The government has launched a call for evidence on the use of non-compete clauses in employment contracts, seeking the views of businesses and workers.
Non-compete clauses are defined widely in their report, including standard non-compete clauses, non-dealing and non-solicitation clauses. The end goal is to establish how well these clauses are constructed, used and justified in businesses.
Non-compete clauses are viewed by some as stifling to the labour market, preventing flexibility and growth of new business. If it is established that these clauses are a barrier to flexibility, then the government will consider how best to act.
There is a vast amount of case law on the issue of restrictive covenants, so it will be interesting to see how the government can build upon those principles. Most recently, we reported on the restrictions in the Bartholomews Agri Food case, where a six month non-compete clause for an Agronomist employee was found by the courts to be invalid as it was wider than reasonably necessary to protect the employer’s business interest. Conversely, other cases have upheld non-compete restrictions up to three years long (One Step (Support) Ltd v Morris-Garner and another).
It is worth businesses checking that your restrictive covenants are correctly drafted so as not to be so wide to be an unreasonable restraint of trade and therefore unenforceable. Meanwhile, we wait in anticipation as to the government’s findings on this topical issue.
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