On 26 November 2025, the Government published a working paper setting out potential reforms to the use of non-compete clauses in employment contracts.

Currently, the law is that non-compete clauses are generally unenforceable as restraint of trade unless it can be demonstrated that they are (a) reasonable in scope, duration and geographical area and (b) protecting a legitimate business interest.

Their inclusion in employment contracts is not regulated by statute, only by the Courts, and the Government is concerned that their use may have a behavioural effect on employees resulting in compliance even where the clauses would not be considered by the Courts to be enforceable. In effect, the Government is worried that employers may be using them unfairly – not dissimilar to the concern about “gagging clauses” in Non-Disclosure Agreements (NDAs).

The Government has introduced a measure through the Employment Rights Act 2025 which voids any provision in an agreement between a worker and their employer that prevents the worker from speaking out about relevant harassment or discrimination. A consultation regarding the misuse of NDAs is ongoing.

The Government has stated its commitment to:

• A dynamic labour market and economic growth
• Boosting dynamism to increase the potential for pay increases
• Reducing barriers to recruitment
• Promoting competition
• Protecting workers unable to bear the financial burden of non-compete clauses.

The Policy Paper states:

“Despite the UK having one of...

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