Key takeaways

The law on non-compete clauses may be drastically reformed by the current government. The most favourable approach is a combination of a complete ban on non-compete clauses below a certain income threshold and a statutory limit of three months on non-compete clauses in relation to employees earning above the limit. Parties to employment contracts should take these proposals into account when reviewing their current position but should also bear in mind that the long-established principles governing non-compete clauses are still in force.

What is a non-compete clause?

A non-compete clause is a type of clause often found in employment contracts which restricts the employee from working for the employer’s competitor or founding a competing business themselves for a specified period after their employment is terminated.

English law prohibits restrictions placed on trade to allow employees to pursue employment freely. This renders non-compete clauses generally unenforceable. However, a non-compete clause may still be enforceable provided that it meets the following criteria:

1. It places fair and reasonable restrictions.

2. These restrictions are needed to protect a legitimate interest of the employer in ensuring that its trade secrets are not exploited by a former employee.

3. These restrictions are proportionate to the legitimate interest and are placed only in relation to the role that the former employee occupied in the employer’s business.

The role of non-compete clauses has been scrutinised by the Competition and Markets Authority in the UK. Its research found that non-compete clauses are prevalent in science and are often met in industries where the need to protect trade secrets and other intellectual property rights is not engaged, such as retail and education. This is seen as a major hindrance to switching jobs. In the current market, which is in a transformative period where many employees do not stay at one company for too long, this problem is particularly relevant.

What are the Government’s proposals for non-compete clauses?

In November 2025, the Government published a working paper seeking views on four alternative approaches to reforming non-compete clauses:

• a statutory limit on the length of non-compete clauses;

• a ban on non-compete clauses;

• a ban below a salary threshold; and

• a combination of a ban below a salary threshold with a statutory limit.

The working paper closed for responses on 18 February 2026. The Government has not yet implemented any of these proposals.

Statutory limit on the length of non-compete clauses

In 2023, the previous government considered a plan to limit the length of non-compete clauses to three months.

This could afford workers some protection from interference in their subsequent employment and promote mobility and wage growth across the labour market.

Barnes Law previously considered that proposal in our article discussing the government's plans to cap non-compete clauses.

Another related proposal suggests a limit which would depend on the size of the employer. One such idea is that companies with more than 250 employees would be limited to non-compete clauses lasting for three months while those with fewer employees would enjoy a limit of six months.

The government highlighted some problems with this approach. The limit would still see workers being unable to work in their area of expertise for three months which would be a considerable hindrance on their mobility and stifle economic growth.

Furthermore, the government highlights that such clauses would still need to be compliant with the common law principles governing non-compete clauses. Such a limit may be read by employers as an industry standard. This would lead employers to assume that non-compete clauses under the limit are fair and reasonable in all cases, incentivising them to adopt such clauses in all their employment contracts. Thus, the limit can shift the position from non-compete clauses being unenforceable unless they are fair and reasonable to an assumption that they are enforceable as long as they are within the instituted time limits.

A shorter limit between one to three months may be considered but there is a risk that workers would still face financial hardship for the period of the limit.

Could non-compete clauses be banned completely?

Another approach explored by the government is that non-compete clauses are subjected to a blanket ban. Such an approach would strengthen protections afforded to workers and boost the dynamism of the labour market. Individuals would find it easier to switch jobs and promote innovation and competition by allowing ideas and skills to travel across regions.

Some employers may respond to such a ban by intensifying the use of restrictive covenants and confidentiality clauses, restricting access to information within their companies, and removing deferred compensation schemes from employees who join rival firms.

Therefore, the government would need to prevent use of such practices in a way that frustrates the purpose of the ban.

Could non-compete clauses be banned below a salary threshold?

Under this approach, non-compete clauses will be enforceable only if they apply to an employee earning above a set threshold. CMA research suggests that use of non-compete clauses rises from 20% to 40% past the threshold of £100,000 annual salary.

The goal is to protect those workers who are not in a financial position to bear the costs of non-compete clauses and allow them to freely move between jobs.

However, this approach has disadvantages in that it is difficult to calculate pay which could lead to litigation on what to include in the calculation and the employers trying to provide marginal benefits to force employees who are close to the threshold into the higher bracket.

This would also lead to the more productive and high-earning employees being completely unprotected under the ban.

Could a salary threshold be combined with a three-month non-compete limit?

To cure the issues in the previous approach, the government is considering offering higher-paid employees protection of a three-month limit on non-compete clauses. This would mitigate the disadvantages of the salary threshold approach.

How could reforms to non-compete clauses be enforced?

The government also has concerns around enforcement of these proposals. Currently, the enforcement of non-compete clauses is done through County Courts or the High Court, which order the losing party to pay legal costs of the winner. This can dissuade workers from enforcing the provisions of the government’s proposal and make them comply with unlawful clauses.

To reduce costs of civil litigation, the government is looking at mechanisms such as fixed recoverable costs, insurance, and conditional fee agreements to reduce the exposure of the employees to these issues.

In its response, the CMA considers the combined approach of a ban on non-compete clauses below a certain income threshold with a statutory limit of three months above this threshold to be the most effective.

What should employees consider before joining another employer?

While the proposed reforms may transform the labour market, it is important to act in accordance with the current legal principles surrounding non-compete clauses. As things stand, employers should seek to future-proof their contracts with employees by ensuring that any non-compete clauses included are fair and reasonable while using the government proposals as guidance.

Employees should seek to mitigate their exposure to the effect of non-compete clauses by carefully reviewing their contents and taking decisions regarding future job opportunities with reference to their obligations under their previous contract of employment.

Barnes Law’s Employment Law team advises employers, employees and senior executives on non-compete clauses, restrictive covenants, confidentiality obligations, team moves and post-termination disputes. For more information, please contact our employment solicitors in London to discuss how we can support you.

Written by Barnes Law Managing Partner Yulia Barnes.