UK considers scrapping non-compete clauses to boost innovation

The UK government is considering significant reforms to non-compete clauses in employment contracts, aiming to foster innovation and economic growth. Prime Minister Andy Burnham announced on October 9, 2026, that the government will legislate to prevent these clauses from hindering recruitment by promising start-ups and scale-ups, likening the move to the "Bosman ruling for the innovation sector."

The Department for Business and Trade (DBT) issued a working paper on November 26, 2025, outlining various policy options for reform. These include introducing statutory limits on the length of non-compete clauses, banning them entirely, implementing a salary threshold below which they would be prohibited, or a combination of a salary threshold ban with a duration limit.

The government views these potential changes as part of its commitment to a dynamic labour market that drives economic growth and improves living standards. The working paper estimates that approximately five million employees in Great Britain are currently subject to non-compete clauses, which typically last around six months, and that many employees may comply with unenforceable restrictions due to fear of legal costs.

Responses to the working paper are being accepted until February 18, 2026, with the government encouraging online submissions to aid in the analysis of stakeholder input. Further details on the proposed legislation and a timetable are expected alongside the Budget on October 28, 2026. Existing non-compete clauses remain governed by common-law restraint of trade doctrine until new legislation takes effect.