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- 🤔 Can your old job stop you taking a new one? (non-compete clauses explained)
🤔 Can your old job stop you taking a new one? (non-compete clauses explained)
Ahad Rahim & Idin Sabahipour
October 14, 2026
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Around 5 million employees in Great Britain have a non-compete clause – a term in their employment contract that stops them joining a rival for a set time after they leave. Last week the government announced plans to restrict them.
Even if you’ve got one in your contract, a court may refuse to enforce a clause that goes too far. But an employee who wants to test that at court still has to pay for legal advice (also risk covering some of the old firm’s costs if they lose) and wait without knowing when they can start their new job for months.
That’s why many people simply stay put and rivals may avoid hiring them, so the cost of a fight can do the clause’s work even when the law wouldn’t support the clause being enforceable.
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– Idin
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🤔 Can your old job stop you taking a new one? (non-compete clauses explained)
What’s going on here?
Last week, the UK government announced plans to restrict non-compete clauses.
🤔 What’s a non-compete clause?
A non-compete clause is a contract term that stops someone from joining a rival or starting a competing business for a set time after leaving.
Imagine you’re a senior associate at a law firm. A rival firm offers you a bigger role and a pay rise. You want to take it, but your employment contract says you must wait six months after leaving the firm before you can join a competitor.
Your firm uses the clause to protect its client relationships and confidential business plans when you leave. Making you wait before joining a rival gives it time to introduce clients to another lawyer and keep their business. Some private information you know may also become less useful as the firm’s plans change.
Companies use non-compete clauses to give themselves this kind of protection when important employees leave. They are used across sectors, including technology and finance.
The government hasn’t said exactly how the rules will change (more detail is expected in the Budget on 28 October). But businesses are already divided over the plans.
Tech companies, including ElevenLabs – a UK AI company that creates realistic voices for businesses – have supported calls to restrict non-compete clauses. But banks, hedge funds and business groups such as TheCityUK – whose leadership includes senior figures from HSBC and Barclays – have warned that the plan could harm UK firms.
How do non-compete clauses work in practice?
Just because you have a non-compete clause in your contract, it doesn’t mean a court will enforce it, even if you signed it. For employment contracts in England and Wales, courts apply the common law rules on restraint of trade, developed through centuries of court decisions (one of the earliest leading cases, Mitchel v Reynolds, dates back to 1711).
In Tillman v Egon Zehnder Ltd, the Supreme Court restated that a non-compete clause is unenforceable unless the company can justify it as reasonable on two grounds.
🔒 First, the company must show it has a legitimate business interest to protect. This means the business must have something the employee could use to give a rival an unfair advantage. Simply wanting fewer competitors, or worrying about losing the employee’s skills and experience, isn’t enough. The company needs something more to protect.
Examples from cases include business secrets (like confidential pricing or plans for an unreleased product), and relationships with customers the employee has worked closely with.
A rival could use that private information to undercut the company, or benefit if customers move with the employee to the new company. To establish a legitimate business interest, the company has to show evidence of what needs protecting and how it relates to the employee’s job.
📏 Second, the restriction should not go further than needed to protect those interests. Having something worth protecting doesn’t justify every restriction on joining a rival or starting a competing business. In Quilter v Falconer (2020), the court examined the employee’s circumstances and the scope of the clause.
Courts consider several factors together to decide whether a restriction gives the company more protection than it reasonably needs.
The work and businesses covered. Imagine you develop an accounting app for a software company and know its secret plans. A court may enforce a ban on developing a rival app. But a ban on taking any job at the rival, even managing office supplies, or on joining a company whose apps don’t compete with yours, may go too far and be unenforceable.
The company’s activities. If your company also makes games, but you know nothing about that work, a ban on joining a rival gaming company may go too far. The court may reject it even if a ban covering rival accounting apps would be reasonable.
The places covered. If your app serves only UK customers, a court may reject a worldwide ban as wider than needed. If it competes worldwide and its secret plans would help rivals overseas, a worldwide ban may be reasonable and enforceable.
