In the Autumn Budget, the Chancellor, John Healey, announced a shift in the government’s approach to non-compete clauses in employment contracts across all sectors.
Meaby & Co, a leading law firm based across London, Surrey and Essex, has provided specialist insight into how a change to non-compete clauses can affect both employers and employees alike and its recommendations for reform.
During his speech, Mr Healey said non-compete clauses in employment contracts have gone too far, stunting growth and restricting labour market mobility. Further details of exactly how the Government intends to reform this area of law were published in subsequent documents.
Chris Marshall is a Consultant Solicitor at Meaby & Co. He said: “Non-compete clauses are really important when considering commercial interests.
“However, we do acknowledge that in some instances they can be excessively lengthy given the fact that employees are simply unable to get a job in similar sectors for the duration of the covenant.
Chris pointed out that in other jurisdictions, such as Germany, businesses can enforce non-competes only if they pay their employee for the duration of the covenant.
“Maybe this is what we need in England, not a complete ban on non-compete clauses, but instead monetary benefits for employees who are excluded from employment in their chosen sector due to their employment agreement.”
Covenants like a non-compete are widely used to prevent employees ‘walking out the door’ to go to a new employer, with intellectual property and trade secrets, which retain significant commercial value to their previous employer.
Chris said: “Some of the most vulnerable sectors are those where employees can just leave the business with intellectual property.
“This especially applies to businesses where there are few barriers to entry and intellectual property is valuable. One of the biggest sectors at risk is the UK’s critical financial sector.
“Whether the Government places a total ban on non-competes, limits the duration or applies them based on salaries, employers will have reduced protections.
“For instance, an employee could leave the business and begin sharing the business’s trade secrets with a competitor. This could be customer lists or manufacturing processes.”
At present, there is no legislation governing non-compete clauses in UK employment contracts. Instead, they are governed by the common law doctrine of restraint of trade.
Under this doctrine, a non-compete arrangement is presumed unenforceable unless the employer can show it protects a legitimate business interest, such as confidential information or client relationships and goes no further than reasonably necessary to do so.
That position is set to change. Following a working paper published in November 2025, the Government confirmed in the Autumn Budget 2026 that it will legislate to curb the use of non-compete clauses. A further consultation on wider restrictive practices is expected, with full details due in early 2027.
Chris said: “In light of these changes, businesses may begin to lower the amount and scope of intellectual property shared with key persons.
“They may also apply a need-to-know basis to intellectual property, doing the exact opposite of the desired effect that the Government intends, as this would reduce innovation and put a brake on growth.”
Meaby & Co is calling on businesses who have concerns about the reforms to non-compete arrangements to speak to their team to put strategies in place that help them to retain talent, while also protecting highly valuable intellectual property and commercially sensitive information.
“The team at Meaby & Co are here to support businesses when they are protecting their intellectual property,” added Chris.
For more information about how Meaby & Co can support your business in the face of change, contact us at: https://www.meaby.co.uk/contact/
