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Ministers considering future of "non-compete" clauses

25 April 2016

Contract terms that impose restrictions on working for competitors – or setting up their own competing bsuiness – after an employee leaves a job are to come under scrutiny by the UK Government as part of a wider review of barriers to innovation.

Business Secretary Sajid Javid announced that the Government will be looking for views from individuals and employers on whether this type of restrictive practice is acting as a barrier to innovation and employment and preventing British start-ups from prospering.

"Non-compete clauses" are being imposed sometimes for up to nine months after an employee leaves. They are only enforceable in court if they protect a legitimate interest and are reasonable. However, there have been suggestions that they can hinder start-ups from hiring the best and brightest talent, so the Government is asking for views on whether they hinder business innovation.

At the same time a wider online survey is inviting ideas in seven key areas where ministers want to tackle legal and other barriers to growth. These are:

  • Making regulation work for business: how the Government can make sure that regulation does not stifle businesses but instead drives innovation;
  • Access to data: how the UK can continue to be a world leader in open government and transparency;
  • Access to finance: what difficulties businesses encounter in seeking finance for innovation, and how the Government can help unlock these;
  • Using government procurement to kick start development of new tech: making sure that procurement practices reflect the potential to invest in businesses offering new and innovative services;
  • Supporting new and dynamic businesses: how to make sure more of these can emerge without being stifled by red tape and regulation, and how the Government can work with the sector to make this happen;
  • Maximising opportunities to deliver infrastructure that unlocks wider economic opportunities: how to build on the network of "Catapult Centres" developing new technologies, to make it more widespread across the country;
  • Intellectual property: with the IPO’s 2016 IP Awareness Survey showing that 96% of firms had not valued their intellectual property assets and only 20% had generated additional income by trading those assets, what measures would help ensure the benefits of British research, invention and creativity are felt strongly within the economy and fuel the development of future innovation.

Click here for further information and to access the survey.

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