28/11/2025

On 26 November 2025, the UK Government issued a Policy paper Working paper on options for reform of non-compete clauses in employment contracts inviting views on options to reform non‑compete clauses in employment contracts. These proposals are part of the wider mission to promote good jobs, boost productivity, and support a dynamic labour market.

Importantly, these proposals apply only in Great Britain (GB). There are no current plans under the Northern Ireland (NI) mandate to introduce similar reforms here. That said, NI often looks across at developments in GB, so future alignment could occur.

Case for Reform

The Paper states that non‑compete clauses restrict employees from joining competitors or starting their own businesses for a period of time after leaving a job. Their purposes is to allow business to protect legitimate business interests. However, evidence shows they can:

• Limit worker mobility
• Reduce knowledge sharing and innovation
• Deter start‑ups and growing businesses from accessing talent
• Create uncertainty for employees, even when clauses are unlikely to be enforceable

Surveys and research indicate that non‑compete clauses are common not only among high earners but also in lower‑paid roles.

Options under Consultation

There are four main policy options being considered:

1. Statutory limit on length:

• • A maximum duration (previously suggested at 3 months).
  • Possible variation by company size (e.g., 3 months for large firms, 6 months for smaller firms).

2. Complete ban

• • Non‑compete clauses would be unenforceable in all employment contracts.

3. Ban below a salary threshold:

• • Clauses unenforceable for workers earning below a set salary level.

4. Combination of statutory limit and salary threshold approach:

• • Ban below a salary threshold, plus a statutory limit (e.g., 3 months) for those above it.

Enforcement

The government is consulting on reforms to non‑compete clauses in GB, with options including a statutory time limit, a complete ban, a ban below a salary threshold, or a combination of these approaches. Currently, restrictive covenants are enforced through the courts, where the losing party pays the winner’s costs, which often deters employees from challenging clauses even when they are unlikely to be enforceable. This means workers may comply with overly broad terms out of fear of litigation. The government is therefore also seeking views on whether high legal costs are a barrier to contesting non‑competes and what changes might help rebalance the system.

Consultation

The consultation is open until 18 February 2026, and we will continue to keep members updated on any developments.

This is the first of what we expect will be 26 consultations affecting employment rights in Great Britain. Meanwhile, in Northern Ireland, we understand that the Department for the Economy is finalising drafts of the Employment Rights Bill, which is expected to be published in January. It is also noteworthy that the Minister for the Economy is scheduled to attend the Economy Committee on 7 January 2026, which is perhaps the date on which she will introduce the Bill to them.