UK Prime Minister Andy Burnham has pledged to restrict companies' use of non-compete clauses in employment contracts, stating the practice has "gone too far" and is damaging innovation and worker mobility.
Speaking at a business summit in Manchester, Burnham said non-compete clauses have forced workers to forgo pay after leaving roles and made it harder for growing firms to hire staff. He confirmed the government would introduce new legislation to prevent the clauses from acting as a barrier to hiring.
The government has been exploring restrictions since late last year, with options including a total ban, restrictions based on salary thresholds, or limits on clause duration. Burnham did not specify which approach he will pursue but indicated rules would apply broadly across the "everyday economy" and specifically support "start-ups and scaling firms." Details are expected to be announced alongside the Budget on October 28.
Research cited by the government estimates approximately 5 million jobs in Britain are currently covered by non-compete clauses, which typically last around six months. The clauses are common in financial services and technology but extend across other sectors.
Burnham framed the move as part of efforts to keep innovative companies in the UK. He noted that many British firms have moved abroad seeking investment, and said the government would address tax policy to encourage high-growth companies to remain and scale domestically. He also indicated plans to expand regional investment funds modeled on Greater Manchester's Good Growth Fund to support private investment across UK regions.
The Recruitment and Employment Confederation cautioned against "sweeping" changes, arguing 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 concerns from employers that it could reduce investor confidence or prompt companies to restrict internal information sharing.
Burnham drew a parallel to the 1995 Bosman ruling, which transformed the European football transfer market, suggesting similar restrictions could prove transformative for the innovation sector.