How long it lasts. There’s no fixed legal maximum, so courts decide what length is reasonable in each case. If the app’s secret plans will be out of date in three months, a court may reject a year-long ban that protects only those plans. A ban lasting only as long as they need protecting is more likely to be enforced.
Your role and access. If you help plan the app’s next features, you know things a rival could use to get ahead. A court may enforce a ban on joining that rival. If you only test the version customers already use and have no private information or close customer relationships, the same ban may go too far. The court may refuse to enforce it.
When the clause was agreed. If you agreed to the ban in a junior job with no expected access to secrets or client relationships, a court may find it excessive. Later becoming the lead developer doesn’t automatically make it enforceable. The court looks at what was reasonably expected when you agreed to it.
If a non-compete clause goes too far in restricting an employee, a court can sometimes remove words and enforce what remains, but it can’t rewrite the clause to make it reasonable.
But these legal safeguards don’t always give workers the freedom to change jobs.
Why can non-compete clauses make changing jobs difficult?
There are three main reasons.
⏳ The wait can be long and unpaid. Around 5 million employees in Great Britain have a non-compete clause, including many in lower-paid jobs. A 2024 report found that around one in four workers earning £15,000–£19,999 a year reported having one. These clauses typically last around six months, and your old employer doesn’t generally have to pay you during that time. If you need the new salary to cover your bills, you may not be able to afford the wait.
🌱 Your notice period can make the wait to join another company even longer. Your notice period is the time between handing in your resignation and your job actually ending. Your employer may ask you to keep working, or put you on garden leave (which is when you’re still employed and paid, but not working). Under some contracts, the non-compete only starts once your notice ends. So three months’ notice followed by an enforceable six-month non-compete could mean waiting nine months to join a competitor.
⚖️ Even a clause a court would reject can put someone off changing jobs. Suppose you think your firm’s non-compete goes further than needed and a court would refuse to enforce it. Your old firm could still try to enforce it. You might have to pay for legal advice, defend yourself in court and, if you lose, cover some of the firm’s legal costs. Meanwhile, you may not know when you can start your new job. This creates a deterrent effect. Workers may stay put (rather than risk a costly legal fight) and rivals may avoid hiring them.
That’s why tech founders have called for limits on non-compete clauses, so companies can hire and grow more easily.
Why do tech start-ups and growing businesses support the proposed rules?
Supporters of the proposed rules argue that making it easier to move between companies would help businesses hire the people they need and develop new products.
👥 Companies could find it easier to hire the people they need. Imagine a small AI company finds the right engineer for its first product, but they work at a larger rival. Their non-compete stops them joining for six months, so the company has to wait or settle for someone less suited.
Restricting non-competes would let it hire them sooner. In a survey of UK scale-up businesses, 87% said non-compete clauses were a hurdle when hiring.
💡 People could bring different skills together to develop new products and businesses. New ideas often come from combining different kinds of experience. Say a scientist who understands diseases and an engineer who builds AI software want to start a company that helps researchers find new medicines. A non-compete could force them to wait.
Freeing people up could mean more new businesses, more choice for customers and more pressure on established companies to improve or cut prices. The government’s working paper sees this spread of skills and ideas as a possible benefit of a ban. California has already taken this approach.
🌍 How does California deal with non-compete clauses?
California generally makes employment non-compete clauses unenforceable under section 16600 of its Business and Professions Code. Unlike in England and Wales, making a restriction short or narrow doesn’t generally save it. California law even makes it unlawful to include one, with limited exceptions such as when someone sells a business.
Workers still can’t steal their employer’s trade secrets, which California protects through separate laws. But that duty doesn’t give the employer a right to stop them joining a competitor.
UK tech founders argue this gives businesses in Silicon Valley, California’s tech hub, an edge, because they can hire without waiting for a non-compete to run out.
While tech start-ups and growing businesses want easier hiring, banks and hedge funds worry that restricting non-compete clauses would leave them less able to protect their business when key staff join rivals.
Why do banks and hedge funds oppose the proposed rules?
