The government has confirmed it's going to reform non-compete clauses.

The Prime Minister has now signalled that the safety catch is off. Speaking at the Innovation Nation Summit on 9 October 2026, the Prime Minister said that the government will legislate to ensure that non-compete clauses "will no longer be a barrier to hiring for our most promising startups and scaling firms". He also suggested that some employers have gone too far in their use of restrictive practices, describing non-compete clauses as a drag on innovation that can restrict labour mobility and prevent talented individuals from moving between businesses. 

He didn't present this primarily as a worker rights issue. Instead, he focussed on growth, innovation and labour mobility. He believes that reducing barriers to recruitment could help start-ups and scaling businesses attract talent more easily, and encourage the movement of skills and ideas across the economy.

But the most important question remains unanswered: what exactly is the government planning to do?

Reform is coming, but the detail remains unclear

The government has previously consulted on a range of possible reforms, including imposing: 

• an outright ban on non-compete clauses
• a statutory cap on their duration
• restrictions based on earnings; or
• a combination of these approaches. 

The Prime Minister didn't indicate which of these options he prefers, or has something else in mind. 

That is the crucial question for employers because there's a world of difference between an outright ban and a statutory limit on the length of non-compete clauses.

Could the reforms extend beyond non-competes?

Another interesting aspect of the announcement is the PM's focus on wider "restrictive practices".

Mr Burnham criticised practices that prevent workers from moving freely between organisations and referred to employees being "held back" and left "on the sidelines". While non-compete clauses were the clear focus of his announcement, these comments suggest that the government may also look at other barriers employees face when moving jobs such as lengthy notice periods, garden leave arrangements and other post-termination restrictions.

What should employers do now?

Nothing has changed and you don't need to redraft your existing contracts yet. Non-compete clauses remain enforceable where they go no further than is reasonably necessary to protect a legitimate business interest.

However, it may also be helpful to start thinking about how you currently protect customer relationships, confidential information and retain talented employees. Depending on the form the reforms take you may need to rely on other contractual protections to safeguard those interests.

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