UK to ease non-compete clauses, marking boon for startups and scaleups

The UK prime minister today confirmed that the UK plans to ease restrictive non-compete clauses in workers’ employment contracts, which could include banning them, marking a boon for the UK startup sector.

Speaking at the Innovation Nation Summit in Manchester, Andy Burnham, the UK prime minister, said: “I can confirm that we will legislate to make sure that non-compete clauses will no longer be a barrier to hiring for our most promising startups and scaling firms.”

The move comes as the UK government looks to boost innovation and give the economy a boost. According to a video of Burnham speech, reported by Politics UK, Burnham said non-compete clauses “stunt innovation” and likened the rule change to the “Bosman ruling for the innovation sector”.

The move follows a campaign by leading tech startups such as ElevenLabs and Synthesia to limit the use of non-compete clauses and extended notice periods. Non-compete clauses are a provision in an employment contract that restricts an employee from working for a competing business or setting up a new startup.

The government did not specify the scope of the restrictions it is planning, but these are expected to be laid out over time.

Trade body the Startup Coalition has been long been campaigning for changes.

Dom Hallas, Startup Coalition CEO, said: “We think this is a huge move and so do lots of friends including so many of the great founders that signed the letter with Inherent just the other week.
Because talent matters and mobile talent means startups can build. The Valley was built on free-flowing talent. In the UK, we’re now seeing our own versions of this story with companies being built from alumni of both homegrown firms like Revolut and beyond. But we need that to move faster. Hiring and building faster means British startups and scaleups can grow faster. Barriers to that slow our ecosystem down.”

This story has been updated, as an earlier version said the government said it was banning non-compete clauses.