The Prime Minister has recently signalled a further direction of travel in the employment law space – the target in the crosshairs? Non-compete clauses in contracts of employment.
At the Innovation Nation Summit on 9 October 2026, the Prime Minister said it was his belief that “some business have gone too far in their use of restrictive practices such as non-compete clauses” and he confirmed it was the Government’s intention to “legislate to make sure that non-compete clauses will no longer be a barrier to hiring for our most promising startups and scaling firms.”
Whilst reform of non-compete clauses isn’t exactly a new discussion in the political arena, this seems to be among the more forceful statements of intent that we have seen of late. Obviously, economic growth is central to the Government’s agenda, and reforming non-compete clauses is viewed by some as a way to boost labour mobility and so, increase the UK’s competitiveness.
A brief reminder
Essentially, non-compete clauses are intended to restrict former employees from competing with their employer following the end of the employment relationship. Usually, they include language which prevents the employee from working for a competitor or a client or setting up their own business. They are generally included in employment contracts, but can often be overlooked by employees in the excitement and urgency to finalise their new role, and have everything signed up.
It is thought that around five million workers in the UK have such clauses in their contracts, they are particularly prevalent in the technology, financial services, and scientific sectors (each of which are important to the UK economy). That being said, they are also often found in sectors where one might consider protection of intellectual property to be less of a priority, including in retail and food services.
Notably, post-termination restrictions (PTRs) – and particularly non-compete clauses – are treated with caution and will generally only be enforceable where they are tailored to protect legitimate business interests. Unsurprisingly, employers often rely on non-compete provisions to safeguard sensitive confidential information where there is a risk that knowledge gained during employment could be used in a competing role. Even so, courts always scrutinise such clauses closely and enforceability will depend on (amongst other things) the duration of the clause, the seniority of the employee, context, reasonableness and the drafting within the particular restriction itself.
Even where an employer includes highly restrictive PTRs that are unlikely to be enforceable, a lay individual unfamiliar with the subject may still be deterred from moving to a competitor due to concerns about potential legal action. Indeed, there is no shortage of employers including poorly drafted, overly broad, PTRs in contracts of employment as standard practice – even for very junior employees, unlikely to be privy to sensitive confidential information.
What could be next?
Whilst we know that non-compete clauses are definitely in the frame, it is still not definitively clear whether the Government also has other types of PTRs in mind for reform. While the PM did not explicitly refer to other types of PTRs, such as non-dealing clauses or non-solicitation clauses, he did state that, “we will also bring forward options to address the wider use of restrictive practices”.
While we do not know a great deal about the Government’s specific intentions, we can speculate. The Starmer Government signalled its intention to bring in a cap of three months on non-compete clauses as a means for boosting labour mobility. Some of the alternatives included in the consultation that preceded this decision included an effective ban on non-competes altogether (as has been introduced in California, bar for some very limited exceptions) or requiring employers to pay compensation or salary during any period of restraint (as is the case in Germany and Finland).
The Government may consider limiting PTRs based on the seniority or salary of the employee, or even potentially the size of the employer. Clearly, there are many different avenues to consider and numerous international examples to take inspiration from.
What should employers do?
Many employers have been carefully watching the employment law landscape over recent times given the sweeping changes introduced by the Employment Rights Act 2025, and it appears that this focus on reform will need to continue. Employers should keep a close eye on developments in this area, as any future reforms to PTRs may require employers to reconsider their broader approach to protecting their business interests, including through confidentiality provisions, intellectual property protections, longer notice periods and garden leave arrangements.
If you have any queries about post-termination restrictions, require support with employment law or the upcoming ERA 2025 changes more generally, please do reach out to a member of our team employment@wslaw.co.uk.