UK Seeks Public Input on Major Overhaul of Non-Compete Rules

Under current law, employers can enforce non-compete terms only if they can prove the rules are reasonable. But the government notes that, per a statement in its policy paper, many workers still believe these clauses are binding even when they may not stand up in court. A YouGov survey cited in the consultation found that roughly half of respondents thought their employers would enforce such restrictions, and the risk of footing the winner’s legal bill can deter challenges.

The first option under review is to introduce a statutory cap on how long employees can be restricted from working for a competitor. The previous government proposed a three-month limit, but the plan stalled. The paper acknowledges that even a short restriction could leave lower-paid staff unable to work in their field for a significant period, while longer limits could dilute the reform’s intended benefits. According to the government’s statement, there is also concern that any cap might be treated as a default standard of reasonableness.

Another proposal would tailor these time limits to a company’s size — potentially allowing longer restrictions at small firms that may rely heavily on key personnel. Proponents say this could help start-ups protect their investments, though it would still leave a large share of the workforce subject to prolonged limitations.

Read more: Canada to Ban Non-Compete Clauses in Federally Regulated Workplaces

Officials are also examining whether to abolish non-competes entirely in standard employment agreements. Such a move, used in some US jurisdictions, could make job transitions easier and reduce hiring obstacles. Per the policy paper, this may prompt employers to rely more on retention incentives or measures like gardening leave instead. At the same time, the government warns that firms could intensify their use of other protections such as confidentiality or intellectual property rules, and must ensure these are not applied “in a way that would have a similar effect as a non-compete clause”.

A fourth model would allow non-competes only for workers earning above a set salary threshold. That approach aims to shield lower-income staff who cannot risk disputes or prolonged unemployment. However, determining precisely what counts toward pay could lead to legal wrangling and unintended gaming of salary levels, according to a statement in the consultation.

The final option blends the two earlier approaches: banning non-competes for lower earners while capping them at three months for higher-paid staff. The government suggests this hybrid framework could extend protections to more people while preserving flexibility for businesses operating in specialist or high-skill sectors, including technology and AI.

Officials are inviting views on all proposals and will also consider ideas for reducing the high cost of civil litigation, which often discourages workers from challenging restrictive terms. Responses are due by 18 February 2026.

Source: Gov UK