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ANALYSIS: To Reform Or Leave Alone? – Non-Compete Clauses In The UK 

Tom Burroughes

5 May 2026

In an industry where so much of the cost and value is in its people, it’s unsurprising that wealth management professionals have “non-compete” clauses in their contracts. 

The UK government is mulling the idea of restricting non-competes to make the labour market more efficient and boost growth. A working paper, which was published in November 2025, said: “Despite the UK having one of the most flexible labour markets among advanced economies, persistent low job mobility, weak competition in certain sectors, and low innovation are constraining productivity and economic growth. Non-compete clauses play a part in restricting employee movement, limiting knowledge spillovers, and can undermine incentives for innovation.”

What might seem a restraint of trade to some is a necessary protection against staff poaching to others. There can be litigation. Your correspondent can remember cases where team exits from large banks could hit the legal buffers – at least for a period. (See this example from as far back as 2008.)

The latest UK working paper follows a 2016 review under the previous Conservative administration, stating that such clauses were essential for protecting business interests, and a 2020 consultation that proposed a three-month cap but was never implemented before the 2024 general election. The paper examines potential models including an outright ban on NCs, a ban below a salary threshold, statutory duration limits, and a hybrid model. 

"There is a case for targeted reform but most employment lawyers do not support wholesale changes such as those suggested by the government,” Jennifer Millins, a partner at , a London-based law firm with a specialism in employment law, told this publication. 

The firm said it hasn’t seen much of a shift in the length and structure of NCs in recent years. 

“We suspect because employers have been wary of imposing non-competes lasting longer than three to 12 months following termination of employment, mindful that non-competes of longer durations are may well be unenforceable in an employment contract,” the law firm said. “Non-competes of longer durations are, however, frequently imposed against individuals in other contexts, e.g. where an individual is entering into an agreement in their capacity not as employee but as a member of a limited liability partnership, (where the courts take a more benevolent view on the issue of enforceability) or as a shareholder or as a participant in an incentive scheme (such as a carried interest scheme) that can properly be said to be separate from that individual’s employment.”

Foreign cases can prompt calls for the UK to follow suit. As an example, in 2024 the US Federal Trade Commission issued a final rule banning NCs nationwide, “protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation,” as it put it. (However, the FTC was subsequently overruled.)

In an article for Freeman Business, a magazine for the A B Freeman School of Business at Tulane University, author Pradeep Muthukrishan wrote that NCs carry very mixed benefits. "An estimated 30 million American workers – one in every five – are subject to non-compete agreements,” he wrote.

“From the firm’s perspective, reducing labour competition has a number of benefits. It allows for a degree of stability, in turn helping the firm undertake capital investments. It also minimises the costs that firms face in hiring, training and transitioning their workers, aligning with the profit maximisation objective. On the flip side, however, research also shows that reducing labour competition prevents new knowledge from entering firms and adding to their existing knowledge base, hindering their innovation capabilities,” he added.

The law of unintended consequences
As such comments suggest, there are lots of potentially unintended effects from bans on NCs or attempts to cap them in certain ways.

Mishcon de Reya’s Millins said one impact from an overly restrictive control on NCs, if enacted, would be to deter foreign investment into the UK. “One thing people will look at is executive search business, based in the UK, told this publication. He is no longer active in executive search, but remains interested in trends in the sector, and is now active in matching investor with investee in a range of deals typically within the $5 to $500 million range.

A source of frustration, Edmunds said, was cases of banks and wealth managers, of all sizes, wanting RMs to come with a large book of business, but firms also wanting to impose a strict clause into a contract. “You would have to be a fool to sign it,” Edmunds said. “If you are really good at what you do, you will say `I will go to work for someone who appreciates me even more, remunerate me well but without ties.’”

The enforceability and type of non-competes and other clauses tends to vary by jurisdiction – an important consideration in a cross-border business such as private banking and wealth management. “There’s a difference between what they can do in the US or Latin America and what they can get away with in, say, Switzerland – and even the individual cantons can be different,” Edmunds said. 

