Government set to limit the use of non-compete clauses

The Government is set to limit the use of non-compete clauses as it looks to encourage a more entrepreneurial environment, as it looks to begin consultation this week.

In a report by the Financial Times, plans were revealed in which Government ministers are looking to encourage start-ups and entrepreneurs by making it more difficult for employers to prevent staff leaving to set up new businesses.

Non-compete clauses often prevent employees that are leaving a business from working for competitors, starting a rival business or working with former clients for months after they leave.

For many employees in executive roles, the period of time between leaving a company and starting a new role is determined by the non-compete clause in their employment contract, often meaning that it may be several months, or in some cases up to a year, until they begin their new role.

The report indicates that the Department for Business, Energy and Industrial Strategy (BEIS) is launching a consultation into the use of non-compete clauses, with the aim of creating a more entrepreneurial environment, which could have a significant impact on many employers in the way that they use non-compete clauses.

It is not believed that the Government will pursue a complete ban, but stricter laws could be introduced as they investigate non-compete clauses and how they fit with current laws concerning confidentiality and intellectual property.

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