The Budget 2026 didn’t deliver much of interest to employment lawyers other than the confirmation in the small print that the Government still intends to legislate around non-compete clauses in employment contracts.
The Government Press Release which can you find in full here summarises the position as follows:
Removing barriers to growth: This Budget also confirms that the government will legislate to make sure that non-compete clauses will no longer be a barrier to hiring for our most promising startups and scaling firms. The government will also consult shortly to understand the wider use of restrictive practices. We will then set out a detailed Government position on all these issues in early 2027 in advance of legislating.
So now we wait for the consultation to be launched and see what it brings.
We’ve previously blogged about this on 29 December 2025 and again on 13 March 2026.
The Competition and Markets Authority (CMA) published its response to the working paper outlining options for reform on 25 February 2026. The Employment Lawyers Association notes that this reform is not something that UK business has been advocating. It seems to be driven by the CMA.
The CMA advocates a ban on non-competes below a certain salary threshold and a statutory limit to those over the salary threshold. The CMA’s view is that non-competes are a blunt tool that stifle labour market activity. They advise the Government on competition law.
This Government is determined to tinker widely across employment legislation. Their focus here seems perhaps overdone. The labour market in the UK seems to work quite well with the use of non-competes in place and has done so for a long time. The parties to any agreement do have the opportunity to negotiate out of these clauses at the relevant time and employers hiring expect to have to wait for new joiners to start work. Non-competes are also notoriously difficult to police and enforce and particularly so where they verge on restraining trade. But there will be a consultation and reform is likely to follow. We will keep you posted.
