termination restrictions remain an active policy issue and that employers need to prepare for potential change.
With an estimated 5 million people in the UK currently subject to non-compete clauses, their use and regulation have implications not only for individual employees, but also for recruitment, retention and competition across the labour market. We outline the background to the consultation and the reform options under consideration below.
Background
Non-compete clauses are designed to prevent former employees from working for, or setting up, a competing business for a defined period after their employment ends. Under current law, these clauses are only enforceable where a court considers them reasonable and necessary to protect a legitimate business interest. The law does not, however, prevent employers from including non-compete clauses in employment contracts, even where their enforceability may be uncertain.
Potential reform has been under consideration by successive governments over the last decade. A 2016 call for evidence led to the conclusion that non-compete clauses were generally valuable to employers and did not unduly restrict workers. That position shifted following the economic disruption of Covid-19. A 2020 consultation proposed a statutory three-month cap on non-compete clauses, but the government at the time did not take this forward before the July 2024 general election.
The current working paper reflects ongoing concerns that the widespread use of non-compete clauses can restrict job mobility and make it more difficult for businesses to access skilled labour. In particular, it highlights potential disadvantages for start-ups and smaller businesses trying to recruit experienced employees, with possible negative consequences for competition and business growth. However, the paper also recognises that non-compete clauses may provide employers with confidence to invest in training and upskilling their workforce.
What reforms is the government considering?
The government is seeking feedback from employers and other stakeholders on a range of potential reforms, including:
- a statutory limit on duration of non-compete clauses and what an appropriate cap might be;
- different rules on enforceability depending on factors such as salary level or company size;
- restrictions or an outright ban on non-compete clauses in employment contracts;
- more accessible enforcement mechanisms given the cost and risk associated with bringing High Court litigation; and
- how any reforms can balance the protection of legitimate business interests with job mobility, competition and economic growth.
The government will assess each option for reform against its policy objectives, which include boosting labour market mobility, reducing barriers to recruitment, promoting competition and innovation, and protecting workers from extended periods of unpaid time out of employment.
Key takeaways for employers
For employers and HR professionals, this consultation shows that the government is actively considering reform of non-compete clauses. The renewed spotlight on restrictive covenants may encourage employees to challenge their enforceability.
While the working paper does not propose specific legislative changes, it suggests that any reform could:
- affect how employers draft and justify post-termination restrictions;
- require reassessment of the risks associated with relying on non-compete clauses to protect confidential information or client relationships; and
- prompt greater use of alternative tools, such as garden leave or other forms of restrictive covenants.
If you rely on non-compete clauses, it is important to remain alert to developments in this area. It is not too early to consider how potential reforms might affect existing contractual terms and wider talent management strategies. If you wish to influence the direction of travel, there is still a short window to respond to the working paper before it closes on 18 February.
