Non-compete clauses: consultation on measures to reform post-termination non-compete clauses in contracts of employment

Overview

Non-compete clauses are used in contracts of employment to restrict an individual’s ability to work for a competing business, or to establish a competing business for a defined period after they leave.  

To support economic recovery from the impacts of Covid-19, the Government is exploring avenues to boost innovation through the diffusion of ideas, create the conditions for new jobs and increase competition.   

The purpose of the consultation is to seek views on two options: 

• Option 1: Mandatory Compensation - proposals to make non-compete clauses enforceable only when the employer provides compensation during the term of the clause, and whether this could be complemented by additional transparency measures and statutory limits on the length of non-compete clauses.  

• Option 2: Ban Non-Compete Claueses - an alternative proposal to make post-termination, non-compete clauses in contracts of employment unenforceable. 

Why your views matter

To support our economic recovery from the impacts of Covid-19, the Government is exploring avenues to boost innovation, create the conditions for new jobs and increase competition. Non-compete clauses can act as a barrier by restricting individuals from working for a competing business, or from applying their entrepreneurial spirit to establish a competing business.

We want to maximise opportunities for individuals to start new businesses, find new work and apply their skills to drive the economic recovery. For these reasons, the Government is seeking views on options to reform non-compete clauses in contracts of employment.