Working paper seeks views on options to reform non-competes in employment contracts

At a glance

• The government has published a working paper seeking views on reforming non-compete clauses in employment contracts.
• Proposed options include a statutory time limit, a complete ban, salary-based restrictions, or a combination of these measures.
• Feedback is also sought on whether reforms should extend to other restrictive covenants and wider workplace contracts.
• The consultation considers the impact of legal costs on enforcing restrictive covenants. 
  Responses to the working paper are due by 18 February 2026.

The government has issued a working paper seeking views on options to reform non-compete clauses in employment contracts, with the aim of boosting labour market dynamism, supporting innovation, reducing barriers to recruitment and protecting workers.

The options considered are:

• Statutory limit on length (for example, three months, possibly varying by company size).
• Complete ban on non-compete clauses.
• Ban below a salary threshold (protecting lower-paid workers).
• Combination of salary threshold ban and a statutory time limit for those who earn above the threshold.

The government is also seeking views on:

• Whether restrictions should be limited to non-compete clauses only or should also apply to other restrictive covenants.
• How the government can ensure that other restrictive covenants, for example non-dealing clauses, are not used in a way that would have a similar effect as a non-compete clause, if restrictions were limited to non-compete clauses only.
• Whether restrictions on non-compete clauses should be limited to employment contracts or whether the government should consider applying them to wider workplace contracts
• Whether the threat of high legal costs presents an obstacle to bringing claims on restrictive covenants, including non-compete clauses.

Extensive research and consultation on the use of non-compete clauses in employment contracts was undertaken by the previous government. On 10 May 2023, the previous government announced that it would introduce a statutory limit on the length of non-compete clauses of three months. However, no action was taken.

The working paper closes for responses on 18 February 2026.