Andy Burnham signals reform of non-compete clauses — what could change?

Prime Minister Andy Burnham has signalled that non-compete clauses could face significant reform, describing some employers' use of them as a "drag on innovation" and confirming that legislation will be introduced to ensure that they’ll “no longer be a barrier to hiring for our most promising startups and scaling firms”.

Speaking at the Innovation Nation Summit in Manchester last week, Burnham said that he believed some businesses had “gone too far in their use of restrictive practices such as non-compete clauses”, which seek to prevent a worker or employee (or other party, such as a contractor or shareholder) from joining a rival or establishing a competing business for a specified period after the contract ends. These are often referred to collectively as ‘restrictive covenants’.

Here, restrictive covenant litigation experts Matthew Astley and Helen Manterfield explain the reforms that could be on the horizon and what employers should be doing now to prepare.

Are non-compete clauses enforceable?

The starting point is that all restrictive covenants are unenforceable unless it can be shown that they protect a legitimate business interest (such as customer or client connections) and go no further than is reasonably necessary to protect that interest. Careful attention and specialism are therefore needed when drafting and interpreting such clauses. 

Non-compete clauses are often the most difficult of all restrictive covenants to justify because — if found to be enforceable — they can prevent competition with the enforcing business and severely restrict a person’s ability to work and earn a living. 

Nevertheless, non-compete clauses have been found to be enforceable in a number of cases, particularly those involving senior employees, executives and shareholders, as well as those concerning business sale agreements. 

What changes could we see?

Although it’s unclear what changes are being considered by the current Government, changes are clearly intended. These could have significant implications for employers and potentially other parties wishing to protect their commercial interests, with employers already facing big changes to the legal landscape — including in relation to the law of unfair dismissal.

It’s not the first time that reform in relation to non-compete clauses has been considered, having been the subject of a call for evidence by the UK Government in 2016, as well as consultations and working papers since that point — most recently in 2025. 

Drawing on some of that subject matter, potential options for reform include:

• A total ban on non-compete clauses.
• A statutory limit on the maximum duration of non-compete clauses.
• Limits based on the size of a business.
• Limits based on salary or remuneration.
• A combination of the above limits (such as a ban on non-compete clauses below a certain salary or remuneration level, with a statutory limit on the maximum duration of the non-compete clause above that level). 

It also remains to be seen whether any reforms would be limited to employment and worker contracts or extend beyond them, and whether they would apply only to non-compete clauses or also to other restrictions like non-solicitation and non-dealing.

What action should be taken?

With so many unknowns in an area of law that’s already complex, it’s more important than ever to have a specialist legal team in your corner. 

Pending any changes to the law, businesses can take steps now to put appropriate contractual documentation in place or review existing restrictive covenants and other clauses to assess whether they provide the overall level of protection desired.  

Even if changes are to be introduced in respect of non-compete clauses in due course, it may be that adequate and proportionate protection can be provided through other types of clauses, which should always be tailored to the business concerned and people involved. 

With the PM himself having confirmed that legislation will be introduced, we’ll all need to watch this space. However, employers in particular should continue to monitor developments in this area and shouldn’t hesitate to contact us, either on the law as it stands now or on the proposed reforms in due course as further details emerge. 

Talk to us

Our specialist litigation team, in conjunction with our employment law experts, has a strong track record in dealing with restrictive covenant and team move cases involving employees, contractors, shareholders and other commercial parties.

We advise clients across a wide range of sectors and can support at every stage, from drafting and reviewing contracts through to contentious matters. This includes making and opposing applications for interim injunctions relating to restrictive covenants, confidential information and trade secrets.

If you need our help, call us now on 0333 004 4488, send us an email at hello@brabners.com or complete our contact form.