The prime minister’s announcement that the government intends to introduce legislation to crack down on non-compete clauses that 'trap' workers and act as a 'drag on innovation', may have been headline grabbing, but it was short on detail.
It follows the Starmer administration’s thoughtful working paper – published in November 2025 – which floated several options, including a statutory limit on duration, restricting non-competes to employees earning over a salary threshold, or banning them altogether.
While we have yet to see which of these Andy Burnham has chosen, his speech, which references other 'restrictive practices', suggests that long notice periods and garden leave clauses may also be up for review.
Non-competes are not the blunt instrument the rhetoric suggests. Under English law, the starting point is that they are void. They are enforced only if they are reasonable and go no further than absolutely necessary to protect legitimate business interests. In practice, that means confidential information that cannot realistically be protected by confidentiality clauses alone: typically where a senior employee moves on, misuse is hard to prove, or the line between personal know-how and proprietary information is difficult to draw.
Client relationships and the integrity of the workforce are protected separately, by non-solicit and non-dealing clauses. These are not understood to be the focus of the reform agenda.
More surprising is the apparent review of long notice periods and garden leave. These have largely escaped attention to date because the employee continues to be paid. They are generally regarded as less 'unfair', since employees do not risk being both unable to work in their chosen field and unpaid.
The case for reform rests on promoting innovation, but the position is far more nuanced than the prime minister would have us believe. Business opinion is divided on whether non-competes enhance or hinder innovation. Properly used, they protect investment by safeguarding know-how. This is especially true at an early stage, when patent or other IP protection isn’t yet available, which is precisely the start-up and scale-up territory the prime minister says he wants to support. Investors will think twice if they know their brightest and best can walk out on short notice and immediately join or start a rival company.
The prime minister is right to highlight abuse: we hear of non-competes in the contracts of junior care home workers, for example. But those clauses are already likely to be unenforceable, and legislation will make no difference. An information campaign making that clear to employees and employers could do more good.
If non-competes are curtailed, businesses will protect themselves in other ways. In California, for instance, where non-competes are broadly outlawed, litigation focuses much more on confidential information. We should anticipate greater use of springboard injunctions, which stop departing employees exploiting breaches of confidentiality or good faith while still employed. The line between legitimately preparing to leave and taking an unfair head start will become an even more important battleground.
At the same, time we should also expect bonuses and equity tied to long-term commitment, and tighter control over who is privy to confidential and proprietary information. That, however, may itself hamper the creativity and innovation the government wants to encourage.
For law firms, the direct impact of non-compete reform is likely to be limited. Non-competes are unusual to see, certainly in City and national practices, which rely instead on non-dealing, non-solicit and non-poach covenants. In addition, genuine partners contract as co-owners rather than employees, so reforms aimed at employees should not affect them.
Notice periods, however, are more exposed: three to six months is typical for lawyers, while up to a year is not unusual for partners and the prospect of a long period of garden leave adds to the risk of hiring. Longer term, shorter restrictions elsewhere in business may also shift what the courts regard as 'reasonable' for partners.
Creating an innovative and entrepreneurial economy is a laudable aim, but it is questionable whether outlawing non-competes is the way to do it. If the government really wanted to make the UK an 'innovation nation', it would abandon its misguided reform of unfair dismissal law. A six-month qualifying period for protection is coming, and from 1 January 2027 employees will be entitled to uncapped compensation, even for an 'ordinary' unfair dismissal. That makes the UK a significantly less attractive destination for global employers.
These measures are already discouraging international business from hiring staff in the UK, and no reform of non-competes will offset that damage.
Daniel Pollard, partner, and Catrina Smith, of counsel, Fisher Phillips
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