CMA supports targeted reform of employment non-compete clauses

Background

The government is considering potential reforms to post-termination non-compete clauses in employment contracts. In November 2025, the Department for Business and Trade published a working paper setting out a range of possible options, including a statutory cap on the length of non-competes, a complete ban, or restrictions based on salary level.

The working paper followed earlier analysis by the Competition and Markets Authority (CMA), which had reported that non-compete clauses are common across sectors and income levels and may restrict labour mobility.

CMA response

On 25 February 2026, the CMA published its response to the working paper.

The CMA acknowledged that restrictive covenants can serve legitimate purposes, such as protecting confidential information, encouraging investment in training and safeguarding client relationships. However, it described non-competes as a relatively “blunt” tool that can significantly restrict worker mobility.

The CMA indicated that its preferred option is a combined approach, involving:

• A ban on non-compete clauses below a defined salary threshold; and,
• A statutory limit on the duration of non-competes for employees above that threshold.

It considered that a simple cap on duration alone would not sufficiently protect lower-paid workers who would be less likely to weather any financial costs from moving roles. In contrast, a complete ban would remove a potentially legitimate protection for employers regarding more senior roles, where the bargaining power between the parties is more balanced.

Learning points for employers

This is not a confirmed policy change, but it provides a useful indication of the direction of travel in the debate about restrictive covenants.

If reforms are pursued, the most likely model appears to be a targeted regime limiting non-competes for lower-paid workers while preserving their use, subject to limits, for more senior employees. Employers should continue to ensure that any non-compete clauses are carefully drafted and proportionate, as their enforceability will continue to depend on the existing common law principles unless and until legislation is introduced.

For support or advice, please get in touch with Sharmin Chowdhury in our Employment team.