The Competition and Markets Authority (CMA) has signalled its agreement with the Government that the law relating to non-compete clauses in employment contracts is ripe for reform.

The CMA was responding to a working paper published at the end of last year (discussed here) which explored a range of options representing a significant overhaul of the existing legal framework governing non-compete clauses. According to the Government, reform is necessary because, among other things, such clauses “play a part in restricting employee movement, limiting knowledge spillovers, and can undermine incentives for innovation”. Furthermore, even where clauses are drafted too broadly to be enforceable (on the grounds that they are unreasonable), evidence suggests that workers may nonetheless comply with them for fear of legal repercussions.

Four options were proposed:

1. A statutory limit on the length of non-compete clauses;
2. A statutory limit on the length of non-compete clauses according to the size of the company, with a longer period for smaller companies;
3. A total ban on non-compete clauses; and
4. A ban on non-compete clauses below a salary threshold.

Responding to the working paper, the CMA notes the prevalence of non-compete clauses (its research suggests that around a quarter of workers believe themselves to be subject to one) and, whilst acknowledging their potential benefits, concludes that they are a “broad and often blunt form of restriction” which can severely constrain labour mobility. It therefore agrees that there is “a strong case for updating the legal framework to restrict the use of non-competes”.

As for the options proposed, the CMA suggests that the Government should stop short of a blanket ban. Instead, it proposes that there should be a combination of:

• a total ban below a defined employee income threshold; and
• a time restriction on the duration of non-competes above this threshold.

The deadline for responses to the working paper closed on 18 February 2026, and it remains to be seen whether the Government will adopt the CMA’s (or others’) recommendations in this area.

To read the CMA’s response in full, click here.