Non-compete clauses are meant to protect valuable information and client relationships. Financial firms worry that restricting them would weaken that protection when important traders, investment managers and advisers leave.
🛡️ Non-compete clauses can reduce the risk of harm before it happens. Imagine a fund manager knows their employer’s private investment strategy and joins a rival. A confidentiality clause can forbid them from sharing or misusing that information. But the old firm may struggle to discover that this has happened and find evidence to prove it. By then, the rival could already have used the information, and winning a legal case might not undo the damage. A non-compete instead keeps the employee away from the rival for a period, reducing the opportunity for that information to be used while it remains valuable.
🎓 Firms worry they might invest less in staff and new ideas. Suppose a hedge fund spends years training an employee and developing an investment method with them. If a rival can hire that employee straight away, it could benefit from their training experience without paying for that same training and development. The first firm might then become less willing to spend money on work whose benefits a competitor could quickly gain. Supporters of non-compete clauses argue that delaying a move gives the firm more time to benefit from its investment.
🌍 Financial firms worry about competing with businesses overseas. UK financial firms compete with financial centres like New York, Singapore, Hong Kong and Dubai. Courts in these places take a broadly similar approach to England and Wales. They’ll enforce a non-compete if the employer can show it’s reasonable. If the UK changes the rules, there’s an argument that UK firms could lose a protection that their overseas competitors still have. If an important London team moved to an overseas rival and took client business with it, some work could leave the UK too. That could weaken London’s position as a financial centre.
The case for the proposed rules becomes stronger if other protections can meet employers’ needs without preventing former employees from joining a competitor.
🧰 What other protections can employers use?
In England and Wales, employers can use clauses that target particular activities after someone leaves, rather than generally preventing them from joining a competitor. The law also protects certain secret information without a contract clause.
→ “Confidentiality clauses” can restrict using or sharing private information. This could include confidential pricing or plans for an unreleased product. The information must genuinely deserve protection. An employer can’t call everything an employee knows “confidential” to stop them using their ordinary skills.
→ “Non-solicitation clauses” can restrict approaching former clients for business. This usually covers clients the employee worked with, for a set period.
→ “Non-dealing clauses” can restrict accepting former clients’ business. These go further because they can apply even when the client approaches the former employee first.
→ “Non-poaching clauses” can restrict persuading former colleagues to leave. These aim to protect the employer’s workforce by preventing a departing employee from encouraging certain colleagues to join another business. They don’t automatically justify a ban on hiring anyone who worked at the old employer.
→ Trade secrets law can protect valuable secret information without a contract clause. This includes protection against unlawfully taking, using or sharing a trade secret, such as secret software code. Under the UK’s trade secrets regulations, the information must be secret, have commercial value because it’s secret, and have been subject to reasonable steps to keep it secret.
Non-solicitation, non-dealing, non-poaching and confidentiality clauses broadly face the same reasonableness test as non-compete clauses.
It remains unclear whether the government will make changes to these other protections, although it has asked whether changes should extend beyond non-compete clauses.
The government must therefore decide how far to restrict non-compete clauses and whether other protections could meet employers’ needs without creating similar barriers to changing jobs.
What could the proposed rules look like?
The government hasn’t yet said which rules it will introduce.
Across its working paper and an earlier consultation in 2020, it has considered six approaches. It has also said it will look at other restrictive practices, starting with notice periods.
A maximum length. Non-compete clauses could be subject to a legal time limit. Employers might no longer be able to enforce clauses that exceed it.
Different limits for different company sizes. The maximum length could depend on how many employees a company has. For example, smaller businesses might have a longer maximum than larger employers, giving them more time to protect their business while they grow.
A complete ban. Employment non-compete clauses could become unenforceable. Employers could lose the ability to use these clauses to prevent former employees joining rivals or starting competing businesses.
A ban below a pay threshold. Workers earning below a specific amount could be exempt from non-compete clauses. Higher-paid workers could still face restrictions, subject to the legal tests.
