Prime Minister Andy Burnham has promised legislation to prevent non-compete clauses from obstructing recruitment by Britain's most promising start-ups and scale-ups. Speaking at the Innovation Nation Summit in Manchester on 9 October 2026, he argued that restrictions preventing workers from joining rivals or establishing businesses of their own were holding back innovation.
In Brief
On 9 October 2026, Prime Minister Andy Burnham announced that the Government will legislate so that non-compete clauses no longer obstruct recruitment by start-ups and scale-ups, describing the reform as the "Bosman ruling for the innovation sector". He also promised that workers in the wider economy would not be prevented from moving jobs. Further detail is expected alongside the Budget on 28 October 2026, including a timetable for a consultation on wider restrictive practices. No change to existing law has yet taken effect.
Key Points
- The announcement follows the Department for Business and Trade's November 2025 working paper, which considered an outright ban, statutory limits on duration, a salary threshold and combinations of these. The Government has not yet said which option it favours.
- The Competition and Markets Authority has recommended banning non-compete clauses below a salary threshold and capping their duration above it, arguing that a duration limit alone would not protect lower-paid workers who cannot afford time out of work.
- The working paper estimated that around five million employees in Great Britain are subject to non-compete clauses, typically lasting around six months, including many in lower-paid roles. It also warned that employees may comply with unenforceable restrictions because they fear the cost of legal proceedings.
- The consultation is expected to cover lengthy notice periods and potentially garden leave. There is currently no statutory maximum notice period, and a cap, either across the board or by role, is among the possible reforms.
- Any legislation will need to address the risk that employers recreate non-compete restrictions through broadly drafted non-solicitation or non-dealing clauses.
- Until legislation is in force, non-compete clauses remain governed by the common-law restraint of trade doctrine and are enforceable only where they go no further than reasonably necessary to protect a legitimate business interest. The announcement does not alter existing contractual obligations.
Burnham described the planned change as the “Bosman ruling for the innovation sector”, invoking the football decision associated with greater freedom for players to move between clubs. The Prime Minister did not, however, specify how the legislation would operate or when it would take effect. Further detail is expected alongside the Budget on 28 October 2026.
From Review to a Legislative Commitment
The announcement marks a significant development in a debate that has continued for several years. In May 2023, following a 2020 consultation, the Conservative Government proposed a statutory three-month limit on non-compete clauses, but that legislation was never introduced.
As reported in our recent article, the Department for Business and Trade subsequently reopened the issue. Its November 2025 working paper considered an outright ban, limits on duration, restrictions linked to salary and combinations of these approaches. Responses closed in February 2026.
The paper estimated that around five million employees in Great Britain have such restrictions in their contracts, typically lasting approximately six months. This matters beyond the technology sector: employers in financial services, recruitment and professional services may also rely on post-termination restraints to protect client relationships and confidential know-how. Reform could therefore affect both recruitment practices and the way contracts are drafted across the economy. The paper warned that workers may comply with provisions which are unlikely to be enforceable because they fear the cost of legal proceedings. The working paper also identified non-compete clauses in lower-paid jobs. Even a three-month restriction may be difficult for employees unable to afford a period without earnings.
What Has Burnham Actually Proposed?
Burnham's commitment goes further than another review: he has said the Government will legislate so that non-compete clauses cease to obstruct hiring by growing businesses. He also promised measures addressing restrictions affecting workers in the wider economy, rather than concentrating exclusively on highly paid technology specialists.
Nevertheless, the announcement does not establish that all such restrictions will be prohibited. The Government has not published a Bill, specified which employment contracts would be covered or announced an implementation date. Questions remain about existing agreements, transitional arrangements and possible exceptions for senior employees.
In his 9 October announcement, Burnham confirmed that the Government would bring forward options addressing wider restrictive employment practices. According to the Startup Coalition, further details and a timetable for a new consultation are expected alongside the Budget on 28 October 2026, with legislation envisaged in the following months. The consultation is expected to examine lengthy notice periods and potentially garden leave. It has not yet been formally launched, and its precise scope remains unconfirmed. There is currently no general statutory maximum notice period, although a cap applying across the board or varying by role is one possible reform. The precise treatment of other restrictive covenants, including non-solicitation and non-dealing provisions, will also matter if businesses seek alternative protections.
