The Competition and Markets Authority publishes response on reform of non-compete clauses in UK employment contracts

The Competition and Markets Authority ('CMA') has published its response to the Government's working paper on the reform of non-compete clauses in employment contracts.

On 26 November 2025, the Department for Business and Trade published a working paper on the reform of non-compete clauses in employment contracts. The paper proposed several options for reform, including:

1.    A statutory limit on length – either universally or according to company size; 

2.    A complete ban on non-compete clauses; 

3.    A ban below a certain salary threshold; and

4.    Combining a ban below a salary threshold with a statutory limit of three months for those above the salary threshold.

On 25 February 2026, the CMA issued its response to the Government's working paper. 

The CMA recognises the importance of labour market mobility for promoting competition and economic growth, and acknowledges that restrictive covenants can serve a legitimate purpose, protecting (amongst other things) confidential information. However, it states that these clauses are a "blunt" tool, and that more targeted mechanisms, such as non-disclosure agreements, garden leave and claw-back provisions, may have a less severe impact on labour mobility.

The CMA conclude that the best option would be a 'combined' approach, involving: (a) a total ban on non-competes below a certain salary threshold; and (b) restricting the duration of non-competes above this threshold. It considers that restriction on duration alone would be insufficient, especially for those employees in a weaker negotiating position or who cannot afford a period without pay to move jobs. This combined approach would protect low paid employees from abusive restrictions and improve job mobility, whilst still retaining the benefits non-competes serve in relation to senior roles.

It seems likely that the CMA's response will be given significant weight by the Government and there has plainly been an attempt to be balanced.  However, some (such as the Employment Lawyers' Association ('ELA')) have expressed concerns.  ELA has observed that no UK commercial or industrial sector has been campaigning for reform in this area.  Further, whilst it supports reform to prevent abuse of non-competes for low paid employees, it suggests that disturbing the approach developed by the courts over many decades in relation to non-competes may have unintended adverse consequences – for example, in relation to the protection of confidential information, which has proven difficult to police through non-disclosure or confidentiality obligations. ELA has suggested alternative, targeted reforms such as clarifying the effect of garden leave on the duration of restrictive covenants and raising the threshold for a court granting an interim injunction to stop employees competing (which currently favours the employer). The Withers employment team tend to agree with the reservations expressed by the ELA. 

Watch this space.

This article was authored by Melissa Paz, special counsel in our UK employment team.