The Leading News & Information Service For The Facilities, Workplace & Built Environment Community

UK Government Looks to Reform Non-Compete Clauses

UK Government Looks to Reform Non-Compete Clauses
20 January 2021

In a consultation which closes in February this year, ministers are seeking views on non-compete clauses in employment contracts, in order to encourage more entrepreneurship.

Looking to California’s Silicon Valley as inspiration, where state law makes non-compete clauses unenforceable, this free movement of workers is given as a common reason for the growth of the technology industry in the state.

Non-compete clauses are used in contracts of employment to restrict an individual’s ability to work for a competing business or to establish a competing business for a defined period after they leave.

In order to encourage more UK start-up businesses, and to support economic growth post-COVID, the government is exploring avenues to make non-compete clauses enforceable only when the employer provides compensation during the term of the clause.

They are also considering an alternative proposal where non-compete clauses in contracts of employment are unenforceable, as in California.


“To support our economic bounce back, the government is exploring avenues to unleash innovation, create the conditions for new jobs and increase competition. We want to maximise opportunities for individuals to start new businesses, find new work and apply their skills to drive the economic recovery. For these reasons we are seeking views on reforms to noncompete clauses.”

Statement from the government’s consultation description


What is the Alternative? 


Charles Urquhart from Law firm Clyde & Co LLP, in a piece by legal insights pubisher Lexology, described the two main options that government are seeking views on.

One solution would require an employer to pay an employee during such a clause, which may encourage less of their use of in contracts. Similarly, it might discourage employed from breaching obligations.

According to Urquhart: 

“The government is also asking for views on what level of compensation employers should have to pay if it goes ahead with this proposal. It suggests that this should be a level of compensation that is set as a percentage of the ex-employee's average weekly earnings prior to termination for the duration of the non-compete clause, e.g. 60 per cent, 80 per cent, 100 per cent or some other percentage.

“It is also asking whether the requirement to pay compensation during the period when the employee is restricted should be limited to non-compete clauses or should also apply to other types of post-termination restrictions, such as non-solicitation and non-dealing clauses.”

Another solution would be banning the clauses outright, making it easier for start-up businesses to form.

The government, however, recognises the need to “help protect legitimate business interests and prevent harm to a business”. The consultation document confirms that they are not seeking views on confidentiality clauses, intellectual property law or other means to protect legitimate business interests.  

This consultation closes at 11:45pm on 26 February 2021

Picture: a picture of a person signing a paper contract

Article written by Ella Tansley | Published 20 January 2021


Related Articles

UK Government Introduces Day-One Right to Request Flexible Working

Millions of employees across the country are set to benefit from new legislation that means flexible working can be requested from the first day of employment. The...

 Read Full Article
Posting On LinkedIn Whilst Furloughed – Is It A Breach?

As around 10 per cent of the private sector workforce is set to be furloughed and temporarily absent from work, is posting on LinkedIn during this time a legal grey...

 Read Full Article
Looking After The Pennies

Arcus has been awarded a regional contract to provide reactive maintenance services to home, garden and leisure retailer, The Range. The contract, which went live in...

 Read Full Article
Building Services Contractors Must Consider Changes to Legal Liabilities 

The Building Safety Act is already changing the legal landscape for the building services profession, according to BESA. The association considers the extension of the...

 Read Full Article
Rishi Sunak’s Net-Zero Policy Changes – Industry Reactions

Prime Minister Rishi Sunak has outlined new plans to dial back the UK’s net-zero policies, to mixed reactions from politicians, business groups and the general...

 Read Full Article
Will Rishi Sunak Push Back on Petrol Car Ban?

The media is awash with reports that Rishi Sunak is to dial back on key net-zero policies, including the ban on sales of new petrol and diesel cars. ThisWeekinFM...

 Read Full Article
LEDs in Major Eco Revamp at Edgbaston Stadium

Edgbaston has launched a new phase of a major low-energy lighting switchover that will see LED fittings and strips installed across parts of the 25,000-seater...

 Read Full Article
UK Government Publishes Facilities Management Strategy

The government has released a guide to establishing a coordinated and aspirational FM strategy. In the document, Alex Chisholm, Chief Operating Officer for the Civil...

 Read Full Article
FMs Warned to Prepare for Fluorescent Lamp Ban

Trade association LightingEurope is urging facilities managers to hurry their buildings’ transition to LED lighting systems, ahead of the August 2023...

 Read Full Article
Inquiry Into Role of Cleaning Sector During COVID Pandemic Imminent

MPs will shortly begin a significant inquiry into the role of cleaning and hygiene during the COVID-19 pandemic.   Editor's Note   The remaining...

 Read Full Article