The government has announced plans to legislate to reform non-compete clauses, with the aim of reducing barriers to hiring. The announcement reflects the government’s concern that some businesses make excessive use of restrictive practices. While the detail is still to come, the reforms could affect when and how employers use non-compete clauses.
The context
Non-compete clauses seek to restrict workers from joining a competing organisation or setting up their own competing business for a prescribed period after their employment ends. The government’s announcement that it plans to reform these clauses follows a working paper the previous government published in November 2025. The working paper set out various options for reform, ranging from a statutory limit on the length of non-compete clauses to a full ban on their use.
The Competition and Markets Authority (CMA) published a response to the working paper in February 2026. It recognised the importance of labour market mobility to promote competition and growth, while acknowledging that restrictive covenants can serve a legitimate purpose. The CMA favoured a ban on non-competes below a defined salary threshold and restricting the duration of non-competes above that threshold.
The government has not yet confirmed which model it intends to adopt. However, the CMA’s response provides one indication of how the government might structure reform. The policy challenge will be to increase labour market mobility while preserving employers’ ability to protect legitimate business interests.
What has the government announced?
The government has indicated that its reforms will focus on ensuring that non-compete clauses do not prevent workers in the “foundational, everyday economy” from moving jobs. It also plans to bring forward options addressing the wider use of restrictive practices. It has not yet explained what those measures will involve, when it will introduce the necessary legislation or how the reforms would apply across different sectors or categories of worker.
What does this mean for employers?
There is no need to consider changing your employment contracts at this stage, but it makes sense to monitor developments closely. Depending on the model adopted, the reforms could significantly restrict when employers can use or enforce non-compete clauses and their permitted duration.
Employers will also want to watch for proposals affecting other forms of post-termination restriction, such as restrictions on soliciting clients or poaching former colleagues. Once further detail emerges, consider whether your existing approach to protecting confidential information, customer relationships and other legitimate business interests remains appropriate.
