Non-competes are on the chopping block. What does that really mean for UK employers?

In last week’s Budget, the Chancellor said he wants to reform non-compete clauses so that people who help build successful businesses can “move easily onto the next”. A consultation is coming, with detailed proposals expected in early 2027.

Nothing changes yet. But this isn’t a new idea, and we already have a good sense of the options on the table and the arguments for and against each one. So let’s look at what could actually happen, why a blanket ban might not fix the real problem, and what you should be doing now.

We’ve been here before

In 2023, the previous government announced plans to cap non-competes at three months. It never became law. Since then, a wider set of options has been floated and debated in detail by lawyers, businesses and worker groups.

The options fall into five broad groups:

The problem is real, but it isn’t the law

Let’s be clear about one thing first. Non-competes are being misused, and it isn’t only in one sector. I see them copied into contracts for receptionists, junior staff and care workers, as well as clinicians and other professionals who have never had a reason to question them.

But the current legal test is actually a good one. A non-compete is only enforceable if it protects a legitimate business interest, such as client connections or confidential information, and goes no further than reasonably necessary. Many of the clauses I review would fail that test.

So why do they still work? Three reasons:

1. Nobody talks about them at the start. The clause sits in the contract unnoticed until someone resigns. That’s when tensions and costs are at their highest.
2. People don’t know what they’ve signed. Most employees aren’t lawyers. They can’t tell whether a clause is reasonable or enforceable, so they assume it is or feel they have to sign it to get the job.
3. Challenging one is expensive and stressful. These disputes move fast, often through urgent injunctions, and most never reach a full hearing. They settle under pressure, usually in favour of the side with deeper pockets.

The common law works when it’s applied properly, but that depends on both sides having equal resources. In practice, they rarely do. The threat of a legal letter does the work that the clause itself never could.

Why a blanket ban might backfire

A ban sounds simple. But if the problem is misuse, removing the tool entirely may just move the problem somewhere else. Expect:

• Longer notice periods and garden leave, which can keep someone out of the market for longer than a non-compete would
• More confidentiality disputes, as employers lean on trade secrets claims instead
• Changes to working status, such as moving senior people into LLP, contractor or personal service company arrangements to get around rules that only apply to employees

Short caps have their own problem. A three-month restriction could expire before a case even gets to court, which makes it close to unenforceable in practice.

Size-based limits are harder still to defend. Should a ten-person salon paying minimum wage be able to impose a longer restriction than a pharmaceutical company investing millions in new treatments? It’s the wrong measure of risk.

There is a legitimate use

It’s worth remembering why non-competes exist. A start-up developing new technology may not have patents or other formal intellectual property to rely on. If a key person leaves for a competitor six months in, the business may lose everything it has built. For some businesses, a well-drafted non-compete is the only realistic protection.

That’s why I’m not convinced a blanket ban is the answer. The aim should be stopping misuse, not stopping genuine protection.

What a better answer could look like

If I were designing reform, I’d want to see:

• Targeted action on low-paid and low-risk roles, where non-competes are hardest to justify
• A reason for every restriction, with employers explaining why the role needs it
• Transparency at the point of signing, such as a separate signature or a plain English “key facts” sheet setting out what the restriction means
• Access to independent advice early on, so issues are spotted before they become disputes
• Clear guidance on other covenants, so non-solicit and non-dealing clauses aren’t quietly stretched to do the same job
• Proper evidence first. Overseas examples like California and Austria are interesting, but they aren’t a reliable guide to what will happen in the UK

Don’t assume your other clauses are safe

It’s tempting to think that if non-competes go, you’ll simply rely on non-solicitation, non-dealing and confidentiality clauses instead. That might be true. But because these clauses can do a very similar job, there’s a real chance reform will look at all post-termination restrictions together, not just non-competes in isolation.

If your non-solicit covers every client the business has ever had, or runs for 12 months for a junior role, it could be next in line.

Why one template for every new starter doesn’t work

The single biggest cause of unenforceable restrictions I see is the template. One contract, one set of covenants, used for everyone from the apprentice to the operations director.

It feels efficient. In reality, it’s the opposite. A court looks at whether a restriction is reasonable for that specific person, in that specific role, at the date the contract was signed. A clause that might be justified for a sales director with deep client relationships will almost never be justified for an administrator with no client contact. And because courts won’t rewrite an unreasonable clause, an over-wide restriction doesn’t get trimmed back to something sensible. It falls away entirely, leaving you with no protection at all.

Templates also go out of date. Roles change, people get promoted, and the restrictions signed on day one often no longer match the job they’re doing years later. If someone moves into a senior or client-facing role, that’s the moment to revisit their covenants.

So take specific advice for each role, and ideally each contract where the restrictions really matter. Ask: what does this person actually have access to? Which clients, which information, which people? How long would it genuinely take for that advantage to fade? The answers should shape the clause, not the other way round.

Don’t let AI draft your restrictive covenants

I’m a big fan of AI, and I use it every day as a neurodivergent person. But restrictive covenants are one of the worst places to rely on it.

AI tools are very good at producing something that looks like a professional clause. That’s exactly the problem. They tend to produce broad, generic wording based on whatever they’ve seen before, often borrowing from other jurisdictions, like the US, where the rules are completely different. They don’t know your business, your clients or what the person in front of you actually does. They won’t even get to know this. And they can’t tell you whether a restriction would survive a challenge in an English court.

A clause that looks impressive but is wider than necessary is worse than useless. It gives you false confidence, and when you need it most, it won’t hold. With reform on the way, the rules are about to get stricter, not looser, and generic drafting will be the first casualty.

Use AI to help you think, by all means. But have a lawyer draft, or at least properly review, any restriction you’re planning to rely on, before it goes into a signed contract!

What employers should do now?

1. Audit your contracts. Who has a non-compete? Is each one tailored to the role, or copied from a template? What is the date of this contract?
2. Ask what you’re actually protecting. Clients, know-how or your team? Choose the restriction that protects that interest most directly, and no more.
3. Ditch the one-size-fits-all template. Take specific advice on restrictions for each role, and revisit them when someone is promoted or their role changes.
4. Don’t rely on AI-drafted clauses. Get anything you plan to enforce drafted or reviewed by a lawyer.
5. Tighten your other covenants. Use defined client lists, sensible look-back periods and restrictions that match the person’s actual role.
6. Explain restrictions upfront. Talk new starters through them. It builds trust and makes them easier to defend later.
7. Don’t rely on workarounds. Very long notice periods or status changes designed to avoid future rules may be the first thing the new regime targets.
8. Protect information in practice. Access controls, good exit processes and returning property matter as much as anything in the contract.
9. Have your say. When the consultation opens, respond, especially if your sector relies on these clauses.

The bottom line

Non-competes aren’t the villain here. Boilerplate drafting, poor understanding and an imbalance of power are. Reform that tackles those problems would help employees and good employers alike. Reform that simply bans a clause risks pushing the same behaviour into places that are harder to see and harder to challenge.

Either way, the days of the copy-and-paste non-compete are numbered. The employers who’ll be fine are the ones who already know what they’re protecting and why.

If you’d like us to review your restrictive covenants before the consultation lands or help you create a playbook or process on how best to manage the various touchpoints to avoid people slipping through the cracks, get in touch with the Thrive Law team at enquiries@thrivelaw.co.uk.