UK Prime Minister Andy Burnham has promised legislation to restrict non-compete clauses in employment contracts, saying their use has "gone too far" and is hampering innovation and worker mobility.
Burnham made the announcement at a business summit in Manchester. He said non-compete clauses have forced workers to go without pay after leaving roles and made it harder for growing firms to hire new staff. Research cited by the government estimates around 5 million jobs in Britain are covered by such clauses, which typically last around six months.
The government has been exploring possible restrictions since late last year, including a total ban, bans above certain salary thresholds, or limits on duration. Burnham confirmed the government will press ahead with new legislation to ensure the clauses can "no longer be a barrier" to hiring. He said their use had stopped workers from joining other companies or founding their own firms, adding: "I think that's a drag on innovation."
He compared the potential reform to the 1995 Bosman ruling that transformed European football transfers, saying he hoped restricting non-compete clauses could prove the "Bosman ruling for the innovation sector." Burnham did not specify the scope of planned restrictions but suggested they would apply to the "everyday economy" as well as help "promising start-ups and scaling firms." Details are expected alongside the Budget on 28 October, according to reports in Politico and The Financial Times.
The Recruitment and Employment Confederation cautioned against "sweeping" changes, stating 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 framed the announcement as part of a wider effort to boost innovative sectors. He noted that although the UK hosts outstanding research and start-ups, too many companies have gone abroad seeking investment. He signalled the government would address tax policy at the Budget to encourage high-growth companies to remain in the UK, and proposed all regions have dedicated public investment funds modeled on Greater Manchester's Good Growth Fund from his tenure as mayor.