A combination of pay and time limits. Workers earning below a chosen amount could be exempt from non-compete clauses, while restrictions for those earning above it could have a maximum length. This could give lower-paid workers more freedom to move and reduce the wait for higher earners.
Paying workers during the restriction. Employers could have to pay part of a departing employee’s earnings during the non-compete. This could help workers cover their bills and give employers a financial reason to limit restrictions, although workers might still have to wait before joining a rival. The 2020 consultation considered this, but the government rejected it in 2023.
The challenge is to give workers more freedom to change jobs while keeping the protection businesses reasonably need.
How can you use this in your applications?
Idea | How you can use it |
|---|---|
A buyer should check how much a business depends on key people (and what could happen if they leave). | Imagine a case study where a client wants to buy a fund management business, and much of its value sits with a few people.
→ Identify the key people. Who could hurt the business by joining a rival? For example, a fund manager who knows the fund’s private investment strategy.
→ Check their contracts. Look at their notice periods and non-compete clauses, and whether each restriction fits the person’s role. Having a clause doesn’t mean a court would enforce it.
→ Explain the risk to the buyer. If those people could quickly join a competitor, the business may be worth less than the price suggests. The proposed reform could weaken that protection further, so the buyer should factor it in. |
A lawyer needs to consider the wording of a contract and the circumstances in which it applies. | Throughout the application process, you’ll probably be asked “Why commercial law?”
Using a specific example from the news shows you’ve actually thought about the work.
→ Pick a challenge from the story. Two employees at an accounting app company sign the same non-compete. One helps plan confidential new features, and the other only tests the public app. A court might enforce the clause against the first and refuse it against the second.
→ Explain why it interests you. The words are identical, but the answer depends on the facts – what each person does and how long their information stays useful to a rival.
→ Link it to you. Say this is the work you want to do every day – working out what a client really needs to protect, then drafting something that holds up in court. If you’ve seen something similar in a job, a society or your degree, mention it.
In an interview, you could say, “I read about the government’s plans for non-competes and was struck that two people could sign the same clause and get different results. What interested me was the lawyer’s job of working out what a business really needs to protect, then drafting something that holds up. That mix of commercial thinking and being legally precise in your language is why I want to do commercial law.” |
When you discuss a legal change, test whether it would change what people actually do. | “Tell us about a legal development that interested you” and “What law would you change?” come up on applications and in interviews. A strong answer shows how a new law would work in practice.
→ Start with what the current rules balance. Non-compete rules weigh workers’ freedom to change jobs against employers’ need to protect confidential information and client relationships. Workers can already challenge a clause that goes too far.
→ Show where that breaks down. Many won’t, because of the legal costs and the risk of a delayed start. Rivals may avoid hiring them for the same reason.
→ Test the options against both aims. A maximum length would shorten the wait, but could leave employers exposed where information stays valuable for longer. A complete ban would remove the barrier, but employers would have to rely on confidentiality clauses, and misuse is hard to prove.
→ Take a position. Say which option you’d back, who benefits and what risk remains.
You could say, “Workers can already challenge unreasonable non-competes, but the cost of a dispute means many just comply. I’d support a pay threshold with a maximum length above it, so lower-paid workers can move freely and higher earners face a shorter wait. The risk is that some information stays valuable for longer than the limit allows.” |
Pick the narrowest protection that covers the client’s specific concern. | Imagine a case study where a client wants to protect its business when sales managers leave for competitors.
→ Pin down the worry. Is the client afraid of managers approaching its clients, or of them misusing its pricing and client information?
→ Match the clause to it. A non-solicitation clause stops managers approaching former clients. A non-dealing clause goes further and also stops them accepting work from clients who get in touch first. A confidentiality clause covers pricing and client information.
→ Justify anything wider. Misuse of information is hard to prove, so a confidentiality clause may not be enough. If you recommend a non-compete, explain what extra protection it gives.
Keep the scope tight, covering only the clients, information and time period that matter. A court may refuse to enforce a clause that goes too far, and it won’t rewrite it to make it reasonable. |
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