The government has published its response to its 2020/21 consultation on measures to reform post-termination non-compete clauses in contracts of employment, and it has confirmed that it will introduce a statutory limit on the length of non-compete clauses of three months. This limit will apply to non-compete clauses only, and in contracts of employment and limb(b) worker contracts only. 

In its policy paper on “Smarter regulation to grow the economy”, the government has also confirmed that its proposal to limit non-compete clauses will not interfere with the ability of employers to use paid notice periods, garden leave, non-solicitation clauses or confidentiality clauses. This means that the existing case law on what is reasonable to protect a legitimate business interest will continue to apply to non-solicitation (and presumably non-dealing) clauses. However, what is not yet clear is how the reform to non-compete clauses will apply to existing contracts of employment, i.e. will the reform have retrospective effect and, if so, will longer non-compete clauses automatically be deemed to be limited to three months, or will longer non-compete clauses be considered void unless they are amended in line with the new legislation?

Primary legislation will be brought forward to introduce the three-month statutory limit when Parliamentary time allows.

Source: New feed