On 26 November 2025, the government published a policy paper focused on reforming non-compete clauses in employment contracts. This policy paper invites views on several possible options for this reform, with responses required by 18 February 2026.

The government says that “reform of non-compete clauses could help drive change by liberalising the UK labour market, supporting start-ups and growing businesses to access talent, improving competition and providing millions of UK workers greater freedom to switch jobs, start new businesses and apply their skills to the greatest effect.” The stated policy options are:

• Introducing statutory limits on the length of non-compete clauses – according to company size or not.
• Banning non-compete clauses in employment contracts completely (as they do in California and other US states) or for those who earn below a salary threshold (as proposed in Australia).
• Combining a ban below a salary threshold with a statutory limit.

A ban on non-compete clauses would necessitate a different approach to the protection of business interests. The government suggests that employers might need to move towards positive incentives to retain staff, such as increased pay, bonuses or greater flexibility or the use of garden leave, where the worker would receive pay.

It should not be forgotten however, that the non-compete clause in an employment contract is not the only restrictive covenant in the employers’ arsenal. Business interests can also be protected using non-solicitation/non-dealing clauses (in relation to clients/ customers and staff), non-interference clauses in relation to suppliers or distributors, confidentiality provisions covering confidential information and intellectual property clauses. Anti team move clauses are also a useful tool to seek to prevent groups of employees leaving in concert. These clauses will only be enforceable where they are reasonably necessary to protect a legitimate business interest of the Company (for example, trade connections, trade secrets and confidential information or the stability of the workforce), but in many circumstances they are an effective alternative to non-competes.

However, the government says that they would “need to ensure that other restrictive covenants… are not used in a way that would have a similar effect as a non-compete clause.” One of the discussion questions in the policy paper asks “Whether restrictions should be limited to non-compete clauses only or should also apply to other restrictive covenants.”

We wait to see, therefore, how far these proposed changes will go but the direction of travel seems clear, post-termination restrictions are likely to become more difficult to enforce. Changing and updating such clauses across a workforce is not quick or straightforward, so there arguably has never been a better time for businesses to review their approach to employee competition and business protection. Do get in touch with our Business protection team who would be happy to help.