The government has published its response to the consultation on reform of non-compete clauses in employment contracts. It confirms that it intends to introduce a statutory cap of three months on non-compete clauses in employment and worker contracts.
The government announced its intention to limit non-compete clauses in employment contracts in its policy paper, 'Smarter regulation to grow the economy', which was published on 10 May (and also announced the consultations on Brexit changes – read more about these under 'An update on Brexit and employment law').The response to the consultation, which was issued in 2020, was published on 12 May.
The government believes that a cap of three months on non-compete clauses will have a significant impact in reducing the period of restriction (the consultation response and subsequent government research suggests that the average duration of a non-compete is 6 months) while maintaining flexibility for employers to use non-competes where they have a legitimate business reason to do so. The government also considers that it will make it easier for individuals to move jobs or start new businesses and for employers to fill vacancies.
The cap will only apply to non-compete clauses, and not to other post-termination restrictive covenants such as non-solicitation, non-dealing or non-poaching clauses.
The government has stated that the primary legislation required to implement the cap will be introduced "when Parliamentary time allows".
