The UK Government has announced plans to limit the length of non-compete clauses in employment contracts to three months. This means that employees will be able to join competitors or start up rival businesses more easily. The change is expected to benefit the wider economy by increasing the talent pool available to businesses.
What are Non-Compete Clauses?
Non-compete clauses are contractual provisions that restrict the ability of employees to work for competitors or start up rival businesses after they leave their current jobs. These clauses are often used to protect trade secrets and other confidential information.
What is the proposed change?
The Government proposes to limit the length of non-compete clauses to three months. This means that employers would not be able to prevent employees from working for competitors or starting their own businesses more than three months after leaving their current jobs.
What are the benefits of the proposed change?
- Employees who are subject to non-compete clauses may have difficulty finding new jobs, as they may be prevented from working for competitors. Limiting the length of non-compete clauses would make it easier for employees to find new jobs, even if they are leaving their current jobs to work for competitors.
- By making it easier for employees to find new jobs, the proposed change could boost the wider economy by increasing the talent pool available to employers.
- Making it easier for employees to start their own businesses could promote innovation by encouraging entrepreneurship.
What are the drawbacks of the proposed change?
- Businesses that rely on non-compete clauses to protect their trade secrets and confidential information could be harmed by the proposed change.
- The proposed change could lead to more litigation, as businesses and employees dispute the enforceability of non-compete clauses.
What is the timeline for the proposed change?
The Government has not yet announced a timeline for the proposed change. However, it has indicated that the primary legislation needed to implement the cap will be introduced “when Parliamentary time allows”.
How Will the Change to Non-Compete Clauses Affect Employers?
The cap on non-compete clauses will limit the ability of employers to protect their trade secrets and other confidential information. However, employers will still be able to use other methods to protect their interests, such as garden leave clauses, non-solicitation clauses, and confidentiality clauses.
What Should Employees Do?
Employees should be aware of the change in the law and how it may affect them. If you are considering leaving your current job, you should review your employment contract to see if it contains a non-compete clause. If it does, you should speak to an employment solicitor to make sure that you understand your rights and obligations.
Conclusion
The proposed change to non-compete clauses is a significant development that could have a major impact on businesses and employees. Businesses should review their employment contracts and make sure that they are compliant with the new law. Employees should also make sure that they understand the implications for them. Contact our solicitors if you need legal advice regarding the restrictions in your contract of employment.
