On 26 November 2025, the UK government published a working paper inviting views on options to reform non-compete clauses in employment contracts. The proposal, which was originally indicated in 2020 but not included in the current government’s “Plan to Make Work Pay,” now calls for views through consultation.
Quick Hits
- The UK government has reopened discussion on amending the law on restrictive covenants, which seemed to have been ruled out in previous consultations.
- The government issued a working paper on 26 November 2025, seeking comments on introducing a statutory limit on duration, an outright ban on certain covenants, a ban below a salary threshold, or a combination of these measures.
- The working paper signals a trajectory towards tighter, more standardised measures with greater emphasis on transparency.
Options proposed include an outright ban on non-competes or an appropriate statutory cap on the duration of non-competes, which could be shorter or longer than the original proposal of three months. The government is also seeking views on varying the cap by employer size, for example, imposing a three-month limit for small organisations and a longer ban for organisations with more than 250 employees. However, the paper recognises that a six-month limit would have a limited impact as this is already the most common length used by organisations. Importantly, the principle that non-competes are enforceable only if they protect legitimate business interests, such as trade secrets, will be retained.
The ongoing consultation will consider the potential unintended consequences of prohibiting non-compete clauses. Concerns include the possibility that deferred compensation and benefits could be withdrawn from employees who leave to join competitors or that employers may rely heavily on other methods, such as non-dealing, non-solicitation and non-poaching clauses. These alternatives are also under review to determine if measures should be extended to all types of restrictive covenants.
The government is also seeking views on whether any ban on non-compete clauses should be targeted at employees earning below a specified salary threshold, drawing on international precedent from the United States. The objective is to protect lower-paid workers, who may lack the financial means to challenge such restrictions.
Feedback is also requested on whether these proposed limits should apply solely to employment contracts or be extended to cover broader workplace agreements, such as stock option schemes that often contain restrictive covenants as a condition of participation.
The government is not, however, reconsidering requiring employers to pay compensation for the duration of the non-compete. This option was considered in 2020 but was ultimately rejected in the original consultation.
A restriction on non-compete clauses is not a new concept. The working paper highlights similar action being taken in the United States, while several European Union jurisdictions and Australia already have salary thresholds.
While the government has not indicated a preferred option or potential timeframe for reform, change in line with the consultation proposals seems increasingly likely.
The UK consultation will remain open until 18 February 2026.
Lorraine Matthews, a practice assistant in the London office of Ogletree Deakins, contributed to this article.