City businesses are expecting non-compete agreements to become less effective, looking instead to alternatives such as deferred bonus payments or share incentive plans to keep employees on board.
In 2025, the Department for Business and Trade (DBT) launched a consultation to consider restrictions on non-compete clauses in employment contracts. The consultation closed for feedback in February.
David Palmer, a partner at Addleshaw Goddard, told City AM: “We don’t quite know what they will do…. I wouldn’t imagine that within two years’ time, we’ll still have them in the same way, shape, or form. It looks like there’s going to be change, and that might involve getting rid of them in some way, changing them, or making them ineffective.”
He said that businesses are now engaging in “blue sky thinking” in the pursuit of staff retention.
One plan for City firms is to delay and restructure staff bonuses. He said: “Why not just delay making bonus payments so that the employees, therefore, are incentivised to remain employed a bit longer… and therefore that gets you that extra service, bit of extra protection.”
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