Government Proposes to Limit Non-Compete Clauses
The Government has released a new policy paper on smarter regulation to grow the economy. The paper includes a proposal to reform non-compete clauses in order to boost competition and innovation.
Background on Non-Compete Clauses
Non-compete clauses have been under the spotlight for some time. The Government previously consulted on measures to reform post-termination non-compete clauses in employment contracts, including banning them altogether. That consultation closed in early 2021, and until this week there had been no further comment from the Government about its plans in the area.
Policy Paper
This week's policy paper provides an update on the Government's thinking. It confirms that it intends to legislate in order to limit the length of non-compete clauses to three months. The policy aim behind this proposal is to provide staff with more flexibility to join competitors or start a rival business after their employment terminates.
The Government has said that this change will not interfere with employers' ability to use paid notice periods or gardening leave clauses to put people on paid leave, or to use non-solicitation clauses.
No timescale has been provided for draft legislation to be put forward. We will continue to report on developments.