Successive UK governments, both Labour and Conservative, have repeatedly examined the case for reform of the law on non-competes. Those inquiries are part of a wider international move across the common law world, epitomised by the US Federal Trade Commission's (FTC) proposal to ban non-compete provisions outright in most employment arrangements.
That proposal is on hold following adverse rulings in the US courts. However, in a speech delivered at the Innovation Nation Summit in Manchester on 9 October 2026, the Prime Minister appeared to signal support for reform in the UK.
In our previous discussions of the case for reforming non-competes and other post-termination restrictions, we have noted that the business community is divided. Some argue that these provisions encourage innovation by allowing businesses to make full use of their investment in proprietary methodologies and key personnel. Others argue that they stifle innovation by making it harder for skilled people to make full use of their abilities. The academic literature is equally divided. The FTC took the view that non-competes suppress wages, hamper innovation and impair entrepreneurial activity. That analysis is based, in part, on the example of California and Silicon Valley. California has a state-wide ban on non-competes, and some say that this has helped the tech giants of Silicon Valley become the household names they are today. Whether that is causation or simply correlation is, of course, very difficult to say with any certainty. Nevertheless, it is the tech industry that has been influential in persuading the Prime Minister to reopen the debate. By contrast, the financial services industry has strongly opposed change.
It is also worth noting that the most authoritative UK commentators in the field have opposed legislative intervention in this area. Their main argument is that, for some 300 years, the courts have managed to strike a balance between three competing interests: individuals' freedom to develop their careers, the wider economy's benefit from a free market in services, and organisations' right to protect their investments.
The Prime Minister did not say which of the existing proposals for reform he favours, so it is worth recapping the options previously on the table.
- Total ban: This would see non-competes prohibited in all cases, at least in employment contracts. Whether similar restrictions would continue to be permitted in share plans, LLP agreements, commercial contracts and sale and purchase agreements remains to be seen.
- Ban below salary threshold: Another option is to prohibit non-competes where the employee's base salary is below a given threshold. The precise setting of the threshold would, of course, be critical to any assessment of the impact of such a rule, and could create arbitrary unfairness at the tipping point. It might also have unpredictable effects on salaries, or on the split between base salary and other forms of remuneration.
- Duration cap: This option would see a statutory limit on the length of employment non-competes, with three months previously floated as the limit (compared with the six to 12 months commonly used for senior managers).
- Variable limits by business size: The original proposal floated the idea that non-competes might be limited in duration to three months for organisations with more than 250 employees, but six months for smaller organisations below that threshold.
The Competition and Markets Authority favours a total ban below a defined employee income threshold, coupled with a time restriction on the duration of non-competes above that threshold. Other international solutions, such as requiring salary (or a proportion of salary) to be maintained for the non-compete period, do not appear on the government’s radar for the time being.
Whatever the UK government brings forward, clients will want to begin thinking carefully about how to protect their critical business assets. This should include a review of the operation of non-competes and the other typical elements of the post-termination arsenal: non-solicitation and non-dealing provisions, and non-poaching clauses. The interaction of restrictions in employment agreements as against other forms of document should also be examined, as should the role of confidentiality provisions, intellectual property controls, and internal information sharing protocols.
Further reading
The Prime Minister’s speech is available here: PM speech at the Innovation Nation Summit: 9 October 2026 - GOV.UK
Macfarlanes’ coverage of the Starmer government’s original proposal is available here: Shorter, smarter, or scrapped? Non‑competes at a crossroads | macfarlanes
The Competition and Markets Authority’s position is set out in its paper here: CMA response to working paper on options for reform of non-compete clauses in employment contracts
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