Government To Limit The Length Of Non-Compete Clauses
This will be well-received by many ...
Posted by Roger Eddowes on 22/06/2023 @ 8:00AM
In December of 2020, the Department for Business, Energy and Industrial Strategy (BEIS) proposed to modify post-termination non-compete clauses in employment contracts ...
A statutory limit on the duration of non-compete clauses will facilitate the mobility of workers!
Following this initiative, the Department for Business and Trade (DBT), which replaced BEIS, has published its response to the 104 responses received during the consultation. The key points of the consultation were as follows:
Enforceability of non-compete clauses only when employers provide compensation during the term of the clause.
Additional measures such as enhancing transparency where non-compete clauses are used and introducing a statutory limit on the duration of non-compete clauses.
An alternative proposal to render post-termination non-compete clauses in employment contracts unenforceable.
After considering the responses and conducting further research, the Government has decided to introduce a statutory limit on the duration of non-compete clauses, limiting them to three months.
By limiting the length of non-compete clauses to three months, the Government is taking decisive action to promote flexibility and dynamism in the labour market, and to stimulate greater competition and innovation.
This will facilitate mobility for workers, including highly skilled individuals, to transition to a competitor or launch a competing business. It will also simplify the process for businesses to fill vacancies and attract better candidates".
"I feel that the introduction of a statutory limit on the duration of non-compete clauses will be well-received by many!"
It is important to note that this statutory limit will only apply to non-compete clauses and not other types of restrictive covenants such as non-dealing clauses, non-solicitation clauses, and non-poaching of employees clauses.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about the new limits to the length of non-compete clauses, it may be a great idea to call me on 01908 774320 and let's see how I can help.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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