Leaders of several prominent technology companies have written an open letter to the Government calling for a ban on non-compete clauses and other contractual restrictions that limit employee mobility.
According to the authors, Britain’s start-ups and scale-ups are being held back by “outdated employment practices”, creating a risk that the country’s mobile tech workforce will move to jurisdictions where it is easier for businesses to recruit talent, such as California. As the letter puts it, “the current status quo is bad or workers, businesses, and the British economy. We urgently need to set a new norm”.
Calls to reform the law relating to non-compete clauses in the UK are not new. In fact, we commented here on a working paper published by the previous Government last year which explored a range of options to replace the existing regime, including a statutory limit on the length of non-compete clauses, a ban on non-compete clauses below a defined salary threshold, and a total ban on non-compete clauses altogether.
While welcoming the Government’s consideration of a ban on non-compete clauses, the authors of the letter argue that this would not go far enough, since businesses could continue to rely on other contractual restrictions to limit employee mobility. Therefore, they go further and recommend a ban on “lengthy post-termination restrictions” and restrictions on the use of extended notice periods and garden leave, arguing that “these terms lower wages, reduced competition, and undermine the innovation that drives economic growth”.
Responding to the calls for reform, the Government acknowledged that “restrictive practices” can act as a barrier to retaining talent in the UK and said it would continue working with businesses as it considers the options set out in its working paper.
To read the letter in full, click here.