UK: PM announces plans to restrict the use of non-competes, but leaves employers in the dark on the detail

At the Innovation National Summit on 9 October, the Prime Minister announced plans to introduce legislation restricting in some way (yet to be confirmed) the use of non-compete provisions in employment contracts, to ensure that they are "no longer a barrier to hiring" both for tech startups/scaling firms and in the wider "everyday economy". Workers should not be prevented from joining or setting up rival businesses and should not be "held back and unpaid during the time they have to sit out on the sidelines". 

The latest announcement follows the Government's November 2025 working paper inviting views on options for reform. These included an outright ban or a statutory cap on the duration of non-competes, which could apply across the board or only to employers of a certain size or employees on a minimum salary. Notably, the working paper did not seek views on the idea of requiring payment during the period of non-competes, so the PM's reference to workers being left unpaid while sitting out a non-compete could signal a shift in thinking on this point. 

The working paper did ask whether restrictions should apply to other types of covenant (such as non-dealing or non-solicit clauses) and non-employment workplace contracts. The main thrust of the PM's announcement was non-competes rather than these wider issues, but he did state that the Government will also "bring forward options to address the wider use of restrictive practices". This suggests that other changes may still be in scope – perhaps a statutory cap on notice periods (to prevent employers using lengthy garden leave as a means of circumventing non-compete restrictions), or restrictions on non-dealing or non-solicit clauses or in other types of workplace contract. No further details were given, although more information is expected alongside the Budget on 28 October 2026.   

While the tech sector may be supportive, businesses in other sectors have expressed concerns that reform may weaken employers' ability to protect their intellectual property and confidential information and damage UK competitiveness. However, a wider international trend towards restricting non-competes may strengthen the UK Government's resolve. For example, the Australian government is proposing a ban on non-compete clauses for those earning below a high-income threshold, as well as a general ban on co-worker non-solicitation clauses and cascading restraints (see here).

Employers using non-compete clauses will therefore want to keep a close eye on Budget Day announcements. Once details of the changes and likely timing are confirmed, they will need to review their use of affected clauses and consider what other protections may be needed.