Prime Minister Andy Burnham promised new legislation to restrict non-compete clauses in employment contracts, saying their widespread use had "gone too far" and was damaging UK innovation and worker mobility.
Burnham made the announcement at a business summit in Manchester. He said non-compete clauses had forced workers to go without pay after leaving roles and made it harder for growing firms to hire new staff. The government will unveil details of the proposed restrictions alongside the Budget on 28 October, according to reporting by Politico and The Financial Times.
Research cited by the government estimates around 5 million jobs in Britain are covered by non-compete clauses, which typically last around six months. Although common in financial services and technology, the clauses affect the broader economy. Burnham said the restrictions would apply to both the "everyday economy" and help "promising start-ups and scaling firms."
Sir Keir Starmer's government has been exploring possible restrictions since late last year, including options ranging from a total ban to restrictions above a certain salary threshold or limits on clause duration. Burnham did not specify which approach the government will take but framed the move as part of a broader effort to retain UK companies and jobs. He invoked the 1995 Bosman ruling, which transformed European football transfers, saying he hoped curbing non-compete clauses could prove similarly transformative for the innovation sector.
The Recruitment and Employment Confederation opposed the plan, warning against "sweeping" changes and arguing that non-compete clauses play a "vital role" in protecting commercially sensitive information and client relationships. The previous Conservative government had ruled out a total ban after hearing from employers that it could reduce investor confidence or prompt companies to tighten internal information sharing.
Burnham also signalled the government would address tax policy to encourage high-growth companies to remain in the UK. He said too many UK companies had moved abroad seeking investment and called for regional dedicated funds, modelled on the Good Growth Fund he launched in Greater Manchester as mayor.