Non-Compete Clauses: Government Reform Plans Back in Focus

July 29, 2025
The History

In May 2023, the previous Government announced a significant proposal to reform the use of non-compete clauses in employment contracts. The proposal, if implemented, would cap the length of non-compete clauses in employment contracts to a period of three months.

The announcement followed a consultation launched in December 2020, the purpose of which was to consult on measures to reform post-termination non-compete clauses to maximise opportunities for individuals to start new businesses, find new work, and apply their skills to drive economic growth.

The proposed cap on the length of the restriction only applied to non-compete restrictions. The length of other restrictions, such as non-solicitation and non-dealing with clients, would not be impacted and instead would be subject to the normal rules on reasonableness.

However, the proposal was scheduled to be considered “when parliamentary time allowed” so it was always a slow burn.  However, with Labour’s large-scale employment law reforms taking place by way of the Employment Rights Bill, the cap on non-competes seemed to fall by wayside.

July 2025 Update: Reform Still on the Table

However, after a period of relative silence, the issue unexpectedly resurfaced during a House of Lords debate on the Employment Rights Bill in July 2025. Baroness Jones, Parliamentary Under-Secretary of State for the Department for Business and Trade, confirmed that the Government intends to consult on non-compete reform “in due course.”

This announcement was made in response to comments from other members of the House of Lords stating that non-competes were “stifling innovation” and that those in the tech industries were not concerned with “issues such as minimum wages and paid leave but how easily people can move between companies, start their own ventures and work across several fast-growing enterprises”.

This announcement signals that the proposed cap on non-compete clauses is still under active consideration and may yet form part of the Government’s broader employment law reform agenda.

Next Steps

While no formal consultation timeline has been announced, employers should stay alert to further developments, and we certainly will provide updates as more details emerge.

The Government faces a complex task in balancing the need and right to protect legitimate business interests with the goal of fostering a more dynamic and competitive labour market.

If implemented, a statutory cap on non-compete clauses would represent a major shift in UK employment law. As a result, employers will need to review their employment contracts as well as consider what other protections from departing employees they have in place.

As we do not know exactly how this will look at this stage, reducing non-compete provisions in contracts is likely to be somewhat premature. However, it is never too early to be reviewing your business protections to ensure you have adequate protections in place in respect of your confidential information and through other forms of post-termination restrictions such as non-solicitation and non-dealing provisions.

For further information, or to discuss the issues raised within this article, please contact us to speak to a member of our Employment Team.

Samuel Gray
Solicitor, Employment
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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