“If I was head of HR in a multinational and wanted to bring in someone into, say, a Caribbean team, would I hire someone local or from, say Zurich? I might choose to do all my hires in Switzerland and relocate them as and when they were needed,” Edmunds added. 

Lower paid workers
If there is an area of agreement it is that lower-paid workers should not be subjected to onerous NCs – a point likely to resonate with a Labour government. 

“These restrictions are already unenforceable under existing law, but that does not help the compliant employee who is put off from moving jobs as a result of an unenforceable non-compete restraint in their employment contract. If their use is genuinely growing in these sectors, as the government believes, then vulnerable workers need real protection – not just a legal principle they cannot afford to rely on,” Millins said. 

“The procedural reforms that the Employment Lawyers' Association proposed in 2020 also remain worth pursuing. Greater transparency, clearer guidance on advice at the point of signing, and more flexibility around garden leave arrangements would improve fairness without overhauling a framework that broadly works,” she continued.

Fox & Partners agreed.

“There has been a growing trend in the UK (mirrored in the US and in Europe) for the use of post-termination non-competes in the employment contracts of lower-skilled, lower-paid workers, who have no or limited access to the confidential information of their employer and who pose little or no competitive threat to their employers.  This has attracted political scrutiny,” the firm said. 

Fox & Partners said a 2024 report by the CMA suggested that about 20 per cent of UK workers have a non-compete clause in their contract in retail, food services and education and about 27 per cent in health and social care. 

“This may, in part, explain why the current UK government has resurrected the idea (dropped by previous UK governments) of introducing legislation to limit the use of such non-competes by employers in the UK, notwithstanding that such non-competes are unlikely to be enforceable against lower-skilled, lower-paid employees,” it said. 

Complaints
Complaints about post-termination non-competes are “fairly common,” Fox & Partners said.

“They tend to come more from the individual employees, members or partners who are subject to the non-competes. These complaints will typically be raised either at the point at which the employer/firm is seeking to impose such non-competes, e.g. when the individual is joining the employer/firm and is negotiating the terms of their job offer, or at the point at which the individual is leaving their employer/firm in order to join a competitor.

“We also come across complaints or concerns being raised by employers/firms about the post-termination non-competes that their prospective new employees/members/partners are subject to in their contracts with their current employers/firms. In such cases, the individual or employer/firm will seek our advice on the enforceability of such non-competes,” it said. 

The more senior, well-paid individuals with access to confidential information and/or influence over clients and/or other colleagues where employers will most likely want to impose a restriction. 

“Our experience does suggest that unreasonable non-competes are sometimes imposed on more junior employees, for deterrent effect, but generally speaking, our experience is that most issues are raised in relation to senior, well-paid employees,” Fox & Partners said.

Alternatives
Firms, such as banks, are increasingly looking at alternatives to NCs, given greater scrutiny and challenges.

For example, they are relying more heavily on using garden leave clauses (which are typically considered to be much easier to enforce than post-termination non-competes), longer notice of termination periods and targeted restrictions such as non-solicitation or non-dealing clauses, etc, Fox & Partners said.

“Financial services firms have also become increasingly adept at structuring incentive schemes that make payments, including deferred elements, contingent on strict compliance with pre- and post-termination obligations,” it said.

Fox & Partners added that there are several positive reasons for NCs that critics should consider: they protect confidential information and trade secrets; preserve client relationships and goodwill; support workforce stability, particularly in team-based environments; give employers confidence to invest in people, training, and sensitive strategies; and that if they were heavily restricted, the likely outcome would not necessarily be a free-for-all, because employers would be likely to adapt by extending notice periods and gardening leave, expanding non-solicitation clauses, and being warier about sharing confidential information with employees.

There is a sense, at least from the legal side, to leave well alone apart from where there appears an egregious problem, as with low-paid workers.

“Hasty or disproportionate reform risks consequences that would undermine rather than advance the government's objectives. The common law has struck a careful and workable balance between employer and employee interests – one which the government itself acknowledged in 2016 – and which gives courts the flexibility to respond to the facts of individual cases,” Millins said. “Significant legislative change in this area risks destabilising that balance, unsettling business confidence and deterring the investment and innovation the government is seeking to promote.”