The Competition and Markets Authority has previously advocated a targeted solution: banning non-compete clauses below a salary threshold while imposing a statutory maximum duration for higher-paid employees. Whether ministers favour that approach, a broader ban or something different remains unclear.
What Does the Law Currently Say?
For now, non-compete clauses remain governed by the common-law restraint of trade doctrine. They are generally unenforceable unless an employer can show that they go no further than reasonably necessary to protect a legitimate business interest, such as confidential information or customer connections.
Courts examine non-compete clauses in context, including their duration, scope and the employee's responsibilities. An employer cannot impose a wide prohibition merely to prevent ordinary competition. Equally, an appropriately drafted restriction can still be enforced, potentially through an injunction.
An employee having signed a contract does not, by itself, make every post-termination restriction legally enforceable. It is therefore important that employees do not interpret Burnham's announcement as permission to disregard their existing contracts. Proposed legislation does not itself alter contractual rights or obligations.
What Happens Next for Non-Compete Clauses?
The Government must now decide how far to restrict non-compete clauses while preserving legitimate protections for confidential information, intellectual property and client relationships. Its working paper recognised the risk that employers could use broadly drafted non-solicitation or non-dealing provisions to recreate restrictions on competing employment. Any legislation will need to address that possibility without undermining proportionate contractual safeguards.
A further question is whether the reforms will apply to existing employment contracts or only to agreements entered into after commencement. Once the consultation opens, employers, employees and their representative organisations should have an opportunity to comment on the proposed scope, possible exemptions and transitional arrangements.
For employees, greater freedom to change jobs could improve career opportunities and bargaining power. For start-ups and growing businesses, fewer restrictions could make it easier to recruit experienced specialists. However, employers with commercially sensitive information and valuable client relationships will want clarity about which protections will remain enforceable.
Further detail is expected alongside the Budget on 28 October 2026, but important questions remain about the scope of reform, commencement dates and treatment of existing contracts. Until legislation is introduced and brought into force, non-compete clauses remain subject to the existing common-law rules on restraint of trade. Employers and employees should therefore assess their contractual positions under current law rather than assume that restrictions have already changed.
Employers: What This Means
The announcement changes nothing yet, but it signals that the Government intends to restrict non-compete clauses and is likely to examine notice periods and garden leave as well. Employers that rely on post-termination restrictions, particularly in financial services, recruitment and professional services, should use the period before the Budget on 28 October 2026, when further details and a timetable for a new consultation are expected, to understand their exposure rather than make wholesale changes before the proposals are published.
- Existing restrictions remain enforceable: Non-compete clauses in current contracts are unaffected by the announcement and remain enforceable where they go no further than reasonably necessary. Employers should not treat them as lapsed, and employees who cite the announcement as a reason to disregard them remain bound by their contracts.
- Understand your exposure: Identify which roles carry non-compete clauses, how long they run and what they protect. Standard-form restrictions applied to junior or lower-paid staff, and restrictions lasting more than a few months, are the most likely to be affected under any of the options the Government has considered.
- Strengthen other protections: Confidentiality obligations, intellectual property provisions and tailored non-solicitation and non-dealing clauses may become the principal means of protecting client relationships and sensitive information. The Government has flagged the risk of these being used to recreate non-competes, so they should be drafted to protect specific interests rather than to prevent competition generally.
- Notice periods and garden leave: The forthcoming consultation is expected to examine lengthy notice periods and potentially garden leave. Employers that rely on long notice periods with garden leave to delay departures should consider how they would manage exits if a statutory cap were introduced.
- Timing and consultation: It is not yet known whether new rules will apply to existing contracts or only to those entered into after commencement, so the timing of new hires, promotions and contract renewals may matter. Employers with concerns about the scope of reform should prepare to respond to the forthcoming consultation, directly or through trade bodies, once it opens.
