UK Prime Minister Andy Burnham confirmed on 9 October 2026 that the government will introduce legislation to stop non-compete clauses from acting as a barrier to hiring for startups and scaling firms. Speaking at the Innovation Nation Summit in Manchester, he said restrictive practices have gone too far, stunt innovation, and trap workers. The announcement, described as a potential Bosman ruling for the innovation sector, follows campaigning by tech founders and startup groups.
Current Legal Landscape
Non-compete clauses are post-termination restraints that can prevent departing employees from engaging in competitive activities for a defined period. In the UK there is currently no statutory limit on their duration, no salary threshold for their use, and no requirement to pay compensation during the restricted period. Previous reform attempts include a 2020 government consultation and a May 2023 proposal for a three-month cap, but neither was implemented before the July 2024 general election.
Proposed Reforms and Innovation Agenda
Prime Minister Burnham said the government will legislate so that non-compete clauses no longer block hiring for the most promising startups and scaling firms. He also stated that workers in the foundational economy should not be prevented from moving jobs. Alongside the non-compete announcement, he set out three broader innovation measures covering devolved funding, identification of world-leading clusters, and stronger collaboration between clusters.
The Prime Minister linked the change to a wider ambition for the UK to become a world-leading innovation nation and to achieve breakthroughs in cancer, dementia, or nuclear fusion within the next decade. With the Budget due on 28 October, he also hinted at tax measures to encourage founders to stay and scale their companies in the UK. He said too many of the country's best ideas are developed and scaled overseas, taking jobs, technology, and investment with them.
Industry Reaction
Startup Coalition Chief Executive Dom Hallas welcomed the announcement as a major step for founders and talent mobility. He said that mobile talent allows startups to build faster, and that Silicon Valley was built on free-flowing talent. Founders from tech companies including ElevenLabs and Synthesia recently wrote to the government arguing that non-competes, long notice periods, and enforced garden leave undermine innovation.
Employer Considerations and Next Steps
Legal commentators note that employers have generally opposed an outright ban on non-compete clauses and warn that a one-size-fits-all approach could harm businesses. While the exact scope of the legislation remains unclear, companies are advised to review garden leave provisions, notice periods, and other restrictive covenants such as non-solicitation and non-dealing clauses. Experts also recommend strengthening confidentiality protections, intellectual property strategies, and incentive arrangements with repayment provisions.
Any changes will require primary legislation, and further detail may emerge in the Chancellor's Budget on 28 October. The government has not yet confirmed whether the reform will involve a full ban, a salary threshold, a statutory cap on duration, mandatory compensation, or restrictions based on employer size. Previous options considered included these approaches, but no final proposal has been published.
The proposed ban marks a significant shift in UK employment and innovation policy and could remove long-standing barriers to job mobility and startup growth. If enacted, it would align the UK more closely with talent markets that allow workers to move freely between employers and launch new ventures. Questions remain about the scope and timing of the legislation, but the government's direction is clear that promoting innovation now outweighs the traditional reliance on restrictive employment clauses.