Employers are urging the government to avoid banning non-compete clauses, warning that removing them could weaken incentives to invest in staff and increase the risk of confidential information being shared with competitors.
The call comes as a consultation on reforming non-compete clauses closes, with businesses arguing that a complete ban would create risks for workforce stability, training investment and intellectual property protection.
Instead, many are backing a more limited reform that would retain protections while improving fairness for employees.
The Recruitment and Employment Confederation (REC), the UK body representing recruitment firms, conducted a survey of employers and found that more than half view non-compete clauses as important to their operations.
Employers seek balanced reform rather than outright ban
The organisation is calling for a statutory limit on the length of non-compete clauses, suggesting a six-month cap as a compromise between protecting business interests and allowing employee mobility.
Its survey of 238 employers found that 55 percent considered non-compete clauses to be important, while 17 percent said they were not.
REC campaigns director Shazia Ejaz said setting a clear limit on non-compete clauses would strike a fair balance between business protection and employee mobility. “Non-competes work well on the whole, but a time-limit on their length is a reasonable middle ground to protect both employer and worker,” she said.
She said the clauses play a key role in safeguarding business assets and relationships. “The use of non-compete clauses gives firms the confidence that their confidential information, intellectual property, trade secrets and customer relationships will not easily land in a rival’s hands.”
Concerns over impact on training and workforce investment
The organisation warned that removing protections entirely could affect how businesses approach workforce development.
Ejaz said limiting the ability to restrict movement between competitors could reduce incentives to invest in staff. “If employers cannot trust that their investment in training staff will pay off and instead fear their rivals will be the ones to gain when staff walk straight into a competitor’s arms, they will be reluctant to invest in their people.”
She added that changes could have wider consequences for different groups within the workforce. “We need employer incentives to make sure they are skilling up staff and need to watch for policies that may possibly disproportionately affect younger people who are already facing what the government calls a ‘crisis of opportunity’.”
Service-based industries are seen as particularly exposed, where client relationships and commercially sensitive information are central to roles. The REC said a ban could have a significant impact on sectors such as recruitment, finance and business services.
Risk to business operations and job security
Ejaz said the recruitment sector in particular could be affected if non-compete protections are removed. She said access to client and candidate information could pose risks if employees move directly to competitors.
“Recruiters who have nurtured client relationships and knowledge of key information, such as clients, candidates, rates, prices, and sales strategies, for their former employer can cause serious financial damage if they were to take the information to a competitor recruitment firm or set up their own firm.”
She said businesses could face significant financial and operational risks if protections were removed. “The loss of confidential information to a competitor could lead to the closure of the business.”
Call for clearer guidance and legal certainty
While opposing a full ban, the REC said there was a case for reviewing how non-compete clauses are applied and understood.
It has called for clearer guidance to help employees assess whether restrictions are reasonable, alongside greater consistency in how clauses are enforced.
A six-month statutory limit, it said, would align with existing practice in many sectors and provide greater legal certainty while maintaining protections for businesses.
With skills shortages already affecting growth and investment, the organisation warned that changes to non-compete rules should be carefully considered to avoid unintended consequences for workforce development and job creation.
- William Furney
- William Furney
- William Furney
- William Furney
