Non-Compete Clauses: Rise In Employers Suing For Breach
As prospects in the job market deteriorate, employers are increasingly turning to the courts to enforce non-compete clauses against former employees who have launched rival businesses in competition with them. Analysis by Nockolds has revealed that there has been a sharp increase of 43% in terms of legal action in the civil courts relating to alleged breaches of non-compete obligations during the first nine months of 2025, with around 4,000 cases lodged (up from 2,800 during the same period last year).
Non-Compete Clauses
It is part of the implied duty of fidelity contained in all contracts of employment, that the employee must during the course of their employment not compete with their employer, and must serve their employer with good faith, loyalty, and with regard to the employer’s best interests. However, the implied duty of fidelity does not extend to the period post termination of employment. Hence, should an employer wish to limit the extent to which the employee can work for a competitor for a period of time post termination of employment (usually between 3-12 months), then an express non-compete clause would need to be included as a restrictive covenant within the employee’s contract of employment.
Employers however need to exercise caution when drafting non-compete clauses, as should they be drafted too widely in a manner that goes well beyond just protecting the employers legitimate business interests, then the employer runs the risk that the non-compete clause constitutes a restraint of trade, and of being declared void and unenforceable.
The Rise in Non-Compete Disputes
The surge in litigation in relation to non-compete clauses coincides with a rise in new start-ups. In the past year alone, there has been a 3.5% increase in new businesses, which equates to 191,000 new ventures. Many of these are founded by professionals who have recently left employment, often due to redundancy and the slowdown in recruitment. With fewer roles available in the jobs market, self-employment is becoming a much more attractive and often necessary path for those seeking a new start to secure their livelihood.
Legal Scrutiny Intensifies
Courts have become more willing to enforce non-compete clauses, especially where they have been properly drafted to protect legitimate business interests. However, judges will likely intervene where they conclude that the non-compete provisions risk unfairly limiting an individual’s ability to work. Restrictions that cover broad sectors or durations beyond a year typically face rejection unless employers can demonstrate clear commercial justification.
Policy Reform on the Horizon
The previous Conservative Government announced plans to legislate to limit the duration of post-termination non-compete clauses to 3 months. However, they failed to follow up on this.
However, whilst the current Government has not incorporated any proposals regarding this issue into the Employment Rights Bill, Baroness Jones of Whitchurch recently stated on behalf of the Government: "The government have been reviewing the research and work done to date on non-compete clauses, and I am pleased to be able to confirm that we will be consulting on options for reform of non-compete clauses in employment contracts in due course."
Employers Concerned About Day-One Sick Pay Costs
Survey
A new survey by HR Dept has revealed growing anxiety amongst employers in relation to the upcoming changes to Statutory Sick Pay (SSP) which will come into force on the 6th April 2026
Increasing Concern
Seventy-five percent of employers are concerned about the increased costs arising out of the removal of the three-day waiting period (with SSP to be paid from the first day off work) and the expanded eligibility following the removal of the Lower Earnings Limit. Despite these concerns, however, nearly half (46%) admit that they have not adequately prepared for the changes
Moreover, over half of employers (56%) lack enhanced sick pay schemes, and many have not reviewed their policies or reporting systems.
