If the ban on non-compete clauses does take shape, it will need carve-outs to cover non-competes signed in connection with an investment or transaction. Founders are often asked to sign up to long restrictions as a condition of a new VC investment or as part of an acquisition agreement. If these arrangements aren’t excluded, a ban could inadvertently act as exactly the kind of drag on innovation that the start-up world is concerned about.

Long-term, it’s possible that businesses will need to focus more on other protections that are available to protect their business interests – for example provisions within employment contracts which concern Confidentiality and Intellectual Property – and that we will see more aggressive litigation in those areas, as in the US.

One major question is whether the ban will target non-compete provisions specifically (i.e. terms that prevent employees from working for a competitor, as opposed to related restrictions that target (for example) the solicitation of key personnel or clients. The term “non-compete” is often used colloquially to refer to a range of post-termination restrictive covenants.

Will this ban apply to all contracts? Or just to contracts in a specific sector? Or in employers who have more than a set threshold of employees? The latter was outlined as an option in the November 2025 consultation, and given the focus of this announcement is the “innovation” sector, it might be what the Government has in mind.

If only certain employers are covered, how will they be identified in any relevant legislation. At what point in time will the relevant condition need to be met – at the time the contract is entered into, or the point it is enforced?

The way that Andy Burnham has presented the possible ban on non-competes is as a policy that is aimed squarely at helping the start-up/scale-up sector, and it will be welcomed by employers in that world.

However, many employers in the City view non-compete provisions (in combination with lengthy notice periods) as essential protection to ensure that key individuals are not able to ‘jump ship’ quickly, taking with them key relationships, knowledge and business strategy.

Those sectors may say that non-competes are an essential means to lock in their confidential information and IP on exit, and that the restrictions give them the confidence they need to invest in key people in the long term.

It’s interesting to see Burnham referred in his speech not only to the potential banning of non-competes, but also to “options to address the wider use of restrictive practices”. What exactly he means by these restrictive practices is not clear, but could he be looking at a cap on notice periods in some employers/contexts? The ‘Free to Start and Scale’ letter mentioned not only non-competes, but also “lengthy notice periods and garden leave” as a problem. I think serious limits or reform to those practices are unlikely, but it seems possible that the Government is keeping the door open.