Burnham promises to curb non-compete rules in job contracts

Andy Burnham has pledged to limit the extent to which employers can restrict the activities of their staff once they leave a job. In a recent address, the prime minister criticized the widespread use of non-compete clauses in employment contracts, arguing that they have “gone too far” and are impeding innovation within British companies. He highlighted the negative impact these clauses have on workers, who often face unpaid periods after departure, and noted that such restrictions also hinder expanding businesses from recruiting talent.

Burnham indicated that his government will introduce new legislation aimed at removing these barriers to workforce mobility. Speaking at a business summit in Manchester, he emphasized that non-compete clauses prevent employees from moving to competitors or starting their own companies, which in turn slows down innovation. He referred to a landmark 1995 legal decision, which transformed European football transfers, suggesting that reforming non-compete agreements could be just as transformational for the innovation sector.

Though specific details about the upcoming restrictions were not disclosed, Burnham suggested the reforms would affect not only high-profile industries but also the broader “everyday economy,” supporting start-ups and firms experiencing rapid growth. The government is expected to announce the proposed measures alongside the Budget on 28 October. Meanwhile, the Recruitment and Employment Confederation cautioned against broad changes, defending non-compete clauses as essential for protecting sensitive business information and customer relationships.

The previous Conservative administration had rejected a complete ban on non-compete agreements, citing concerns that such a move might undermine investor confidence or force companies to become more secretive internally. Burnham framed the new proposals as part of a larger strategy to nurture innovation. He pointed out that despite the UK’s wealth of research and entrepreneurial activity, many promising enterprises seek funding overseas. He also indicated that the government plans to enhance public investment to encourage private sector funding, aiming for dedicated regional funds inspired by Manchester’s Good Growth Fund. Additionally, he mentioned efforts to revise the tax system to better retain high-growth firms, acknowledging that many innovations and the associated economic benefits currently flourish abroad

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