Government Considers Ban on Non-Compete Clauses in Employment Contracts

Published : December 10, 2025

Committed to the growth of a dynamic labour market, the government has released a consultation document posing questions and proposing options for the reform of non-compete clauses in employment contracts. Publishing the Working Paper alongside its recent budget, the government argues that reform in the area could help to liberalise the UK labour market, empower workers and offer greater employment mobility across the board.  

Government Explores Potential Ban on Non-Compete Clauses 

The Working Paper invites views from relevant stakeholders on potential options to reform the current regulation of non-compete clauses within employment contracts. A reform of this particular restrictive covenant is considered pressing in order for workers to be able to take advantage of employment opportunities and to encourage economic growth across the country.

To support its position on delivering a higher standard of living, reducing barriers to business and entrepreneurship, and supporting innovation throughout the economy, the government proposes several options for reform. 

Proposed Reforms

  • A complete ban on non-compete clauses in employment contracts;
  • The introduction of a statutory limit on the length of non-compete clauses when included in employment contracts; 
  • A ban on non-compete clauses below a certain salary threshold; 
  • A combined ban that dictates a statutory time limit and applies when the employment contract is below a salary threshold. 

The government explains that non-compete clauses restrict an individual’s ability to work elsewhere or establish their own competing company after they have moved on from an employer. It underlines that even in the case of an over-generalised non-compete, which may be unenforceable, many workers will still feel bound by the clause, intimidated by potential legal action should they infringe it. In addition, if workers bring a claim, the losing party is generally responsible for the winning party’s costs, which can deter challenges to a non-compete regardless of its enforceability. 

If you have questions about a non-compete clause in your employment contract, contact Redmans Solicitors. Our experienced team of employment specialists is here to help. After a brief chat, we can answer your queries and discuss potential next steps. 

To get in touch, simply: 

Employment Contracts: What are Non-Compete Clauses?

A non-compete clause is part of an employment contract which restricts an employee from working for a competitor or starting up their own competing business. The clause normally lasts for a specified period and within a specified geographical area after leaving their job. A non-compete clause forms part of a legal employment contract between an employer and employee. It can only be enforceable if it’s reasonable and specific.

Under UK law, non-compete clauses are governed by the common law doctrine of “restraint of trade.” This provides that any contractual restriction on an individual’s ability to work is void unless it protects a legitimate business interest and goes no further than reasonably necessary. Courts commonly recognise the protection of confidential information, the protection of customer or client relationships, and maintaining workforce stability as ‘legitimate interests’. This legal underpinning gives context to why non-compete clauses can be found to be unenforceable. When drafted too broadly, they will be considered to be unreasonable.

Reasonable and Specific: Can a Non-Compete Clause be Enforced in the UK?

In principle, non-compete clauses can be enforced in the UK provided certain conditions for enforceability are met. 

Firstly, the non-compete clause must have a genuine legitimate business interest, protecting something – whether information or relationships – without simply preventing competition. 

Furthermore, the reasonableness of the clause means that it must have a clear duration (normally between three and six months, but up to 12 for senior roles), have a defined geographic area, and be specific in scope as far as the employee’s role and the employer’s interests are concerned. 

What Are the Impacts of Non-Compete Clauses? 

A non-compete clause gives employers the confidence to invest in their employees. This may take the form of training and up-skilling, or sharing valuable information specific to their business. In this way, it can act as a barrier to employee poaching from other firms, particularly when it comes to higher-salary and higher-skilled positions. 

Read more: Non-Compete Clauses are Stopping UK Employees from Switching Jobs 

By contrast, the protections offered by non-compete clauses can also be viewed as overly restrictive. They may flatten the potential for a more dynamic labour market, restrict employee mobility and limit competition. Overall, it makes it harder for companies to scale. 

The Potential Changes to Employment Contracts if the Proposals Proceed

The Working Paper proposes that feedback will be gathered until February 2026, after which point reform proposals will be undertaken. Businesses are being advised to review their active non-compete clauses. It may be useful to consider scaling them back, particularly in the case of junior and non-senior roles. 

The proposed options take into account observations from international employment approaches. Several US states (California, North Dakota, and Oklahoma) are imposing full bans; France, Germany and Italy allow non-compete clauses only if the employer pays mandatory compensation during the period of a non-compete clause; and Luxembourg and Austria imposed a ban on non-compete clauses when the employment in question is below a certain salary threshold. The Working Paper will consider feedback on the four reform options with the ultimate goal of improving employment mobility and clarifying post-employment restrictions. 

What To Do if You Face an Unlawful Clause 

Workers who are subject to a non-compete clause that might be considered unlawful should seek legal advice. In some circumstances, it may first be possible to negotiate with a former employer. If unsuccessful, workers could bring a challenge to the clause in court. Non-compete clauses are only enforceable if they are considered reasonable and necessary. In addition, they should genuinely protect the employer’s business interests. 

Read More: Christmas Shopping at Work: Why a Clear Acceptable Use Policy Can Prevent Unfair Dismissal

Around five million employees in Britain currently have non-compete clauses in their contracts, typically lasting around six months post-employment. Reports suggest that legal disputes involving non-compete clauses have increased throughout the first nine months of 2025. This rise may be indicative that clearer regulations around the use of non-compete clauses would benefit all parties. 

With reform possible, both employers and employees should review their current restrictive covenants to ensure they remain legally sound and commercially justified. 

Companies might consider alternatives to non-compete clauses. These can include robust confidentiality clauses, garden leave, non-solicitation and non-dealing clauses and fixed-term notice periods.

Employees should carefully review the scope, duration and geographic reach of the clause before signing. In considering enforceability, they should also consider whether they have actually had access to confidential information or valuable business relationships.

Employment Contracts: Get Help with Redmans

If you believe that you are subject to an overly restrictive non-compete clause, talk to us. Redmans Solicitors are experts in the employment sector. Our solicitors would be happy to assess your case, answer your queries and present potential options to move forward. Where relevant and eligible, we can also guide you through the legal process to ensure you achieve an optimal outcome. 

To talk to us and find out what we can do to help, simply: 

The information on this page is intended for general informational purposes only and does not constitute legal advice.