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Response to the Government’s reformation of non-compete clauses consultation to follow

Following on from our article, Should non-compete clauses be banned?, published in December 2020 which highlighted the Government’s plan to consult on reforming non-compete clauses in employment contracts, the Government has announced this week that it is still analysing responses to the consultation (which closed in February 2021) and will publish its response "in due course".

In December 2020, the Government confirmed that it would carry out a consultation on the proposals to make non-compete clauses enforceable only where the employer provides compensation to the employee during the term of the clause (and whether this could be complemented by additional transparency measures and statutory limits on the length of non-compete clauses) or, alternatively, to make post-termination, non-compete clauses in contracts of employment unenforceable.

The intention behind the proposed reforms is to encourage a more entrepreneurial culture, particularly in the area of the next generation of emerging technologies. As non-compete clauses restrict competition, the Government's position is that limiting their scope or abolishing them entirely could help to foster more start-up businesses.

Since the announcement in December 2020, updates on the consultation remained quiet, until Paul Scully MP, Parliamentary Under-Secretary of State for BEIS, confirmed to Parliament on 2 March 2022 that the Government will publish its response "in due course".

In answering the question put forward by Kate Griffiths, ‘To ask the Secretary of State for Business, Energy and Industrial Strategy, when his Department plans to publish the outcome of the Measures to reform post-termination non-compete clauses in contracts of employment consultation, which closed on 26 February 2021’, Paul Scully responded ‘Any decisions to progress with reforms to non-compete clauses require consideration of the benefits and risks before implementation and we are not able to provide further comment on future plans at this stage. A response to the consultation will be published on the GOV.UK website in due course.’

Whilst no further information has been provided at this time, we recommend watching this space for updates. For further information on this article, please contact Kirsty Cooke or Keeley Parkes.

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