In May 2023 the Government outlined plans to limit the length of non-compete clauses to three months.
A non-compete clause (one type of “restrictive covenant”) is a contractual restriction that aims to prevent an employee working for a competitor or (establish a competing business) for a defined period (typically 3 months to 12 months) after they have left their current employer.
The purpose of this type of clause is to protect legitimate interests of companies. Interests include trade secrets and confidential information, customer relationships, and prevention of poaching existing employees.
What does this mean for employers?
There will be no change to the wider non-solicitation clauses, confidentiality clauses, paid notice periods, or garden leave clauses under the current proposals and, as such, we may see employers introducing longer notice periods or relying on garden leave clauses to keep the employee from joining competitors. It is unclear how the legislation will impact current
It is unclear whether the proposals will apply to non-competes in other types of contract as well as employment contracts, such as LLP and partnership agreements or sale and purchase agreements.
What should I do next?
We’ll keep you updated, but in the meantime, if you want to ensure that you’re fully compliant, let us help you and contact us today.