Government consultation on non-compete reform: key considerations for employers
Commenting in City AM, Associate Andrew Czechowski discusses the government’s proposed reforms to non-compete clauses and the potential implications for employers and employees.
"Labour’s proposal is only to ban non-compete clauses that restrict employees from joining competitors, but would leave intact non-solicitation clauses covering clients and colleagues. Employers are therefore likely to respond to the risk of a ban on non-competes by introducing longer notice periods, strengthening terms around garden leave and lengthening non-solicitation clauses in employment contracts to limit their exposure.
"In practice, longer notice periods and garden leave will be used by employers to keep key talent out of the market. At senior executive level, this could mean a 12-month garden leave period, which has the same impact as a 12-month non-compete period except that the individual remains employed and paid throughout.
"This will, however, have cost implications. If a company may need to fund six or 12 months of paid garden leave to prevent a departing executive joining a rival, the true price of hiring rises. Faced with that exposure, some employers will think twice before recruiting.
"The idea is that banning non-competes would lead to higher mobility of employees and would encourage innovation through increased knowledge transfer across firms and industries, as talent and know-how would be free to circulate more readily. However, in reality, employers will be reluctant to share confidential information with all employees, especially those they deem to be a flight risk, inhibiting the free flow of information within a business. This could impact the performance of a company, which will take protective measures in response and information may be restricted to employees on a need-to-know basis."
An extract of Andrew’s comments was published in City AM, 2 March 2026.
