Prime Minister Andy Burnham has promised new legislation to restrict non-compete clauses in employment contracts, saying their use has "gone too far" and is constraining innovation and worker mobility in Britain.
Burnham made the pledge at a business summit in Manchester. He argued that non-compete clauses prevent workers from joining rival companies or starting their own firms after leaving a job, and have forced some workers to go without pay. He also said the restrictions make it harder for growing firms to hire new talent.
Research cited by the government estimates around 5 million British jobs are covered by non-compete clauses, which typically last about six months. Although most common in financial services and technology, the clauses appear across sectors.
Burnham did not detail the scope of proposed restrictions but indicated they would apply broadly to both the "everyday economy" and help "promising start-ups and scaling firms." He compared his aim to the 1995 Bosman ruling, which transformed football transfers in Europe, calling it potentially a "Bosman ruling for the innovation sector."
The government has been exploring options since late last year, including a total ban, restricting them above a salary threshold, or limiting their duration. The proposed restrictions are expected to be unveiled alongside the Budget on October 28.
The Recruitment and Employment Confederation cautioned against "sweeping" changes to non-compete rules, warning they play a "vital role" in protecting commercially sensitive information and client relationships. The previous Conservative government had ruled out a total ban, citing concerns that it could reduce investor confidence or prompt companies to restrict internal information sharing.
Burnham framed the announcement as part of a wider government effort to retain innovative companies and investment in Britain. He said too many British firms relocate abroad to find funding, and he signalled the government would discuss tax changes at the Budget to encourage high-growth companies to remain in the UK. He also hinted at expanding regional investment funds like the Good Growth Fund he launched in Greater Manchester as mayor.