Prime Minister Andy Burnham promised new legislation to curb non-compete clauses in employment contracts, saying their use has "gone too far" and is holding back UK innovation.
Speaking at a business summit in Manchester, Burnham said the clauses restrict workers' ability to join rival firms or start their own companies after leaving a role, and force some workers to go without pay during the restriction period. Research cited by the government estimates around 5 million jobs in Britain are covered by non-compete clauses, typically lasting around six months.
The government has been exploring possible restrictions since late last year, including a total ban, bans above certain salary thresholds, or limits on duration. Burnham did not specify which approach the government will take, but indicated restrictions would apply broadly to the "everyday economy" as well as to start-ups and scaling firms. Details are expected alongside the Budget on 28 October.
Burnham compared potential restrictions to the 1995 Bosman ruling, which transformed football transfers in Europe. He framed the non-compete initiative as part of wider efforts to retain high-growth companies in the UK and prevent promising firms from relocating abroad for investment.
The Recruitment and Employment Confederation warned against "sweeping" changes, arguing that non-compete clauses play a "vital role" in protecting commercially sensitive information and client relationships. The previous Conservative government had ruled out a total ban after hearing from employers that it could reduce investor confidence or prompt companies to tighten internal information sharing.
Burnham also signalled the government would address tax policy to encourage scaling companies to remain in the UK, and announced plans for all regions to have dedicated public investment funds modelled on Greater Manchester's Good Growth Fund launched during his tenure as mayor. He acknowledged the UK's challenge of retaining best ideas, technology and investment that often scale overseas.